Dont Get Ripped

[Typhoon]

The info I have posted here is out of my personal workbook it was not intended to be shown to anyone. So at time it might not make sense and I have had to delete words for privacy reasons. I’m happy to answer any questions.

Background

I was employed by a large and successful dealership , classed as one of the market leaders in training and service. After two years of working as a sales person selling used/new cars, I wanted to protect people from some unsettling and deceiving elements in the industry. I felt that people were not completely aware of just how much of a controlled industry it is and as a result many clients were being taken advantage of.

My personal goal for is to use my experience and knowledge of the industry to make the task of buying a new or used motor vehicle a comfortable and positive experience for my clients. offers a service to the public that is fair and honest.

I look forward to discussing your needs.

Sincerely,

Simple fact:

Car yards are out to make as much money as they possibly can out of every sale, with total disregard for the customer.

Eg:  18.95% finance

 $3800 wheel and tyre packages worth $1500

 Rd Bike traded for $4500 and wholesaled for $9500, less than 10 minutes after traded.

However: MTA Quality Endorse Industry Standards do apply

Sales Staff

You can not intimidate sales people and sales managers, and you can not insult them. They are professional people who do this for a living and are always in control of what is happening. You must be assertive and take charge in any sales or negotiating environment. Be confident with what you know and what you want. This may be hard, for you could only buy, sell or negotiate on a car 3 to 4 times in your life whereas a sales person or manager will do it up to 100 times a month.

Approaching Dealerships and Sales People

 If you have arranged to be represented by a negotiator, it is vital that whilst looking for cars, you do not mention to dealerships that you have a negotiator. If a dealership knows you have a representative, the company will pressure you and attempt to sell you a car there and then.

 When shopping for cars be polite and assertive to sales staff. Do not do anything you do not feel or want to do. They are trying to put you through a sales system.

 Take your time looking at your desired vehicle, politely telling sales people to stand aside and away.

 If you want to test drive a vehicle do so at your own leisure, without sales staff. Do not let the sales staff come with you, regardless of what they say.

 After test driving a vehicle, if you like the car enough to consider buying, take the sales person’s card and tell them you will be in touch. Do not give sales people your telephone number, they will only harass you.

 If the vehicle is not what you are looking for, simply thank sales staff and tell them immediately that you are not interested. Do not feel bad about walking away. Dealerships want you to feel guilty.

Best Times to Buy

There are times throughout the year which would give the consumer a slight advantage when it comes to buying. The most frequent, or “best time”, falls at the end of each month when dealerships are needing to meet sales targets. If dealerships are behind on sales targets they will simply write off a deal in order to get a sale and meet targets.

The months of May, June, July and August prove to be tough times for dealerships. During these four months dealerships can be desperate to sell cars and again can be willing to write off deals in order to make sales targets.

Christmas time is a great time to buy a new car. This is due to the fact that dealerships are signing off so many deals during the Christmas period that they can concentrate solely on turnover – more so than profit margins.

Trade In Vehicles

Sales staff and management generally know what your trade in vehicle is worth immediately. They will say they need to drive the car in order to get a better indication of what it is worth. However, they do this in order to keep you in your comfort zone while attempting to extract personal information from you.

Dealerships generally do not want your trade in vehicle, especially if it is a car that they can not make money on. The less your car is worth, the more accurate price the dealership will give you. The more valuable the trade in vehicle is to the dealership, the more they will try to devalue it in order to make a profit.

Note: Use loads, reco and margin to inform customers about how dealerships come to the trade in prices.

Dealing With Contracts

Word all conditions on your contract exactly how you would like it set out. Have what you want, your conditions and requests written clearly on the contract.

Things which you can write on a contract:

 Purchase subject to satisfactory finance approval

 Purchase subject to satisfactory RAA inspection

 Purchase subject to all requested repairs and work to meet my satisfaction

Only sign contracts when you are completely satisfied with what is written and all the figures add accordingly.

After Market Products

Never buy after market products from dealerships under any circumstances.

After market product include:

 Window tinting

 CD players and stackers

 Car alarms

 Tow bars

 Paint protection

 Wheels

 Protective coverings

All after market products are heavily marked up. For example 100% to 200% mark up on wheels and tyres is common, and paint protection may be marked up to 1000%. Paint and fabric protection is an absolute waste of money. It simply does not do what it is advertised to do.

Finance

Finance representatives (business managers) that typically work for dealerships receive enormous financial kick backs for signing up business on new or used vehicles. It is not uncommon for the man or woman sitting in the financial department to be on an annual salary between $50,000 to $150,000. These people are out to make as much money out of any one person at a time, with no regard for your financial well being.

Never ever take yard finance. Try to arrange finance before you sign for a vehicle. Shop around at the major banks. A good rate is between 8.95% to 10.95%.

In House Warranty

Free in house warranty and roadside assistance can be generally well presented to give a client false security as to just how thorough a vehicle’s warranty is.

All in house warranties and roadside assistance require the buyer to enter into service agreements, which are generally over priced for the amount of servicing undertaken. For example, it may cost $180 for an oil change with an oil filter and a check and inspection report.

In house warranties (2-3 years) will generally only cover components from $800 – $1400. For example, it may cost approximately $2500 to repair an Automatic Transmission. The remaining cost (over $1400) which is not covered by the warranty is therefore paid by you.

Vehicle Servicing Agreements

A service agreement is when the customer needs to have their car serviced by the dealer at an inflated price in order to keep their warranty valid. However the price you pay for accumulated services generally does not justify minor warranty claims your vehicle may have. Remember that major claims that exceed the covered amount will come straight out of your pocket.

Road Side Assistance

Road side assistance can be included in your free extended warranty which you lose if you break your service agreement. The dealership will lead you to believe that the roadside assistance is as good as the RAA roadside assistance program. However it is far from comprehensive and I recommend that the conditions are read and fully understood for both the roadside and free dealer warranties.

Purchase Warranty

A purchase warranty is an insurance policy against your car breaking down. Prices range between $400 – $1500 and all will only cover a certain amount. For example it may cost $750 for the engine, $1500 for the transmission and $500 for differentials.

Purchase warranties require a strict service history of stamped books and receipts before any warrantable work will be carried out. In some cases excess may be required, depending on the policy.

New Car Warranty

Think about this very carefully: If the car you are looking at purchasing has a considerable amount of new car warranty left on it (eg 2 years), and your free extended dealer warranty is 3 years, why enter into a service agreement for 5 years?

You are entitled to the free 2-year factory warranty. However the dealer will want you to service your vehicle with them throughout the factory warranty. The likelihood of a minor, let alone a major problem within the first 5 years of a cars life is fairly remote to warrant an $1800 5-year warranty bill. If you are unlucky to experience a problem with your vehicle out of the new car warranty, the likelihood of it exceeding $1800 to repair is rare.

New car warranty covers everything apart from squeaks and rattles and specific oil leaks. However, most dealerships will fix these problems in order to keep you happy if the car is only 3-8 months old.

Methods of Negotiations

I understand how dealerships set up margins on their vehicles, what their expense costs are, and what their pure profit margins are.

Money can be saved in the following areas:

 Trading (Value of your trade vehicle)

 Loads (Minimum profit the car for sale must return)

 Reco, money spent on vehicle (Write off money )

 Dealer Delivery (New car change for dealer to deliver vehicle)

 LC Tax (Under $57,009)

 Factory write back money

 Money makers (Cash back deals)

 Accessories (Wheels/Tint)

How I determine what a car is really worth:

 New Cars (Motor / Wheels magazine)

 Used Cars (Glasses guide 2003)

 Trade ins (Glasses guide 2003)

Motor and Wheels magazines are updated regularly and are an excellent guide to recommended retail pricing. Glasses guide is an industry standard bible of whole-sale prices and RRP prices for new and used vehicles for up to 10 years.

Methods of Negotiations

Fees, Charges and Government costs

Luxury Car Tax: ($100,000 – $57,009) = $42,991

= ($42,991 x 10) / 11 (to exclude GST)

= $39,082.72 x (25%)

= $9,770.68 payable on $100,000

Not applicable on:

 Motor home

 Disable vehicles

 Commercial vehicles

Registration:

 Current registration pricing print out from Motor Register

Stamp duty:

 MTA Stamp duty fee book

Dealer Delivery:

 New cars only and varies between dealerships

Insurance:

 Insurance costs are involved when buying a new or used vehicle, talk to your preferred insurance agency

Spider webs are designed to capture prey, leaving it in a powerless predicament. A dealership is designed to have the same effect on clients. Sales people and sales managers are like spiders continually weaving this web around vulnerable clients. Therefore, by having sales people come to you, rather than you going to them, you are taking them out of their comfort zone. This makes negotiations a lot easier because sales people are more vulnerable to hasty decisions and pressure from management over the phone.

I`m not sure how much this may help anyone I hope it made some sense it just would have been to much for me to edit and go into I`m happy to answer ?????

[Trough Lolly]

bloody long read..

good info though! thanks typhoon!

[XRBloke]

Good read!

Also one other point for anyone who puts a subject to finance clause on the contract, make sure you state which bank you are getting the finance from, eg. Subject to WESTPAC finance approval.

If you put just subject to finance approval and get knocked back by your own financier, the dealer can arrange finance for you thru their in house financial consultant at anywhere between 10 and 12 % interest! They are buying that money for around 7%, therefore making 3 to 5 % of the purchase price in commission! This isn't going to be the same in all cases however I have seen it before where say Westpac won't approve the deal yet Ford Credit will.... Not all dealerships will do this, but I have seen it done before and if they can get you finance then the contract is still binding.

So don't think that your ass is covered if your prefered Finance providor doesn't approve your application, as the dealer can pretty much force you into finance (providing you meet the criteria which all vary)....

For any private buyers looking for trade in prices check out www.redbook.com.au

Costs nothing and is a good indication of what the car is roughly worth.

[crisso]

Great read indeed.

Typhoon, I don't suppose you are now working for a new dealer? I would love to buya car off you, being a fellow forum member and all

Thanks for the info, it will make my next negotiation a little more in my favour.

Chris

[aaronmihe]

"Subject to finance" Simple expand it so that it covers what you want in a finance deal "Subject to finance below 8%, fortnightly payments, single application fee, but no monthly fee, no early repayment penatly etc etc"

or "Subject to finance arranged by purchaser"

Also if you're trying to offload a car, and ordering a new one (up to say a 1 month wait) simply write the contract as "Trade of XX vehicle at $$ if purchaser is not able to sell privately before delivery"

In short don't get lumped with two cars, make the option to trade your old one of the stipulations in the contract at an agreed price. That way you KNOW you will be able to dump the car... but only tell the dealership this after you get the quote.

Another thing to keep in mind, most of the info above is accurate, but it's not all true in an every changing industry. Dealerships can refuse to let you take a vehicle alone. In fact if it's got "trade" plates then it's normally a condition on the insurance.

Also many dealers have a minimum markup that will always be held above their 'cost' of the vehicle. This isn't "hold back" it's completely not negotiable ...

One delaership I know sets this as $2400 on ANYTHING they sell, and above that price they have "Holdback" (About $1.5K) and then your normal negotiating sphere "gross".

Usually your sales droid doesn't get commission for deals below hold-back UNLESS on average their sales for the month are very good.

Normally sales droids are paid based commsions on the total gross held in a month across all their deals, with manufacturers/importers giving bonuses to them for volume of sales.

A good salesperson or sales manager will always know their personal position against gross, and the 'teams' position against gross. In some cases you'll get hand-balled to a sales droid who can afford to loose gross - or the sales manager will do the deal as a house deal to absorb the loss but increase the volume.

It's a game, but att he end of the day go to a dealership and do the deal with the people you get treated by in the manner you want to be treated, by going to the shonky people for the sake of $50 (yes it happens) all you're doing is rewarding them for being pricks...

A.

[BEN189]

Very good read, im in the market right now for a new car and this will come in very handy.

[F6 UTE]

Typhoon, I don't think I have read such a load of muck in all my life. I won't go into detail as to my history in the motor industry as anyone reading this would already be close to gagging.

It sounds to me like you are a little disgruntled about a previous employer or experience in a dealership I am assuming was in Adelaide.

If anyone follows this guide to buying a car they are doomed from the beginning.

Storys like this do nothing for the reputation of dealers and salespeople in the current climate, if you posted this to vent some build up anger then that's fine.

I would like to send out a warning to all reading this turn the page !!

<{POST_SNAPBACK}>

So.............. what is incorrect, what is correct, and what positive information could you possibly provide to new car buyers??

Thnx..

[Typhoon]

Typhoon, I don't think I have read such a load of muck in all my life. I won't go into detail as to my history in the motor industry as anyone reading this would already be close to gagging.

It sounds to me like you are a little disgruntled about a previous employer or experience in a dealership I am assuming was in Adelaide.

If anyone follows this guide to buying a car they are doomed from the beginning.

Storys like this do nothing for the reputation of dealers and salespeople in the current climate, if you posted this to vent some build up anger then that's fine.

I would like to send out a warning to all reading this turn the page !!

<{POST_SNAPBACK}>

its not a guide its just a SMALL bit of info. I dont care what you have to say

[Typhoon]

Great read indeed.

Typhoon, I don't suppose you are now working for a new dealer? I would love to buya  car off you, being a fellow forum member and all 

Thanks for the info, it will make my next negotiation a little more in my favour.

Chris

<{POST_SNAPBACK}>

sorry mate I am out of the car game iam in IT now

[Typhoon]

This is not a guide its just some info I have taken from a workbook of mine. I have a lot of info on the car game that iam happy to share in more depth if anyone is intrested. Please no wankas I will not answer any posts that are just trying to piss me of,. if you would like some help then ask if your not intrested then dont post bullsh*t I KNOW WHAT I`M TALKING ABOUT!