Automotive

Why would used car lots rather keep the car for 3-6 months rather than sell it?

  • Last Updated:
  • Jul 1st, 2013 1:54 pm
Tags:
None
Deal Fanatic
User avatar
Jan 6, 2011
5743 posts
1334 upvotes
GTA
The new greed is about do more with less. Here are some sources of transaction fees (unhappiness):
1. 13% HST on used vehicle (zero value add), and that money does not contribute to market efficiency.
2. Wholesale-retail spread on my car was $1750, on $11,000 wholesale, about 15%. Paying retail should be considered fair.
3. Dealer wants $450 "admin" fee (I am not sure if I was the sole sucker paying it), another 5%

So 33% total just the way in, let's not count selling/trading-in.

Nowadays cars live longer and more mechanically sound, very likely to outlast needs. But due to these transactional costs, buyers must be damn careful in predicting the future needs, this leads to deadweight, inability to adapt to changing circumstances. Nothing we could do with the gang-bangers (the Government), unless it's private sales with "mutual understanding". So if there's a website that gathers high quality owner postings (those could have traded-in but chose not to), price, and verifies quality references (pictures/proofs on the standard x check points), I'd be getting Dealer Auction Pool quality for at least the same or lower prices. Oh BTW, dealers do sells car they don't have, sometimes they even share the car between locations. Also, dealers do not guarantee problems or quality. By dealers I mean the manufacturers.

It's very likely someone is both buying and selling, but it would be infrequent and the amount is quite large, so I am not sure if reputation can be tied to this. This is also where I think Kijiji is falling short of its potential.

Of course there are the same old synergistic revenues on "warranties", financing (look at CarFinco) or other add-ons.
Deal Addict
Nov 13, 2012
1464 posts
67 upvotes
Edmonton
mofesto wrote: A+ for Effort, F- for Facts.



Sales is about selective information. ie. if a fact would make your car look less valuable to a competitor, it magically gets omitted, while instead you talk up the flaws of your competitor's vehicle. People aren't paying you for access to that knowledge, with the result being the best value vehicle they can buy in its class, you're using that knowledge to deceit people from receiving the best offer, because you have to meet a quota and don't get to waste time or let customers go elsewhere. And at the end of the day, as a salesperson at a dealership, you don't get to decide what cars you sell; ie. how reliable is the build quality, the features of the vehicle, etc. And you certainly can't make the best offer, because not only are your restricted by policy and manager expectations, but you're restricted by the range of the vehicles you're selling.



Right, those uninformed citizens willingly entered into a disadvantageous buying situation. Why? Because there was no better options, or they weren't aware of those betters options. And that's where technology is coming in and changing the game. We are giving people better options than those that were previously available. And once that technology is put in place, no one would willingly "walk into a dealership" before first finalizing a bid/offer from a dealer online.



Sales people offer very little value, but expect huge compensation. That's where the discord happens. Realistically, a car salesman should be earning minimum wage like every other "service professional" at a retail outlet, ie. McDonalds, Tim Hortons, Walmart. Why is it that a car salesman "has to" earn a $1,250 commission on the sale of a vehicle? Because obviously, if you give the salesman an open net, he'll bring the most profit possible to your dealership. But then don't be surprised when customers are pissed off at your business model and are looking for alternatives. Those "salesman" are no different than Al Bundy stacking shoes at a shoe store. Sure, let them work long hours, just pay them $10.25 an hour instead.



No, we don't do any sales. The websites we build sell themselves. It's like an Apple iPhone or iPad, the product is desirable, so there is no sales required. People willingly hand over their money, and they already know what they're buying before they enter the store.



No, making lots of money doesn't equate to being dishonest. If our website takes a $50 fee when we land you the best offer from a dealership, and you save $1,250 on the transaction, then we just provided $1,200 in value that wasn't available to you before. If our website then becomes used by everyone across Canada & US, and we're closing 125 bids/offer per day, our website is generating $6,250/daily revenue ($187,000/monthly revenue). And that's money people are willingly giving us because it's advantageous to them.

Whereas if you go directly to a dealership and talk to a sales agent, and he gets a $500 commission selling you a vehicle, that is money he's taking directly from your pocket to pay for his rent/mortgage. And he has to take a big cut to be able to pay his bills, because he can only deal with 1 client at a time, he might be able to see 9 or 10 "potential" clients in a day. Whereas a website runs itself and can accept multiple transactions at once. So at the end of the day, the idea that a salesperson will cut himself a huge commission from your vehicle purchase, that's a completely unsustainable model -- when the alternative is so much more transparent, and the value proposition is 1000x better than the alternative.

The choice is very clear for buyers.
I am giving you all the facts that I can. And quite frankly they are killing you.

NO one ever said that the amount of money you make should be based on the amount of knowledge or education you have. There are many ways to make money without any or minimal education. One example off the top of my head is Lord Sugar. I don't think you understand the type of person a salesperson is. Clearly you could not be one. Not everyone can be salesman, in-fact very few can be. To be a salesperson you have to have that something in you. You need to be pursuasive and motivated and work extremely long hours. So far from what you have been saying, your viewpoint outlines nothing but jealousy towards people in sales. You know that some make a load of cash. And they make a load on you when you buy a car.

Someone has to sell people phones, they are called salesmen. Car sell themselves to because people need them as a mode of transportation.

I respect salesmen, most of them, for what they do. They work long hours, are motivated and make a load of money. People like you that think people income should be based on income are ones who will never be rich, are jealous and are never happy. Web site developers aren't respected highly of anyways.
Deal Addict
Dec 29, 2011
1860 posts
368 upvotes
Vancouver
CalgaryExotics wrote: Web site developers aren't respected highly of anyways.
You live in a funny backwards-twisted world, friend.

However, self-deception will only cost you sanity and a mental break-down a few years from now.
Deal Expert
User avatar
Feb 26, 2004
26999 posts
4301 upvotes
Jim321 wrote: LOL this is a joke, this thread was supposed to be a rant about how these fools at the dealer wouldn't sell their car, and its turned into a full blown argument about who's right in the business-world.

Sheesh
Welcome to RFD.
Deal Addict
Nov 13, 2012
1464 posts
67 upvotes
Edmonton
mofesto wrote: You live in a funny backwards-twisted world, friend.

However, self-deception will only cost you sanity and a mental break-down a few years from now.
9-5er, you will never be rich. In the way you think. Read a book "the alchemist"
Banned
Apr 15, 2006
4572 posts
124 upvotes
Chatham
mofesto wrote: You live in a funny backwards-twisted world, friend.

However, self-deception will only cost you sanity and a mental break-down a few years from now.
First, lets be clear about one thing. Website developer is such a general job title. Since nowadays, websites are much more than just what it used to be .... plain HTML. Usually in this age, ppl with specific degree are usually appointed to a specific job. A job title like website developers are usually for a jack of all trade ( having a diploma instead of a degree or a entry job of an IT degree). Website is just a front end of a software/app.


I've heard points from both ends, frankly there is only half truth in both.

While making money without any education sounds very inspiration, it all comes down to passion, and willing to learn ( essentially you're self educated and got charisma of an successful person)

In contrast, claiming education is the only way to make "legit" money is utterly stupid. There is reason why Lawyers are ranked up there with used car salesmen. Education and morality are too different things. As soon as I read that point, the whole creditability of his post is down the drain.

Both of them sound young. Live and learn.
Deal Addict
Nov 13, 2012
1464 posts
67 upvotes
Edmonton
jetway1212 wrote: First, lets be clear about one thing. Website developer is such a general job title. Since nowadays, websites are much more than just what it used to be .... plain HTML. Usually in this age, ppl with specific degree are usually appointed to a specific job. A job title like website developers are usually for a jack of all trade ( having a diploma instead of a degree or a entry job of an IT degree). Website is just a front end of a software/app.


I've heard points from both ends, frankly there is only half truth in both.

While making money without any education sounds very inspiration, it all comes down to passion, and willing to learn ( essentially you're self educated and got charisma of an successful person)

In contrast, claiming education is the only way to make "legit" money is utterly stupid. There is reason why Lawyers are ranked up there with used car salesmen. Education and morality are too different things. As soon as I read that point, the whole creditability of his post is down the drain.

Both of them sound young. Live and learn.
Exactly,it is all about drive and passion. Money is not made by education. In some instances, but rarely. Most rich people are school dropouts, not PHD graduates. Anyone can say what they want about salesman in general, but whenever people hate on them it is out of pure jealousy.

Websites can arguably be created by anyone, with a bit of DIY research. Frankly, I could create a website.
Deal Addict
Oct 5, 2009
1096 posts
371 upvotes
Dartmouth
CalgaryExotics wrote: Most rich people are school dropouts, not PHD graduates. .
I call BS

Show us some proof or be gone please.

Warren Buffet-Master of Science in economics

Charles Koch- Master of Science in mechanical engineering in 1958, and a second Master of Science in chemical engineering in 1960

David Koch-He went on to the Massachusetts Institute of Technology (MIT), earning both a bachelor's (1962) and a master's degree (1963) in chemical engineering.

Jim Walton-Walton received a bachelor's degree from the University of Arkansas

Micheal Bloonberg-he received his Master of Business Administration from Harvard Business School.

Those are some of the richest people in the US all worth over 25 BILLION dollars. So you show us all how "most" rich people are school drop outs"
Deal Addict
Nov 13, 2012
1464 posts
67 upvotes
Edmonton
Toolatecrew wrote: I call BS

Show us some proof or be gone please.

Warren Buffet-Master of Science in economics

Charles Koch- Master of Science in mechanical engineering in 1958, and a second Master of Science in chemical engineering in 1960

David Koch-He went on to the Massachusetts Institute of Technology (MIT), earning both a bachelor's (1962) and a master's degree (1963) in chemical engineering.

Jim Walton-Walton received a bachelor's degree from the University of Arkansas

Micheal Bloonberg-he received his Master of Business Administration from Harvard Business School.

Those are some of the richest people in the US all worth over 25 BILLION dollars. So you show us all how "most" rich people are school drop outs"
Richard Branson
Lord Sugar
Mark Zuckerberg
Robert De Niro

Yes some rich people have education. But a lot don't either. You can BS yourself. Another jealous person.
Deal Addict
Oct 5, 2009
1096 posts
371 upvotes
Dartmouth
NOPE not getting away with that.

You said MOST rich people are school dropouts.

You are simply wrong. A few examples of people who dropped out does not constitute MOST.

You do not understand the concept of MOST or "a lot". How many is "a lot" 4 , 10 20 1,000,0000?

Take one minute and click this link.http://www.infoplease.com/ipa/A0883617.html

Its statistically proven that people with advanced degrees make more than DOUBLE what "school (college) drop outs make.

You are WRONG. Please don't try to change your argument and move the goal posts either.

Class dismissed.
Deal Fanatic
User avatar
Jan 6, 2011
5743 posts
1334 upvotes
GTA
These success school dropouts excel at what they do, Steve Job was good at what he does, Richard Branson risks serial bankruptcies. Mark Zuckerberg was a coding wiz kid.

The reason I went to Manufacturer dealer because they had high quality auction pool. The indies get's what that pool didn't want (out of warranty, accident, water damaged...etc etc). Got a good price on a good car, but failed to see how the salesmen were adding value, to customer as well as dealer. Give me direct access to the pool, I will hire some car expert guy to go bid a car I want, and bring to my house.

I continued to follow this thread because Mofesto mentioned there a business model that can take out the salespeople, or make them work for customer. The use car sales are enjoying abnormal profits, prices last year actually rose a few %. I noticed while shopping in 2011, there were fewer dealers around, and according to OP, deals take long to close. People preferred used car thinking about saving money, but the result is likely to end up spending more.
Deal Expert
User avatar
Jan 7, 2007
20557 posts
4606 upvotes
Poormond Hill
Toolatecrew wrote: I call BS

Show us some proof or be gone please.

Warren Buffet-Master of Science in economics

Charles Koch- Master of Science in mechanical engineering in 1958, and a second Master of Science in chemical engineering in 1960

David Koch-He went on to the Massachusetts Institute of Technology (MIT), earning both a bachelor's (1962) and a master's degree (1963) in chemical engineering.

Jim Walton-Walton received a bachelor's degree from the University of Arkansas

Micheal Bloonberg-he received his Master of Business Administration from Harvard Business School.

Those are some of the richest people in the US all worth over 25 BILLION dollars. So you show us all how "most" rich people are school drop outs"
The Koch brothers and Walton all inherited from their father's death. Whether they would have become self made billionaires like Buffet and Bloomberg, is unknown.
A life spent making mistakes is not only more memorable, but more useful than a life spent doing nothing.
Deal Addict
Oct 5, 2009
1096 posts
371 upvotes
Dartmouth
sandikosh wrote: The Koch brothers and Walton all inherited from their father's death. Whether they would have become self made billionaires like Buffet and Bloomberg, is unknown.
That is irrelevant to refuting the statement that "most rich people are school dropouts"

Its pretty straight forward. Get a list of all the rich people. Add up thi ones that dropped out of school add up the ones that got an education. If the ones that dropped out of school add up to fewer than the educated ones the statement MOST rich people are school drop outs is false.

It was a statement made as one of FACT. If Walton would be rich without an education is a theoretical argument.

Yes what would have happened without education is unknown. What is KNOWN is that people with education on average make vastly more money than those that don't. Exactly why this is true is uncertain but its true nonetheless.
Deal Addict
Oct 5, 2009
1096 posts
371 upvotes
Dartmouth
As to the original post there are all kinds of reasons to not sell the car for 1000 off:

1.While the car may have been there for 5 months maybe history shows that tht type of car take 8 months to move and that they will only start to worry after 8 months.
2.Maybe they simply overplayed their hand. I've worked in car sales in the past. I've seen managers lose me deals becuase they tried to send me back one last time to "bump" the customer an extra $100. Maybe they were already maing $800 but wnated to take one last shot before saying yes. It was one time too many and the customer walks. But they are playing what they feel are the odds that 9 out of 10 will either bump up or buy. Its all about averages.

3. Maybe they had a legit offer at 17,000 that simply fell through due to financing or something so they have a legit belief they can sell for that.

4. Maybe the buyer was very in stent they would not pay admin fees extended warranty buy in cash etc. The TOTAL profit of the deal was not very good so they would rather sit on it for more time maybe sell it for that same 16 900 the OP offered but slam on 2000 worth of extras to someone who was willing to buy them.

No point it getting all emotional about it. If you want take personal satisfaction when you see it still there in a month.
[OP]
Banned
User avatar
Nov 10, 2012
777 posts
81 upvotes
Hamilton
Toolatecrew wrote: As to the original post there are all kinds of reasons to not sell the car for 1000 off:

1.While the car may have been there for 5 months maybe history shows that tht type of car take 8 months to move and that they will only start to worry after 8 months.
2.Maybe they simply overplayed their hand. I've worked in car sales in the past. I've seen managers lose me deals becuase they tried to send me back one last time to "bump" the customer an extra $100. Maybe they were already maing $800 but wnated to take one last shot before saying yes. It was one time too many and the customer walks. But they are playing what they feel are the odds that 9 out of 10 will either bump up or buy. Its all about averages.

3. Maybe they had a legit offer at 17,000 that simply fell through due to financing or something so they have a legit belief they can sell for that.

4. Maybe the buyer was very in stent they would not pay admin fees extended warranty buy in cash etc. The TOTAL profit of the deal was not very good so they would rather sit on it for more time maybe sell it for that same 16 900 the OP offered but slam on 2000 worth of extras to someone who was willing to buy them.

No point it getting all emotional about it. If you want take personal satisfaction when you see it still there in a month.
1 - Honda Accords do not sit on lots for longer than 4 months, at the very very most. Happens all the time at the local Honda dealers.
2 - The car is still sitting there. Quite pathetic imo that they wouldn't sell for 350, and rather it sit there and rot, because the battery as I said was dead when he went to turn it on
3 - That's too bad then, could've offered 17,000 right on and sold it instead of pissing around and being firm at 17,250
4 - Extras? No extras were even discussed - the morons wouldn't sell it for 16,9 or even 17,0 so let it sit there. Maybe he would've bought the extended warranty/rustproof whatever, there was no mention of it during the sale, which is pretty bad on their part too.

Top

Thread Information

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