Automotive

5 Big Misconceptions of Working With Dealers

  • Last Updated:
  • Nov 11th, 2014 9:24 am
[OP]
Verified Rep
User avatar
Apr 5, 2011
6977 posts
1464 upvotes
Toronto, Canada

5 Big Misconceptions of Working With Dealers

Hey RFD,

Unhaggle team here, sharing something that we think would be valuable to the less experienced car shoppers.

One of our alumni, Brent Jones, who was our Director of Business Development, published an article on our blog about the five biggest misconceptions of working with car salespeople. Wanted to share it here and get your feedback on the post and share his thoughts on working with dealers.

You can find the post here: 5 Big Misconceptions I Learned Working With Dealerships

And if you don't want to click through, here's a TL;DR of the article points:
  • Myth #1 – Dealerships can always do better on price - "A dealership may be able to give you a better price, but it’s unlikely to be below dealer cost. Nor will you get a dealership to waive mandatory fees already paid to the manufacturer."
  • Myth #2 – Dealerships hide fees - "Generally speaking, you and the dealer both want to arrive at an all-inclusive drive away price. How the individual fees are labelled doesn’t matter. So long as you got a fair price and the dealership made a profit, everybody wins."
  • Myth #3 – “Make me an offer” is a sales trick used to close me! - "Reasonable offers are generally accepted. Attempting to grind a dealership down to the break-even point is usually not very successful. The less time and effort the dealer needs to put into making the sale, the better the price you will usually get."
  • Myth #4 – Internet customers terrify car dealers - "Internet shoppers are generally closer to a purchase decision and cost less to acquire. Dinosaurs will die, and before long, you will be hard-pressed to find a dealership that doesn’t see the benefit to a comprehensive digital marketing strategy."
  • Myth #5 – I’m just a number to the car salesperson - "Contrast that with the last car I bought. I hear from the dealership regularly. The salesperson I worked with emails me from time-to-time to ask how things are going. I receive calendars and key chains in the mail, and I get a Christmas card regularly. It isn’t much, but it shows some level of care."
Pulled out the relevant quotes, but we feel like the whole post is worth a read. Let us know what you think!
Have a question about buying a new car? Ask away!

Check out our thread for invoice pricing and the latest incentives on new cars.

Official account of Unhaggle.com
66 replies
Temp. Banned
Feb 8, 2005
2335 posts
246 upvotes
how about this myth:

the invoice price that is provided freely over the internet is what the dealers actually pay for the car
Deal Expert
User avatar
Jul 30, 2007
31759 posts
18687 upvotes
Toronto
for #1 - pdi fees are not mandatory fees paid to manufacturer. I doubt it costs the dealer $1200 or more to prep the car for delivery. This is a huge $ maker for the dealer.
- As for the dealer cost, the true dealer cost will only be known between the dealer & manufacturer, once all the incentives/rebates they have been accounted for (not passed onto the consumers). The invoice cost listed on your database is not the 'true' invoice.


for # 2 - if dealer does not want to hide the fees, then don't include the bogus fees (nitrogen air (ride green levy), vin etching admin fee) onto the price to begin with. Dealer needs to be honest as to fees which are optional and inform the purchasers that they are not mandatory and they have the option to buy or decline. Inexperienced buyers are often told those fees are mandatory which they are not.
Deal Addict
Dec 19, 2008
1398 posts
749 upvotes
booblehead wrote: for #1 - pdi fees are not mandatory fees paid to manufacturer. I doubt it costs the dealer $1200 or more to prep the car for delivery. This is a huge $ maker for the dealer.
- As for the dealer cost, the true dealer cost will only be known between the dealer & manufacturer, once all the incentives/rebates they have been accounted for (not passed onto the consumers). The invoice cost listed on your database is not the 'true' invoice.


for # 2 - if dealer does not want to hide the fees, then don't include the bogus fees (nitrogen air (ride green levy), vin etching admin fee) onto the price to begin with. Dealer needs to be honest as to fees which are optional and inform the purchasers that they are not mandatory and they have the option to buy or decline. Inexperienced buyers are often told those fees are mandatory which they are not.
Is PDI charged separately? I usually see it combined with the freight which from experience never gets waived/reduced itself and gets calculated into the invoice+freight when figuring out how much markup to add before making an offer.
Deal Expert
User avatar
Jul 30, 2007
31759 posts
18687 upvotes
Toronto
Some dealers will combine the two (so to make one thinks that this is fixed and mandatory and non-negotiable). But on the manuf. website, some will only show the freight and the PDI will vary from region to region, dealer to dealer.

For example, for BMW, in the GTA, the PDI can range from $1200 - $1500. Out West, the same PDI would be even higher in the range.
Penalty Box
Dec 27, 2013
8003 posts
4024 upvotes
Toronto
nineiron wrote: how about this myth:

the invoice price that is provided freely over the internet is what the dealers actually pay for the car
Lol yep. I had the dealer pull the invoice price and show it to me like i was supposed to be impressed at the deal i was getting.

Meanwhile the dealership is getting it for at least 20% less. I mean it's fine hey don't need to disclose what they pay but don't try to fool me otherwise.
Member
Dec 5, 2010
481 posts
63 upvotes
My cumpare works in the industry.

There are many incentives and rebates dealers get that buyers will never see.

Invoice pricing is just for the buyers to make them feel like they got a better deal.
Deal Addict
User avatar
Jun 22, 2004
2918 posts
823 upvotes
epiksales wrote: Invoice pricing is just for the buyers to make them feel like they got a better deal.
+1 I am guessing that profits are up since the proliferation of accessible "invoice prices".
Deal Addict
User avatar
Feb 16, 2005
2731 posts
36 upvotes
Toronto
daivey wrote: Meanwhile the dealership is getting it for at least 20% less. I mean it's fine hey don't need to disclose what they pay but don't try to fool me otherwise.
Curious, where did you get that number?

I mean, it's understandable that invoice price may not be representative of what they actually paid, but 20% seems farfetched.
Member
Nov 29, 2013
409 posts
28 upvotes
Montreal
Unfortunately, those "invoices" prices are all we really have to go by.
Newbie
Aug 25, 2014
20 posts
8 upvotes
London, ON
Wow...talk about a dealership-apologist! Yeah, salespeople are all about altruism and "putting the customer first" with price transparency and fair treatment. Bull. With my recent dealings with salespeople the majority still cling to sales cliches, antiquated tactics and delayed responses to simple questions. Let's be really honest - salespeople are about making money. That's it. I'm not faulting them for it, but i'm not about to delude myself into thinking they have other motives, especially ones that place me higher than a buck.

It's an adversarial system and in Canada we're still handcuffed by a closed system that fails to highlight inventory, market prices and holdbacks. Just take a gander at truecar, edmunds, kbb or any number of U.S. sites and you'll see how far behind we are in terms of purchasing power. And it's not like our dealers are entirely forthcoming with info either.

I'm surprised Unhaggle would push this dreck on us and expect it to be taken without question.
Deal Expert
User avatar
Jul 30, 2007
31759 posts
18687 upvotes
Toronto
^ Unhaggle is in the game to make a quick buck on us as well.

I believe for each successful referral and closing, they get up to $500 for a transaction. It could be more ... depends on what brand of car.
Deal Addict
Apr 2, 2008
1126 posts
206 upvotes
this thread should be reported for self promotion. ....

lmao at the 5 myths listed by unhaggle...
Deal Fanatic
Apr 16, 2007
8132 posts
3467 upvotes
Financial District B…
Myth: the car cost invoice pricing supplied by various online publications that promote knowledge of pricing margins for the benefit of achieving the best deal are real.
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
Newbie
Nov 4, 2014
6 posts
Ottawa, ON
booblehead wrote: ^ Unhaggle is in the game to make a quick buck on us as well.

I believe for each successful referral and closing, they get up to $500 for a transaction. It could be more ... depends on what brand of car.
Goodness, where did you find this out? That's huge.
Deal Addict
User avatar
Oct 22, 2009
3189 posts
1444 upvotes
Lethbridge
nineiron wrote: how about this myth:

the invoice price that is provided freely over the internet is what the dealers actually pay for the car
What I want to know is that how actual numbers are never disclosed by an ex-dealer managers or owners...EVER. I know a vast majority of car lots are owned by massive dealer networks, but you'd think there'd be one former employee/pissed off SOB that would at least spill some beans for us.

Every post or report about how invoice pricing is a scam never has more than "that car could be $500 to $10,000 LOWER than what you pay!!!". I realize this varies from manufacturer & models, but just once I'd like to see some broken down examples... :rolleyes:
Penalty Box
Dec 27, 2013
8003 posts
4024 upvotes
Toronto
FearSonic wrote: Curious, where did you get that number?

I mean, it's understandable that invoice price may not be representative of what they actually paid, but 20% seems farfetched.
What do you think the margins are? ?? How can you afford to keep the lights on if you're not making a few thousand per sale.?? You honestly thin a dealer makes 300$ on a car sale? ??? Yeah they pay the sales rep that. The dealer needs to make way more than 300$ per car just to pay the property tax
Penalty Box
Dec 27, 2013
8003 posts
4024 upvotes
Toronto
Pauly Boy wrote: What I want to know is that how actual numbers are never disclosed by an ex-dealer managers or owners...EVER. I know a vast majority of car lots are owned by massive dealer networks, but you'd think there'd be one former employee/pissed off SOB that would at least spill some beans for us.

Every post or report about how invoice pricing is a scam never has more than "that car could be $500 to $10,000 LOWER than what you pay!!!". I realize this varies from manufacturer & models, but just once I'd like to see some broken down examples... :rolleyes:
Because The big dealerships are passed down generation to generation. The people that actually know the price wouldn't disclose. The managers don't know and neither do the sales reps
Deal Addict
Jan 23, 2006
1775 posts
244 upvotes
Toronto
The biggest question for me is what is the real cost for making this cars and how much are we paying premium for buying at dealership?

After testing various vehicle at designated test drive location; If we take out the middle men and buy Cars online;; then how much can we Save?
Member
Nov 29, 2013
409 posts
28 upvotes
Montreal
If anyone here watches shark tank, you'll know that people markup the price on products crazy amounts sometimes up to 1000%. I can only imagine car manufacturers are similar.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)