Selling Cars
Most car dealerships display their inventory in a showroom and on a car lot. Under U.S. federal law, all new cars must carry a sticker showing the offering price and summarizing the vehicle's features. Typically, salespersons, working on commission only, negotiate with buyers to determine a final sales price. In many cases, this includes negotiating the price of a trade-in—the dealer's purchase of the buyer's current automobile. Negotiation from the dealership's perspective is the actual to-and-fro that occurs when a salesman works out a deal to a point where the customer is seriously considering the vehicle and makes an offer on the new vehicle, often including his current vehicle as part of the deal. The salesman then brings the offer, plus a sign of good faith from the customer, whether it's a check with a deposit or a credit card to the sales manager where the monthly payment options and various pricing options that result are returned after the sales manager enters the information received from the salesman into a CRM (customer relations management) computer program. The result is referred to as "desking" the deal. This is the final step of negotiation process. Some refer to this as all part of the negotiation process, but it is not as this is the final or decision part of the process. The information generated during the desking phase includes payment and pricing options and it usually requires the customer and sales manager sign off on the option chosen. The next step is a purchase and sales agreement or a sales agreement and the actual monetary downpayment is generated. The manager and customer sign this paperwork and then the customer is handed off to the "box" or the finance and insurance office where various add-ons are often sold that include special waxing, wheel protection or, often, extended warranty services. The final paperwork is also printed out at this phase. While some may believe that desking is part of the negotiation process, it only occurs once the salesman has a legitimate offer on the vehicle from the customer and is able to hand the sales manage a token of good faith, as noted.
Profit margins on automobile sales are low. A new car dealer may mark up a car by less than two percent over the manufacturer's invoice cost, and typically the car dealer borrows from the manufacturer for inventory and pays interest (called flooring or floorplanning). On the other hand, some manufacturers pay "hold-back" to improve the fiscal stability of dealers. Typically this is around 1% to 2% of the vehicles' wholesale price to the dealer. Hold-back is usually not a negotiable part of the price a consumer would pay for the vehicle. Hold-back is designed to offset the cost the new car dealer has for paying interest on the money being borrowed to keep the car in inventory.
With the advent of the internet, the process of selling cars has undergone a considerable change. More than 70% of car purchases in the United States start with research on the internet. This empowers the buyers with the knowledge of features of comparable cars and the prices and discounts offered by different dealers within the same geographic area. This helps the buyers during price negotiations and puts further pressure on the profit margin of the dealer.
Read more about this topic: Car Dealerships In North America
Famous quotes containing the words selling and/or cars:
“I concluded that I was skilled, however poorly, at only one thing: marriage. And so I set about the business of selling myself and two children to some unsuspecting man who might think me a desirable second-hand mate, a man of good means and disposition willing to support another man’s children in some semblance of the style to which they were accustomed. My heart was not in the chase, but I was tired and there was no alternative. I could not afford freedom.”
—Barbara Howar (b. 1934)
“Cuchulain stirred,
Stared on the horses of the sea, and heard
The cars of battle and his own name cried;
And fought with the invulnerable tide.”
—William Butler Yeats (1865–1939)