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The Five Most Important Things I Learned in 40+ Years in the Car Business
The car business has taught me a lot over the 40+ years that I’ve been a part of it. Today I wanted to share with you the five most important things I learned during that time:
1. Be you.
Be who you are — warts and all. It took me a while, but over the years, I figured out that it was important for me to be a little silly, a little off kilter, and a little different at the dealerships I worked at. Why? Because that’s who I am.
I remember many, many years ago, watching a guest on an afternoon talk show say that you should “dare to be different.” I hate to say it, but it’s easy to be pretty much the same, but if you dare to be different, you’ll inevitably stand out from the crowd.
For me, that meant having fun with customers, being both informative, and entertaining at the same time. When I was selling, I was giving the customer a show. Fortunately for them, there was no cover and no two drink minimum, but damnit, they were entitled to a good time.
My motto was simple, “if you give them a good show, they will part with their dough!” (As you can see, I stuck with car sales instead of poetry for good reason). Don’t feel pressured to act a certain way in the dealership, whether you work there, or you’re coming in to buy a car. Not only is it perfectly fine to be you, it’s encouraged. Be the best you, you can be.
2. Tell the truth, the whole truth, and nothing but the truth.
If you find yourself having to tell something other than the truth, you are not only letting your customer down, but more importantly you are letting yourself down! As I have been known to share with a customer, “if the truth is going to preclude us from making a deal, then so be it, I’m not going to lie to you in order to make it happen.”
Jack Nicholson famously shouted from the witness stand in the movie, A Few Good Men, “You want the truth? You can’t handle the truth!” Maybe in the military he was right, but when it comes to sales, he was dead wrong.
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In sales the truth shall set you free. Rather than wondering down a twisting road of lies, each requiring you to remember what the last lie was, you can instead simply tell the truth. As I like to say, “if it is right, do it or say it, if it is wrong, don’t do it or say it, and if you are not sure if it is right or wrong, do both you and your customer a favor, and don’t say it.”
Tell the truth, you’ll both be better off for it.
3. Never tell the customer what you can’t do, always tell them what you can do.
In my 40+ year career in the car business, this one took the longest time for me to understand. You never want to say “no” to a customer, instead, you are always searching for a way to say “yes” to them. One way to do this? Always focus your conversation around what you can do. This puts both you and the customer on the path towards “yes.”
For example, let’s say you’ve quoted a customer a payment of $498 a month for a 60 month loan. Like most customers do, they say, “make it $450 for 48 months and we’ve got a deal.”
For the longest time my response was almost instant and almost always the same, “What are you crazy, I can’t do that,” and the ultimate result was almost always the same: we didn’t make a deal because it was too confrontational.
Later in my career, I handled the same situation very differently. I would tell the customer a story (selling is storytelling), about when I attended company-wide sales training, and they taught us to never tell a customer what we can’t do. “I should only tell you what I can do, and folks if you pay close attention to what I can do, you’ll probably notice that I am really telling you in a nice way, what I can’t do.” This was my go to script.
“So what I can do is $498 a month for 60 months. Can we make this work for both of us?” I’d finally ask.
This wouldn’t always work, but the results were an awful lot better than simply telling the customer, “nope, we can’t do that.”
Always speak to your customer in terms of what can be done. For both of you, it’s a much more fun and positive path to travel.
4. Under promise and over deliver.
This one is as old as the hills but incredibly important, under promise and over deliver. If you tell a customer that you are going to do something, whether it be big or small, do it. I don’t care how small or trivial it is, if you say you’re going to do it, do it. Did you tell a customer that you’d follow up later on today with more information? Call them later that day, even if you haven’t gotten the information yet. If you don’t keep your promise you’ll erode valuable trust with your customer.
I cannot tell you how much that means to a customer, seemingly small things like picking up the phone and giving them a call when you said you would, is truly a difference maker. Trust me, the salesperson down the street probably won’t keep that promise. All you need to do is under promise and over deliver to take the first step towards being their go to “car guy.”
Remember, never promise more than you can deliver. If you do, you’ll instantly become a “typical car guy” in the customer’s eyes. Remember, dare to be different. Part of that difference is always doing more than you said you would. No ifs, ands or buts. If you promise it, do it!
5. When it comes to customers, it is cheaper to keep them than to replace them.
It costs a ton of money to acquire a new customer. Whether your marketing includes digital, TV, radio, direct mail, etc, it’s incredibly expensive to acquire new customers at your dealership.
Dealerships invest in all this marketing to attract customers to their showroom, with the hope that their sales staff can sell them when they come in. If your store is really good, you’ll close 20 to 25% of the people that walk in for the first time. That means 75 to 80% of people aren’t buying on their initial visit.
Would you like to improve your odds of closing a deal? Of course you would. How can you? By concentrating your efforts on your existing customers.
Existing customers will close at a higher rate because they have already done business with you (if you treated them right the first time around). One of the best things your dealership can do is to configure a rewards program that is designed to encourage your customers, both sales and service, to remain your customer.
Perhaps you can guarantee an extra $500 trade value if they have always serviced and maintained their current vehicle at your dealership, whether they purchased it from you or not. Take a cue from your local supermarket or grocery store, they all have rewards programs for shopping with them. Come up with something similar for your dealership.
Research shows that existing customers will pay a higher average gross profit than a fresh customer. Do the math and you’ll realize that it costs a whole lot less to keep your existing customers than it does to go find new ones.
Those are the five most important things that I have learned in my 40+ years in the car business.
The Ultimate Guide to Dealer Invoice Price Lookup: Your Key to Negotiation Leverage!
A car’s invoice price is the amount that a car dealership pays the manufacturer for a vehicle. By understanding how this price determines the overall sticker price of a vehicle, you can shop smart when hunting for deals. In this guide we’ll show you how to look up the dealer invoice price, no matter the car you’re interested in.
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What’s the Dealer Invoice Price? It’s Your Ticket to a Deal.
Did you know that car dealerships don’t own their inventory outright? Floorplanning costs are a little-known facet of the auto industry. At the center of the costs of being in the car business are invoice prices. The dealer invoice price refers to the amount a car dealership pays to the manufacturer for a vehicle. It’s important to know this price because it can serve as a valuable tool in negotiating the final cost of a car. By understanding the dealer invoice price, you can have a better idea of a fair price for the vehicle you’re thinking of buying.
Franchised car dealerships buy their inventory directly from their manufacturers. Similarly to you and I, dealers “floor plan” their purchases. Floor plan is industry jargon for “finance,” and it means that dealerships take out loans to pay for all of the vehicles you see on their lot, just like most consumers do when they finance the purchase of a new vehicle.
Dealerships receive an invoice directly from the factory telling them the price of the car (including the destination fee) that they owe. The dealer invoice is something you’ll want access to when negotiating the price of a new car.
When it comes to used cars, they are primarily bought and sold from the auctions or customer trade-ins, and in these cases looking at a dealer invoice price won’t be an option. You can always ask a dealer what they paid for a used car, but there typically won’t be a willingness to share that information.
On the new car side of things, dealers are much more likely to be open and transparent about the invoice cost they paid to purchase a vehicle. This has become a sales tactic that nearly all car dealerships use to convince customers that they are getting a fair deal.
How to Find the Dealer Invoice Price
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Looking for something else? Here’s how you can go about finding the dealer invoice price when buying a car…
Ask the Sales Manager for the dealer invoice
At the end of the day, there is only one foolproof way to get the invoice price of any new car — ask the salesperson or sales manager at the dealership. This doesn’t have to be overly complicated. A quick email that says, “Hi, I am interested in this Ram 1500 pickup truck, and I want a fair deal. Can you please send me out-the-door pricing, a copy of the Monroney label, and the invoice you paid from the factory?” Will go a long way.
Referencing the out-the-door price is a great way to show a salesperson or sales manager that you know what you’re talking about, and you don’t want to spend hours discussing monthly payment goals. Asking for the Monroney label, or window sticker is also a great way to show you’re on top of your game. You want to know what options and features the vehicle has, and what better way than to look at the Monroney label? And finally, asking for the factory invoice makes it clear to the dealer that you want to make a fair deal.
The same thing applies to money factors when leasing a car. Do not be afraid to ask a dealer what the money factor is on a lease, and to follow that question up with, “Is this the buy rate, or are you marking it up?” If the dealer can’t give you a straight answer, that’s another sign it’s time to find someone new to work with.
Tips for Negotiating Based on Dealer Invoice Price
Set a target price: Determine a target price based on the dealer invoice price and any applicable incentives or rebates. This will give you a starting point for negotiations.
Preparation is key: Bring printouts of your research, including the dealer invoice price and any incentives or rebates, to the dealership as evidence to support your negotiation. Don’t forget this negotiation cheat sheet!
Stay calm and confident: Negotiating can be stressful, but staying calm and confident during the process can help you secure the best deal possible.
Free Car Buying Help Is Here!
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What Hertz’ Bankruptcy Means for Used Car Prices
As billions of people shelter in place, many household brand names are struggling to find their footing. Hertz Rental Car is one of them. With the drastic decline in travel (both business and personal), Hertz is faced with more uncertainty than ever before. As Hertz contemplates filing for bankruptcy, our team at CarEdge is considering what impact that would have on the used car market, and specifically used car prices and deals for consumer.
Should you buy a used car today, or wait a few weeks or months to get a better deal? That’s the money-saving question, and Hertz’ bankruptcy decision will certainly implicate what makes the most sense.
With a total fleet of over 856,800 vehicles globally (as of 2018), it’s safe to say that Hertz has a lot of vehicles under their ownership. What would happen if Hertz has to liquidate those assets to pay back their creditors? In the United States alone, the company has more than 500,000 vehicles under their ownership. If Hertz files for bankruptcy and has to sell all of these used cars, what would happen to used car prices?
Let’s explore.
Used car pricing is demand driven
It’s important to understand that car dealerships base their used car prices off of “market value.” Like I’ve written about in the past when discussing how much dealers mark up their used car inventory, dealerships use software like vAuto to constantly adjust their used car prices to reflect what people are paying for similar cars in their region.
That being said, if there was an influx of used cars that flood the wholesale market, we would anticipate that demand to purchase those cars would not keep up, ultimately lowering the price per vehicle. We’ve already seen a decrease in wholesale prices for used vehicles, with a historic 9.2% drop in whole prices recorded in April, according to data reported by Manheim Auto Auctions, the largest purveyor of used car auctions in the United States.
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Hertz, and their creditors desperately want to avoid having to liquidate their inventory of vehicles, because they know prices are already suppressed. According to Bloomberg, they’re looking for any option other than a “fire sale.”
But what would happen if hundreds of thousands of used cars immediately flooded the market? Because of the sheer scale of their liquidation, it’s not likely that Hertz will be able to liquidate many vehicles directly to consumers. That means car dealers will buy up their inventory at suppressed prices, and in return sell them at lower prices (of course with a margin still built in).
If the supply side of our equation increases by 500,000+ units, and the demand side stays the same, you ultimately have a decrease not only in wholesale prices, but also retail prices. Car dealers will need to sell their inventory to sustain their cash flow, and in theory, good deals should be for the taking. Ultimately a large increase in used car supply will trigger car dealership’s “dynamic pricing” tools to rapidly lower their selling price, while still maintaining some profit margin, at least that’s our supposition.
Is buying a used rental car a good value?
One of the questions I get asked frequently is if buying a rental car is a good value. The answer is, it depends.
With Hertz potentially liquidating hundreds of thousands of cars, I can assure you there are some vehicles they’ll be selling that you’ll want to avoid, and some you’ll certainly want to take a closer look at. How can you tell which rental cars make good used cars? Here’s my advice.
Take into consideration where the car was driven. To find this out you can look at the vehicles CarFax report. Although it won’t tell the full story of what a vehicle has been through, knowing where it spent most of its time is helpful.
For example, very recently we helped a client purchase a used car in Anchorage, Alaska. The vehicle was previously a rental car, and it only had 14,000 miles on it. Why? Because in Alaska they have an incredibly short summer rental season, and this car had been driven hard for three months, and then was ready for sale to a local resident. What did that mean for our client? They got a great car, at a great price, with relatively few miles, in driving conditions that focused entirely on highway roads, not city streets. In this example, buying a rental car is a great used car value.
On the other hand, if you’re looking to buy a rental car and it spent most of its days in a major city center, you may want to think twice. Scratches and dings are almost certainly going to be present. How many potholes can one car drive over before the tires need to be realigned? The brake pads may be worn, etc, etc.
If you do want to buy a rental car as a good used car value, you’ll want to get a pre-purchase inspection completed in advance, to confirm everything is in good working order.
How to buy a used car directly from Hertz
Whether Hertz goes bankrupt or not, you can buy vehicles from them. Hertz Car Sales is a business unit within Hertz that comprises 75 retail store fronts nationwide. Hertz Car Sales would not be able to support the liquidation of all Hertz inventory in the event of bankruptcy, however it is likely they would see an increase in used car sales.
That being said, Hertz Car Sales takes a “one price” approach, which means you will not be able to negotiate the selling price of a vehicle. Time will tell, but you may end up getting a better deal if you buy a car through a dealer instead.
Keep in mind other car rental companies, like Avis, Budget, and Enterprise also offer similar programs which may be worth investigating at this time too.
Honda Certified Pre-Owned Review
Used car buying can be stressful. Our Honda Certified Pre-Owned review is meant to help.
One of the perks of buying a certified pre-owned vehicle is knowing that it meets the manufacturer’s standards for quality and worthiness. That being said, every manufacturer has a slightly different certified pre-owned program, and Honda actually offers two variants.
HondaTrue Certified, and HondaTrue Certified+ are two levels of certified pre-owned offered by Honda on their vehicles. Below we’ll tell you what you need to know about both before you buy your next Accord, Civic, Odyssey, or CRV.
Is Honda Certified Pre-owned Worth It?
HondaTrue Certified+
CarEdge score: 7/10
HondaTrue Certified+ is Honda’s premier CPO program. Vehicles that are less than one year old qualify for Certified+ distinction.
HondaTrue Certified
CarEdge score: 6/10
Honda’s “non-plus” variant of certified pre-owned is valuable for customers. Below we breakdown what we like and dislike about both CPO programs.
Highlights
What’s to love about Honda’s CPO program?
- Two tiers provides better perks for newer vehicles.
- Trip-Interruption Expense Reimbursement is a nice perk.
- 7 years/100,000 mile powertrain warranty is comprehensive.
Lowlights
What’s missing or lacking about the program?
- If you drive a certified pre-owned Honda for Uber, Lyft, or any other rideshare company, your future repairs will not be covered by the warranty.
- Warranty excludes coverage for A LOT of items.
Full Honda Certified Pre-Owned Review
If you’re interested in reading all the fine print, you can click here to access the entire CPO warranty booklet. Below we’ll go in depth into key aspects of the certified pre-owned program.
Honda Certified Pre-Owned Warranty Information
What is not covered by Honda’s CPO warranty
Expendable Parts
- Distributor cap
- Rotor;
- spark plug wires;
- spark plugs;
- PCV valves;
- Filters;
- Fluids;
- Lubricants;
- refrigerants (unless required as part of a covered repair);
- belts with the exception of the timing belt (for failure only);
- wiper blades;
- clamps and fasteners.
Maintenance procedures
- Tune-ups;
- Adjustments;
- Reprogramming;
- Updates;
- Calibrations;
- Tightening;
- tire rotation;
- wheel balancing and wheel alignment (unless required as part of a covered repair).
Clutch, Brakes & Tires
- Clutch disc; pressure plate;
- throwout bearing;
- pilot bearing/bushing;
- disc brake pads;
- disc brake rotors;
- brake drums;
- brake shoes;
- parking brake shoes;
- brake hardware and tire valve stems, except for failed TPMS sensors.
Batteries & Bulbs
- Batteries (except for nickel-metal hydride, lithium-ion and polymer lithium-ion batteries used in hybrid vehicles);
- battery cables;
- high-intensity discharge (HID) headlight assembly;
- sealed beams;
- bulbs (with the exception of the instrument cluster bulbs)
- LEDs (light-emitting diodes) equipped lighting assemblies and fuses.
This limited warranty does not cover any emission-related repairs, including but not limited to the following:
- Head pipes;
- catalytic converters;
- Mufflers;
- Resonators;
- Tailpipes;
- Hangers;
- heat shields;
- gaskets and related fastening hardware.
This limited warranty does not cover any item concerning the vehicle’s general appearance including cleaning, polishing, normal wear and deterioration of any part.
Body Parts & Trim
- Frame;
- body mount bushings;
- subframe(s);
- subframe mounting bushings;
- primary body structure/welded assemblies;
- core support;
- header panel;
- Grille;
- Hood;
- Fenders;
- inner fenders;
- Doors;
- rear hatch;
- trunk lid;
- Tailgate;
- Spoilers;
- Fascia;
- air dams;
- composite panels;
- Bumpers;
- bumper covers;
- outside ornamentation;
- Emblems;
- Garnish;
- Moldings;
- roof ditch moldings;
- bright metal;
- chrome trim;
- stainless trim;
- paint; headlight housings;
- taillight housings;
- side marker lamp housings;
- lenses and bezels.
Interior Parts, Upholstery & Trim
- Steering wheel;
- dash panel;
- dash pad;
- glove compartment door;
- floor or overhead consoles;
- door and other interior panels;
- armrests; seat upholstery;
- seat padding;
- headliner; cargo covers/sunshades (except for failure of the retractor mechanism);
- sun visors (except for the sun visor support);
- Carpet;
- floor mats;
- door handles;
- window handles;
- Buttons;
- Knobs;
- Boots;
- beverage holders and gas-, brake- and clutch-pedal pads.
Glass & Mirrors
- All window glass, sun-/moonroof glass, all mirror glass (except for electronic failure of the auto-dimming mirror), all rear or sideview mirror housings/frames and brackets.
Wheels
- Wheels;
- wheel covers;
- trim rings;
- center caps;
- wheel studs;
- lug nuts and wheel locks.
As you can see, a lot of items are not covered by the CPO warranty. This is one of our biggest frustrations with Honda’s certified pre-owned program. Unfortunately for the customer, they will likely end up having to pay out of pocket for something on their CPO vehicle, even though they are paying for the privilege of it coming with this extra warranty.
Honda Certified Pre-Owned Roadside Assistance
Similar to Toyota’s certified pre-owned program, Honda also offers a 12 month roadside assistance program for CPO vehicles. This is a nice perk, and one that more and more manufacturers are offering.
The specific benefits that come from Roadside Assistance are:
- Emergency towing to the nearest authorized Honda dealership or repair facility required as a result of a mechanical breakdown† or vehicle accident/collision
- Flat-tire change (with spare)
- Battery boost (jump-start)
- Emergency fuel delivery (up to 3 gallons)
- Lockout assistance
- Winch service (within 10 feet of paved road)
Honda Certified Pre-Owned Inspection
For a vehicle to qualify for CPO status, it must pass a rigorous 182-point inspection by a Honda certified technician. The inspection includes confirming that no aftermarket parts have been added to the vehicle, that the entire interior, exterior, and underside of the vehicle are of high quality, and that the tires, brakes, and engine are in good working condition.
For a complete list of what is included in the inspection, you can click here.
We hope you found this Honda Certified Pre-Owned review helpful. Navigating the car buying journey can be challenging, and we’re here to help!
How to End Your Car Lease Early (Explained by a Car Dealer)
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One thing you learn as you get older is that there’s no such things as an “easy way out.” Although, when it comes to ending your car lease early you may have a few options. Depending on your circumstances, there are a few creative ways you can end your car lease early without hurting your bank account.
Car dealers, and their manufacturers are always looking for two things;
- Ways to make more money; and
- Ways to sell more cars.
If your lease isn’t due for another few months, but you really want to get into a new car, the odds are that a dealer is going to put their best foot forward to help you make that a reality. Why? Because they’ll make money selling the new lease, and they’ll sell another car. Both of those things benefit the dealer.
Although, this positive attitude needs to be taken with a grain of salt. Your current lease agreement is a legally binding document. It says you will make a certain amount of payments over a certain term, and that if you don’t, there will be specific consequences.
Buying a car (and getting a good deal) is all about leverage. If your lease isn’t due for 3 months, and you have a legally binding contract that says you’ll make the remaining payments, you don’t have too much leverage. Don’t fret though, because remember, the dealer and the manufacturer do want to help you get into a new car, but they also don’t want to give up the money they could be making if you completed the full term of your lease.
With all this being said, there are some creative ways you can approach this situation. Let’s get into the weeds of how you can end your car lease early.
Will they “forgive” my payments?
The short answer is “no.” The long answer is “probably.” Why do I say that? Because a lot of factors are in play.
First, how many monthly payments do you have left on your current lease? One, two, twelve? If you have less than three, the odds are high that the dealer and the leasing company will work with you to forgive your remaining lease obligations in exchange for getting into a new car (although there are caveats to this that we’ll cover below). On the other end of the spectrum, if you have six, eight, or twelve payments left on your lease, there is less likelihood that the dealer or the leasing company will have any interest in helping you out. Why would they? You’ve got a whole year’s worth of payments to continue making, and with each check you write, they make money.
Take a look at your original lease agreement and locate the termination date of the lease (the date you would return the car if you completed the lease). You can typically also find this information in your online payment portal, if you have access to that. This date is the most important thing for you to keep in mind, and it’s the date that the dealership and the leasing company will be referring to when they consider how “friendly” they’ll be in forgiving your remaining lease payments.
When will they “forgive” payments? (Lease pull ahead programs)
To end your car lease early without penalty, you’ll want to research lease pull ahead programs. Car lease pull ahead programs are specific incentive programs that leasing companies create to entice prospective customers to lease a new vehicle.
Leasing companies generally do not provide this information in a publicly available way. Instead, each month the captive finance company (BMW Financial Services, for example) will send it’s dealerships (BMW dealerships) a list of new and ongoing incentive programs for customers.
These lists are humongous, complex, and not particularly easy to understand. Within these monthly guidelines dealers may find pull ahead programs (among other things) that are intended to incentivize customers to buy new cars. Keep in mind that incentive programs are different for each region within the United States. Two dealerships may have two very different incentive programs in any given month. This is partly why you don’t see lease pull ahead programs advertised nationwide.
You can try and find this information online, although your best bet is to call your local dealership, or the leasing company itself.
If you want to research online for lease offers, my recommendation would be to search for a specific manufacturer, for example “Chrysler lease offers” and go directly to the manufacturer website (like the example above).
Or, another option that is worth your time is a website called LeaseHackr, where individuals share lease deals they are aware of. Be warned that the offers you see on this website may not be available in your specific area.
It’s important to understand that dealers and leasing companies typically have more incentives in place if you lease the same vehicle, or with the same manufacturer again. Generally speaking, there are fewer programs if you end your lease early with Audi and then get a BMW, other than a conquest program to encourage a current Audi owner to move to a BMW, for example. That isn’t to say that programs don’t exist (they do), it simply means that incentives and offers are greater when you stay with the same brand from one lease to the next, especially when you want to end your current car lease early.
When does it make sense to end your car lease early?
To this point we’ve talked about how you can end your lease early, but we haven’t spent any time discussing when it makes sense to actually do so. If you’re reading this near the time of its publication (April of 2020), then you know we are in the midst of the global coronavirus pandemic. It may be surprising to read this, but now (this month) is a good time to end your car lease early and get into a new car.
There are two reasons why.
- First and foremost is that leasing companies are offering very aggressive incentives to sell new cars right now. With that in mind, you should be able to negotiate a good deal.
- Residual values are most likely going to decrease starting next month (May). The residual value of all cars is most likely going to decline as there is an economic downturn and less demand for vehicles. With that in mind, if you leased a car this month (April) your lease payment will most likely be substantially less than if you lease the same car next month. (May).
At the end of the day, if you’re looking to end your car lease early you need to recognize that you have a legal obligation to fulfill the contract you signed. With that being said, you know that dealers and leasing companies want to lease you a new car, and you can use that to your advantage to ask for incentives and programs to help offset the remaining payments you have on your current lease.
