Robert,
Thank you for taking the time to speak with me today. Our website www.cashguzzlers.net has been following the story for months and of course we were concerned when our site was referenced along side of a website that looks like a phishing scam. Our website was created to provide information and clarity to consumers and also to help create a greater awareness of the program to sell more cars.
Your suggestions were very helpful because the goal of the website is to provide good information about the CARS program and to allow consumers to have the choice to have a local dealer contact them about buying a new car. We also have been answering hundreds of emails and calls for free to help consumers and also to help our automotive clients have a successful launch of this program. We are taking the following steps to ensure that the public is aware that our site is a consumer website and not a government website:
1. We have added ” This is not a government site” in the header and we have taken our marketing logo out of the header.
2. We have added a tagline in the header that says “Consumers helping consumers with the Car Allowance Rebate System”.
3. We have added clear language that our CFC logo is for marketing purposes only and that we are not an official registrar for CARS.
4. We have added clear language that dealers must register with cars.gov.
5. We have added clear language that consumers do not have to register.
6. We have added clear language that the consumers can go to any local dealer to buy a car.
7. We have modified our CFC marketing logo to remove “Participating Dealer” to “We Can Help”.We hope that be responding to your feedback and your recommendations and those of the DOT that www.cashforguzzlers.net can continue to provide a service to consumers seeking assistance with understanding the bill.
Brian Pasch, CEO, Pasch Consulting Group
www.dealer-seo.com http://twitter.com/automotiveseo http://facebook.com/automotiveseo
The majority of their front page is either advertising or self-promotion. Four banner ads, two invitations to follow on Twitter, the standard buttons for Digg, etc. The rest of the info is just reprinted from other sites. For example, pages of MPG estimates. A FAQ that reprints government info.
In other words, zero original content. This is yet another search-engine-optimized advertising-generating site. Some people google for “cash for clunkers” and maybe end up on this site. A few click around and the owner gets a few bucks. You can put this kind of site together in a couple hours. Go to rentacoder.com and hire someone to write “articles” for a penny a word using a list of keywords you give them. Lather, rinse, repeat, abuse Google’s PageRank algorithm, make some bucks.
Sad thing is, this is not really that profitable. No one gets rich doing this, though you may make enough to eke by. Someone sitting in his bathrobe with a bong in his parent’s basement watching Scooby Doo is trying to avoid getting a real job.
And that is why I love the Volvo S60.
I lump this site into the same category as those that promote “free” credit reports, but “require enrollment in Triple Advantage,” or some similar BS. The fact is that the consumer IS allowed one free credit report per year from the three major credit agencies, without having to go to the place promoted by the singing pirate.
For some reason, anytime the government introduces a “free” program, websites pop up for the sole purpose of prying money from the pockets of unsuspecting consumers. Sad.
“Our website was created to provide information and clarity to consumers and also to help create a greater awareness of the program to sell more cars.”
“… the goal of the website is to provide good information about the CARS program and to allow consumers to have the choice to have a local dealer contact them about buying a new car.”
Wow, these guys are true philanthropists, paying for this fine service out of their own pockets just for the good of the people. Right?
Pasch Consulting Group appears to be one of many companies selling search engine optimization services for websites. In essence, they sell weapons to online business combatants. Not everyone can come up first with google searches, so there is an industry out there to help you be the one. But, like the cold war, it is never really over.
Their c4c website is simply a lead generation machine, presumably for dealers who sign up with them.
Just about every auto site (mine included) “allow[s] consumers to have the choice to have a local dealer contact them about buying a new car.” Sadly, this is the only proven way to pay the bills when providing auto information (or not) on the Internet.
I guess, once again people are too distracted by shiny things to realize their comments are examples of contradiction.
THE PURPOSE OF THE SITE IS TO ADVERTISE. If anyone bothered to read the purpose of the post they would understand that! This site was originally sited along side a site that was created as a phishing scam. The Pasch Consulting site was ALWAYS a legitimate marketing site. They have made ADDITIONAL changes so as not to mislead the consumer into thinking it is any way misrepresenting that it is an official government site.
The purpose of this site is SEO and marketing. If that is it’s criticism than thank you! I’m glad we’ve wisely invested in a site that people who are looking to buy new cars via the CARS program will find!
How is it that people miss this concept? The purpose of the CARS program is to STIMULATE THE ECONOMY! Guess what – SUCCESS! Guy builds website – Dealer pays guy who built website – people contact dealer who advertises on site built by guy – people buy car – dealer sells car – economy moves forward.
So the CARS program wouldn’t work if step 1 – “Guy builds website” somehow didn’t happen? Except the government HAS a website already – these others muddy the search waters, possibly interfering with customer access to the ‘official’ site. People bought things before the internet, hard as that may be to believe. How about “Guy hears about CARS – guy goes to local dealer – dealer sells car – economy moves forward” even faster! I once read that a good definition of ‘entrepreneur’ is someone who can spot bunch of people following a trend, and is able to race to the front of the line and set up a toll booth before they get there. These sites certainly meet that definition!
MidLifeCelica
That is capitalism! How does guy hears about CARS and goes to local dealers speed anything up or lead to an informed purchase?
Guy has clunker, google’s it and finds site and submits quotes to dealers who compete. Then consumer can research competing dealers and make an informed decision where he wants to do business.
I don’t follow the toll booth analogy. No consumer is paying a toll.
Additionally, while most people aren’t privy to the backwards way auto dealers function, they OFTEN do not engage in practices that could lead to more business. So directing the consumer to the dealers who WANT to be at the front of the line is in the consumers best interest. The dealers who sell the most cars do so because they are aggressive and are willing to sacrifice gross profit for a larger customer base. If they are treated well they will likely come back and SERVICE their vehicles leading to long term profit.
If you take nothing away from this think about what you said, “How about “Guy hears about CARS – guy goes to local dealer – dealer sells car – economy moves forward” even faster!” When has the government helped make anything faster?
And why are we splitting hairs? The point is to stimulate the economy. Money was spent in two ways vs one. Wouldn’t the idea of stimulating the economy lend itself to money changing hands 2 times vs one?
BostonNissan:
After more than 30 years of (true) advertising service on behalf of one of the world’s largest automakers, I sympathize with your cause. Driving customers to dealers is hard duty.
However, I advise everybody to distance themselves from fraudulent schemes, or even borderline lead generation activities, using Cash for Clunkers as a theme.
European examples have shown that the scrappage programs are an invitation to fraud. Other governments have stomped down on it. The U.S. government isn’t all that dumb and is able to learn.
It is very interesting to note that the DOT is taking a very proactive posture and is getting the word and warnings out before the cash4clunkers program is even live. Usually, they act after the cow has left the barn, if at all.
Expect this program to be under intense scrutiny. Internet fraud is being investigated by the FBI. It may not be so smart to wake up with a virtual laser dot on ones forehead and turn into a “person of interest.”
As reported elsewhere, “one clue that Web sites aren’t real is if they use the name “Cash for Clunkers.” Says the DOT, not us. These sites are in the crosshairs. Don’t end up as collateral damage.
PS: Brian Pasch is no infallible SEO pope. In his article, he refers to http://www.cashguzzlers.net – that URL doesn’t exist. Freudian slip?
BostonNissan,
The reality is your service is not going to stimulate anything except your pocketbook, and ‘possibly’ the dealership paying you. At least that is what you need to convince the dealer of… AND THAT IS AOK!!! No American should feel offended by this concept. I’m not. If a dealership wants to pay you to inform them of perspective buyers, great. Now I haven’t visited your site, but I hope you’re operating ethically and inform the end-user of this fact. In other words, your website exists to inform certain dealerships (your clients) of there (end-user) interest in purchasing a new car using the CARS program. That’s basically it in a nutshell, right? And then allows those dealers (whom pay you) to receive this information to use in a way they see fit (send email, mailing, calls, price quotes, etc…) Right? Haven’t been to the site, but seems this is the gist from reading your posts.
Now where people do become offended is ‘if’ you’re trying to convince them (not saying you are) you are providing a service to the eventual car buyer. Providing a service to the dealer, yes. The buyer, no. Why? Well, because you don’t have EVERY dealership paying for your service. I suspect a very, very small percentage considering the number of dealers. And unless you can prove those dealerships paying you are ‘somehow’ better than the rest, and we know you can’t, your service is sold on ‘limiting’ the buyers dealership options. In other words, you convince the participating dealers this person will likely buy at their dealership. Reality is, a car is merely a commodity which most people want to get the best price possible. No different than a candy bar or bag of chips. LIMITING the pool of dealers to the end-consumer is a ‘bad thing’ – for them. The more dealerships you have fighting for you business, the better! REGARDLESS if they pay your website or not. Informed buyers know this. Of course dealerships and marketing firms will make you think this is not true, that buying a car at THEIR ‘dealership’ is better. Or somehow ‘special’. We all know that is a lie, as a car can be serviced at any dealership under warranty (same make).
As for informing people about the CARS program, well, I’m sure the government can handle that. By the time this program gets implemented, everyone in America will know the in-and-outs and then some. I expect to be beat over the head with information about this program in the coming months. ENDLESS TV/Cable news/Newspaper programs/articles are forthcoming.
In closing, be a straight shooter. That’s how you’ll gain respect on this site, IMHO. If you try to ‘sell us’, you’ll get eaten alive.
Bertel Shmitt et al:
I am the dealer. I am defending the site provider that I pay to advertise on. What initiated this article was the fact that cashforguzzlers.net (you are correct I told him to edit the article which shows the wrong url) – a legitimate marketing site was being listed as an offender along side cashforclunkersheadquarters.com – a SUSPECTED PHISHING SITE. This second site told the consumer they had to pre register and attempts to collect social security numbers and other info that could potentially lead to identity theft.
The cashforguzzlers.net site was always transparent in that it was geared toward marketing. In light of the criticism from TTAC the site operator has taken ADDITIONAL steps to ensure the consumer understands that it is NOT a government site and that its purpose is that of marketing.
onerareviper:
I’m not sure what your argument is here. “The reality is your service is not going to stimulate anything except your pocketbook, and ‘possibly’ the dealership paying you.”
Firstly, I am the dealer paying for the advertising – not the website provider. Secondly, what you quote as “stimulating your pocketbook” is again, making my argument for me. How is it that people keep missing the fact that the WHOLE PURPOSE of this program is to STIMULATE THE ECONOMY!!!!!!!!!!!!!!! That means the spending of money – aka pocketbooks!
Furthermore, you can’t honestly believe that all car dealers are created equally. Anyone who has EVER purchased a car will have undoubtedly encountered a poor consumer experience at SOME dealership. So there ARE better dealerships in with which to do business. Now, I agree wholeheartedly that it is for the consumer to determine what dealership is best to do business with and that they should be wary of dealers claiming they are the best. But there is always a worst, a good a better and ultimately a best.
It is for this reason that my Nissan Dealership, Marlboro Nissan, got involved very early with true 3rd party testimony on dealerrater.com. This site was created for the consumer to summarize their experience and rate dealers they do or have done business with. This company advocates for the consumer, NOT the dealer. They monitor to prevent dealer fraud (posting phony reviews) and provide an outlet specific to the automotive industry. Since we have the highest ranking and highest number of reviews we can say we’re the best according to that small pool of consumers. We even go so far as to inform every internet inquiry and person that comes through our door about this site so that there is no bias to the reviews. If they know about it at the outset, then the happy and unhappy alike have equal opportunity to critique our performance.
Additionally, your argument for limiting the pool is not correct. The dealers aggressive enough to advertise are the ones WILLING to compete for your business!
Here’s why: There are 2 school’s of thought in the car business. Gross vs Volume. You MUST have 1 or the other. Dealers who limit their marketing budget’s take “an old school” approach. They would rather sell fewer vehicles at a higher profit. A poor approach for future survival, but one many dealers subscribe to. Dealers who aggressively advertise subscribe to the “velocity method” of selling that takes into account credits from the manufacturer for fast moving inventory as well as customer retention in the service department as a result of a positive consumer experience.
Does that mean all volume dealers provide a good consumer experience? Of course not. Again, that is why sites like dealerrater.com and others exist. But a volume dealer will still sell the vehicle at a more aggressive price point which DOES ultimately benefit the consumer.
Ever try to service a car at a dealer you didn’t buy your car at? Ever try to get a loaner car from that dealership? Ever find that something wasn’t under warranty? Ever find that the dealer you bought the car at was willing to do more for you? We experience it daily.
“As for informing people about the CARS program, well, I’m sure the government can handle that.” How can anyone honestly say after all that has gone on in the last 12 months, that the government can handle ANYTHING? The governments marketing budget for the cars program is $50 million dollars. Might sound like a lot to the average consumer, but by contrast, Toyota of America CUT their marketing budget by $55 Million for 2009 bringing their national marketing budget for 2009 to $766 million.
The government will provide information ONLY. They’re not going to furnish a quick way for buyers to get quotes! What the consumer fails to realize is the $3,500-$4,500 government assistance is paid to the DEALER, NOT the consumer. How quick do you think uncle sam will be about sending those checks to dealers? Ever go to the registry? How quick is that experience? Ever go to the clerk of courts and request documents? 6-8 weeks – if you’re lucky! The public sector moves slowly. What does this mean for the consumer? Many dealers will opt NOT to be involved with the CARS program because they will not have the financial infrastructure to deal with the tremendous strain on cash flow this program will cause!
There is far more involved with a program like this than most consumers will ever realize. But to criticize an entrepreneur for being entrepreneurial is just absurd! Not saying YOU are.
Finally, understand how this all started. Robert Farago wrote an article about fraud and listed cashforguzzlers.net as an offender next to cashforclunkersheadquarters.com a site alleged as a phishing scheme. This precept is just ridiculous. This was also, one mans opinion based on poor research by the DOT. The cashforguzzlers.net site on which we advertise was never a phishing scheme. It was, however, and still remains a lead generation site for consumers wishing to take advantage of the CARS program. Because of this incorrect comparison, the site owner has gone EVEN further as outlined in this article to ensure transparency. We are straight shooters! Might sound rare in our business, but it is the truth. The truth hurts us often, because people want to believe the lie MORE than the truth. Thats why politicians operate the way they do and its why people want to negotiate! The truth is the price is on the window sticker! The truth is the average margin of markup on a new vehicle at sticker price is 10% or less. The truth is the margin on groceries
exceeds 900% in some cases. The truth is the margin on department store products exceeds 500% in some cases. No one wants the truth. Now tell me how a car is commodity like chips and soda. I’ll be happy to negotiate with a 900% margin! Which “truth” do you really want?
Timothy Martell
Digital Marketing Director
Albrecht Auto Group
(888) 251-3813
You missed the part where I said, “AND THAT IS AOK!!! No American should feel offended by this concept.” Please re-read my post.
BUYING CAR:
I’m not going to debate (line by line) the rest of your response, I will merely state this. THE LAST 10 CARS I BOUGHT (mostly for family/friends), I DIDN’T STEP A FOOT INTO THE DEALERSHIP BEFORE FINAL PURCHASE + AGREED UPON PRICE. Doing otherwise is a HUGE waste of time and counter-productive. I had family/friends tell me the exact car they wanted, then sent faxes to Sales Managers of all dealerships in a 100 mile radius. They all competed for my business, and lowest price wins. Let me tell you, it is a feeding frenzy. Usually 5 of the 20++ do not want to do business this way, AND THAT IS OK. There are 15++ that do! More than likely those 5 know they can’t compete on price. That just helps filter out the non-volume dealers. Bottom line – dealerships are selling a commodity, no different than a candy bar or bag of chips. No different than a bag of rice. In other words, don’t flatter yourself. I can buy the SAME EXACT thing at hundreds+++ of different dealers. And I’m not stuck educating some coffee/smoke breath salesman about a product HE should know more about than ME. Not to mention pay him an additional percentage of profit that must be billed into the sale. Anyway, using this method means 15-30 minutes at the dealership and I am gone with new car. Don’t deal with any salesman, ‘behind the curtain’ manager, etc… Finance guy + payment and I am gone. And trust me, all were bought well below ‘advertised’ invoice + rebates. We all know ‘invoice’ doesn’t mean squat anyway. As you know, most dealer incentives an end consumer will never know. And that is EXACTLY why the more competing dealers you get in the pool, the better. Limiting them to a silly theory of how they advertise is ridiculous. One dealer may only be a few cars away from reaching the next sales plateau, so you’re likely to get the best deal in those situations. Some dealers even took a loss on my sale to reach a sales number (end of quarter). In other words, no dealer is going to give the ‘best price’ every time. Anyone that says they can, well, are bold face liars. So THE SINGLE WORST thing a buyer can do is limit his/her competitors.
SERVICING CAR:
This is a bit more complicated. Basically, reputation is everything. Word of mouth is GOLD. The fallicy you’re trying to perpetrate is convince buyers SELLING and SERVICING cars are tied together. Most of the time, they’re not. Some service centers are FANTASTIC, but the sales department sucks. And vice-versa. AND ANY SERVICE CENTER WORTH A NICKLE DOESN’T CARE IF YOU BOUGHT THE CAR AT THEIR DEALERSHIP. If you say yours does, and you treat customers differently based on purchase location, please do tell. I would love to talk to Nissan headquarters about this practice. But getting back to the real world, it’s all about building relationships. A little ‘tip’ here & there to the Service Manager/Service Technician for great service does WONDERS!!!
The CARS program:
I guess we can ‘agree to disagree’ on this one. By the time this passes, I suspect every American will know the plan ‘inside and out’. Time will tell. This does not ‘imply’ the government will ‘run’ it right, as many people will use loopholes and corruption will follow. This we agree on.
BTW:
Please don’t try and deceive the public saying many dealers will not participate in the program. That is an ‘assumption’ that lacks factual information. Shame on you…
onerareviper,
A life time of car buying barely amounts to a month’s worth of car selling for a single sales person. To make claim that your very small perspective as a consumer somehow represents consumer experience as a whole is ridiculous. Faxes? Really? Who’s wasting time? 20+ dealerships? 100 mile radius? Purchasing a new or pre-owned vehicle does not have to be that difficult. Anyone submitting more than 5 requests is wasting their OWN time. The only reason to drive more than 25 miles for a vehicle is if it is rare, or a very specific used car.
Let me get this straight, rather than deal with a sales person (who generally have the weakest selling skills and thinks everyone wants invoice less holdback) you would rather deal with the best, highest paid gun – the sales manager. How does that make sense? FYI I encourage ALL customers that they should seek competitive bids. Our model lends itself to that approach and we DO want to compete for their business. But WE are ALSO in the minority. Your story is simply anecdotal and not based on any substantive fact. Additionally, your stereotype of sales people is out dated. MOST of OUR sales people do NOT smoke. Perhaps in the other parts of the country this is more common place. Or perhaps you just don’t know because, as you said, you haven’t dealt with a SALES PERSON for so long.
It really amazes me how peoples perception can be so far from reality. You know, most people actually like to drive a car before the decide to purchase it; but apparently you just come to do your paperwork and take the car home? Hey that’s great we need customers like you too, but again, you are in the minority and that is the only point I am trying to make here. You can deal with the sales manager all you want and they love to use that “I’m not a salesman so there’s no commission” line on people who think they’re winning by avoiding the sales person. But the TRUTH is, a sales person still has to pull a car out for you to test drive. A sales person has to fill out your paperwork. A sales person has to gas your car up. A sales person has to get it cleaned for delivery. A sales person has to go over all the new features of your new vehicle. A sales person has to get the car inspected. A sales person has to put the plates on the car or run to the registry. AND a SALES PERSON is STILL getting paid an avg 20% gross profit or $100 commission. That means they are getting paid, on avg, 2% or less of the sale price. There is no ADDITIONAL profit billed for this. If you’re really looking for a deal you WANT to deal with the sales person – even better the “INTERNET SALES PERSON”. They BELIEVE the objections customers come up with and work the MANAGER to lower the price. The sales manager has heard them all before and knows EXACTLY how to deal with them. The sales person just wants to move another unit. They are far less concerned with the mix of gross profit.
Here’s a little known fact. The consumers who brag about how they beat up the sales person or tell you how great the deal they got from the last place was are the ones who generally pay the avg. They might not pay the most, but they generally don’t pay the least either. And thats NOT a bad thing! Making a $1,000 profit on a $24,000 product is, quite frankly, insulting to the seller. NO other business operates with these kind of margins. NONE. Yet MOST of us are happy to do it and compete to sell it for even less. You likely paid more COMMISSION to your real estate agent then you paid for your whole CAR. Yet you see value in getting bid’s from 20+ dealers and driving 100 miles to save $50-$100 bucks? Call it $500 even. How much is your time worth? That is, at a minimum, a four hour round trip plus time at a dealer which is NOT less than 30 minutes regardless of who you deal with. It takes 30 minutes just to get through an efficient F & I office. The avg consumer spends an entire DAY when it comes time to purchase their car. How much is a day’s pay for you? Is it worth all the time in advance and all the time on the day of delivery to drive past 3 or 4 or 5 dealerships to save a few hundred bucks? We have people who will drive 100 miles plus to do business with us but it isn’t just because of our aggressive pricing. We make a fair profit and aren’t ashamed of it. But when it comes time to go above and beyond we are better positioned to do it as a successful and PROFITABLE dealer than one who is not. We treat people right and build relationships with our consumers after the sale. People who really pay below invoice and hold back represent less than 5% of consumers and in the long run, do they really win? The mental aggravation of assuming everyone is lying and trying to trick them and being mislead by one dealer and going to another who tells them the truth that they now do not believe… It’s exhausting just to think about! I don’t know how you do it! And these days, I don’t know WHY you do it. The information is already there online for all to see. The truth is you WANT to believe the lie. There aren’t thousands and thousands of dollars below the invoice price. No one is selling the vehicles at a loss. That is the fallacy that consumers WANT to believe. What interest does Kelly Blue Book and NADA and Edmunds.com have in telling you the invoice is the price the dealer pays if it is a lie? They tell you holdback is money the dealer doesn’t receive until after the sale and can be predicated on objectives and that it is generally not open for negotiation and still consumers want to negotiate this. Are you honestly going to tell me that our employee’s don’t deserve to be paid? Are you really saying we do not deserve to make a profit as a business? The dealer PAYS the invoice price. Believe it, don’t believe it. But thats the truth. Everything else (rebates, holdback) happens after the fact.
Servicing a car: Firstly, I NEVER said that our dealership treats people that way. What I said, was that it is a COMMON consumer experience – and it is. Dealers have wonderful technology – CRM and DMS systems that allow us to know even when you call in, every dime ever spent at any store in our organization -all right from the caller ID! What do you think happens when someone pays invoice less holdback, never completes a single service at that dealer, but comes back 2 or 3 years later wanting some non-warranty repair covered at no charge? I can tell you it isn’t the same result as the person that bought their last 3 cars there and the dealer always made a few hundred bucks of profit and oh by the way they do every $24.95 oil change and major service like clockwork. Sorry not a fallacy! They are MOST CERTAINLY tied together. Thats not to say there do not exist great sales departments with shoddy service departments and the reverse. AGAIN, this is why sites like DealerRater.com exist!
BTW: profit is not a dirty word. Do you work for free?
As the Marketing Director for an organization that generates over $300 Million in gross annual sales, I can tell you first hand that the CARS program is a MAJOR concern right now. There is tremendous risk on the DEALER; NOT the government. We hold the responsibility cradle to grave on these cars. That means if the junkyard that is supposed to crush the car, takes the parts out and ships them to ecuador – we’re left holding the bag for the $3,500-$4,500 uncle sam is then NOT going to pay. There is huge risk for fraud, not just BY dealers, but against the dealer as well. Combine that with the fact that this program will likely put a tremendous strain on cash flow and you have a recipe for disaster. One that could potentially bankrupt smaller dealers with limited operating capital. You have no business making accusations on something to which you simply have ZERO knowledge of. Like most of liberal america you are focused on the idea rather than the responsibility. Let’s fix the economy! Let’s fix GM! Let’s fix healthcare! Let’s fix the mortgage industry! Let’s fix social security! Let’s give social security to illegal immigrants! Let’s save the planet! How will we pay for it? Who’s going to be held accountable for it? Let’s… have someone else worry about that.
Finally, the demographic that will make up the majority of the CARS program recipients will be sub-prime (won’t even get into that possible nightmare) buyers. These people will likely get approved on vehicles in the $10k-$14k range with $3,500-$4,500 down. So as soon as that car is reported sold WE the DEALER MUST PAY IT OFF IN FULL – no 30 day grace. PAY ME NOW. All this while waiting for any rebates from the manufacturer (something we take responsibility for on the consumers behalf), holdback from the manufacturer (which you want as part of the negotiation), funding from the bank, and now what could be more than 40% of the vehicle cost from uncle sam. I can state with absolute certainty that MANY dealers will NOT participate in this program at the start or will cease to do so very quickly (when 90 days go by with no check from uncle sam). This will be a far more cumbersome process than you would like to believe. As the dealer I HAVE the FACTUAL information. What is the basis for YOUR ASSUMPTION that I do not?
Instead of debating your entire post, I will point you towards http://www.fightingchance.com/
It is where I became educated about the car buying process. If you want to debate someone about the antiquated car buying process most dealers still believe in, I suggest you email the author. Here’s what I know as a CONSUMER. Since reading this book and implementing the methods, I have bought cars at far better prices + spent WAY WAY WAY less time doing so + had a much better overall buying experience. Those are the things I’m interested in, and feel many (not all) buyers are in the same boat.
BTW – I still test drive cars to find the exact car I want, I just don’t ‘buy’ cars after a test drive. Those dealerships still get the opportunity for my business at a later date. And the cars are always detailed and perfect when I pick them up. There is no need for a salesman to explain features, etc…, as an owners manual does just fine.
For those wanting to know a little more about the website/author, here you go:
First, A Personal Note: I started this business 15 years ago. It has always required a consuming, non-stop effort — about 70 hours a week, 50 weeks a year. I study Automotive News, the industry’s weekly trade paper. I’ve received over 100,000 orders, and I have talked with at least half of those customers. Much of what I’ve learned — and continue to learn — comes from their experiences. With 52,500 highly-focused working hours logged, I am probably one of the most qualified consumer advocates on this subject.
I chose to focus on new-car buying because no other information source was doing a credible job of helping you win in this purchase process, which so many of you hate so much. Creating a better product was easy. The competition was, and still is, inept. Most of the logical suspects are singing essentially the same song they were singing years ago. But the retail automotive marketplace has changed dramatically in recent years, and you need more relevant, up-to-date information and advice on how to deal with it effectively today.
Fighting Chance will always be a small “information boutique.” On average, even in this down year for car sales, over 25,000 Americans buy or lease a new vehicle each day, 365 days a year. On average, I want 25 of them. (I couldn’t handle 30.) My competitors may have the other 24,975.
Here are some key examples that illustrate how we’re providing the information and advice you need in these tough economic times — information and advice that no one else seems to be providing.
In the past, most of the money spent on “dealer cash incentives” was tied directly to each sale of a specific vehicle. (e.g., “Sell one of those, and you’ll get an extra $500.”) That’s not true anymore. Only a tiny handful of auto nameplates still uses that type of incentive on a regular basis.
Today every automaker allocates the vast bulk of its dealer cash incentive budget to “below-the-radar” programs in which dealers can earn substantial cash bonuses for reaching or exceeding sales targets over specific time periods — from one month to several months.These cash payments are typically not tied to individual sales of a specific vehicle. Instead, they are based on overall dealership sales objectives set on a dealer-by-dealer basis, where small dealers get smaller targets and big dealers get bigger targets. In addition, most of these programs require dealers to achieve specific customer satisfaction ratings to qualify for a bonus. (Customer satisfaction scores are based on both purchase and service satisfaction scores from responses to questionnaires asking customers to rate their dealership experience.)
Occasionally one of these programs may be focused on the specific vehicle you want, but not tied directly to your purchase. Instead, the incentive typically comes in the form of a bonus for selling a total number of units, not a cash payment for each individual sale. If dealers reach their overall sales targets for your vehicle, they get a nice bonus check. If they fall short of the target, they get nothing.
There are over 40,000 new car dealerships, and no one can tell you what any given dealer’s target is, or how close a dealership is to achieving its objectives. You can’t even learn exactly when these programs start and end.
So how do you negotiate price successfully in the current dealer incentive environment? You don’t walk into a car store to negotiate the price, and you don’t make an offer. Instead, you take control of the process, making dealers bid competitively for your business. Our information package teaches you exactly how to do that, step-by-step, working from your home or office and using the “fax/email attack.” Just as automakers get competitive bids from parts suppliers, smart consumers understand that they are shopping for a commodity and get competitive price proposals on the vehicles they want to buy or lease. (Not-so-smart consumers walk into a car store and spend countless hours negotiatng a price with some car salesman and his boss — the endless “good cop/bad cop” routine.)
The dealership that will give you the lowest price proposal this month may give you the highest proposal next month because it’s in a different place vs. its target objectives. Dealers who are close to earning a substantial bonus will often sell for a lot less than other dealers at the same point in time. They might even be willing to lose money on your deal. So you need to cast a relatively wide net, getting bids from several dealers — one or more of whom might be much more flexible on pricing than others.
Clicking through to get “Internet price quotes” from dealers’ or others’ web sites isn’t always a great idea. Frequently the” Internet Sales Manager” will contact you and try to get you to visit the store to get a price quote. And sometimes those salespeople are relatively junior employees, with the authority to quote the same “Internet price” to everyone, but no knowledge of the “below-the-radar” sales targets and little authority to offer the rock-bottom prices the dealership might often accept to reach those targets.
Because these bonus programs tend to end at the end of months, you should aim to do your negotiating then. In addition to below-the-radar bonus incentives that might be in effect, all dealerships have monthly targets, as does every sales business. (They’re trying to beat last month, or the same year-ago month.) The best deals customers report always seem to come at month-end.
Given the core facts outlined above, only a fool — a solid, gold-plated fool — would walk into one or two or three car stores to negotiate the price of a new car. And only a fool would make an offer. Yet that’s exactly what more than a million Americans do every month, because “That’s what the experts advise, so that’s what we’ve always done.” If that’s what you’ve always done, it’s time to wise up and ignore those apparently clueless so-called “experts.”
WHY HAVEN’T YOU LEARNED THIS FROM OTHER INFORMATION SOURCES?
Specifically, why aren’t Kelley Blue Book and Edmunds and other high-traffic automotive web sites telling you this? My guess: They won’t do anything to jeopardize the automotive advertising dollars they need to pay the high costs of maintaining and updating those sites. Visit their sites. Look at all the car-company ads. In addition, they want you to “click through” to dealers to get price proposals. Surely you’re not naive enough to think they don’t get revenue from dealers for those leads. But if they provided the facts and the advice that we do, they’d alienate their advertisers. (Note: There is no advertising on the Fighting Chance web site.)
Edmunds’ web site lists a True Market Value (TMV) for each vehicle, implying that this is the price you should expect to pay. They tell us that this “TMV ” is “based on what others are paying for the car you want.” But how many of those “others” are savvy shoppers? Since most people are clueless about how to negotiate successfully, would you be happy to pay the average “TMV” price that they’ve paid? I hope not.
Alternatively, why aren’t you getting this advice from consumer affairs reporters at TV and radio stations, in your daily newspapers, and in personal finance magazines? Same reason: Advertising dollars. A writer from one of those personal finance magazines called me in mid-2006, leaving this message: “We’re doing an article on negotiating the price of a new car, and we’d like your input.” In a reply to the writer’s voice mail, I gave them the short form of my input: ” Only a fool would walk into a car store to negotiate the price. And only a fool would make an offer.” I never heard from them again. That magazine can’t print those truths without risking the loss of automotive advertising dollars. There is no “free press” when it comes to providing helpful consumer information that would scare major advertisers away. The score in that game is advertisers: one, consumers: zero.
Even Consumer Reports, a trusted automobile information source providing a lot of helpful information, doesn’t seem to be on top of the new reality in dealer incentive programs. In their April 2008 Annual Auto Issue, under a headline that reads, “The New Rules of Car Buying,” here’s the advice they give to encourage you to purchase their New Car Price Service: “This service gives you everything you need to walk into a showroom with confidence — and walk out with a great deal.” “You should bargain up from the real price the dealer paid for the car,” which they define as the dealer invoice price minus “unadvertised dealer incentives and holdbacks.” These were “The New Rules of Car Buying” in about 1969. They are ancient history today.
There are some fatal flaws with this approach:
(1) People who “walk into a showroom” to negotiate a price are essentially announcing that they are not soliciting competitive price proposals from other dealers, some of which might sell the vehicle they want for much less. They will never end up with the best price available if they’re dealing with just one or two or three dealers. And they’d have to be certified lunatics to put themselves through the pain of walking into 15 different showrooms and negotiating the price in each one.
(2) With the bulk of dealer incentive dollars now in the form of bonuses based on overall dealership sales and customer satisfaction targets, “negotiating up” from Consumer Reports’ “real price” is bone-stupid advice. Fact is, “negotiating up” from any dollar number eliminates the possibility of getting the vehicle for less than that amount. (Duh!) And dealers who are close to earning a big bonus will often sell for much less than that “real price” and even lose a lot of money on several deals if that will get them to their targets.
(3) In the same sense, making an offer is incredibly dumb. As soon as you make an offer, that’s as good as the deal can get. Would you lay your cards down first in a poker game?
(4) Worst of all, if Consumer Reports fans act on this really bad advice, they probably won’t even get the best price available at the store they walk into! Those best deals typically go to the smart shoppers (Fighting Chance customers) who make several dealers bid competitively and will never again walk into a car store to negotiate the price.
To illustrate these points, here’s a specific example from the experience of a Fighting Chance customer. His wife’s car died, and she wanted the all-new, redesigned 2008 Honda Accord shortly after it was introduced. In that situation we advise customers to wait two or three months to negotiate to allow the initial sales excitement to dissipate and supply and demand to come into a more favorable balance. He couldn’t wait. Most of the price proposals he received were at the full sticker price, or close to it. But one dealer sold him the car for $568 below the invoice price — more than $2,500 less than any other dealer. The owner told him that his incentive target from Honda was 1,000 sales and that he “was doing anything he had to do to make the goal and get a significant bonus check.” You can bet that check was at least $250,000 ($250 per car) and more likely $500,000 ($500 per car) or more. All auto manufacturers have their own “below-the-radar” dealer incentive programs. Why isn’t Consumer Reports telling you this? My guess is they aren’t close enough to the car business. If this customer had followed their “New Rules Of Car Buying,”, he would have aced himself out of a lot of money.
This isn’t rocket science, it’s common sense. It’s also the way most of the business world has worked forever. Companies making expensive purchases routinely make suppliers bid on price to win their business. And most sales operations don’t reward salespeople on a sale-by-sale basis. Instead, bonuses are tied to meeting overall sales objectives (e.g., “Beat last year’s result by X%.).
Worth noting: The Fighting Chance information package costs almost three times the $14 Consumer Reports charges for its New Car Price Service. Why? My answer is that I know what our product is worth. I assume they know what theirs is worth.
THE BOTTOM LINE
New cars are just expensive commodities — the same vehicles with essentially the same pricing structure at every dealership selling that nameplate.
You’ll always get the best price on any commodity — including new cars — if you make several suppliers bid competitively for your business.
There is no “dealer who always gives the best deals” in any market. This month’s low bidder may be next month’s high bidder, depending on where the dealership stands vs. its bonus targets.
In today’s retail auto marketplace, walking into a showroom and making an offer by “bargaining up” from a “real price” is a terrible idea if your objective is to get the best deal available.
Any automotive information source that isn’t telling you this either doesn’t know it, or doesn’t want you to know it.
Any questions?
James Bragg
I guess there isn’t much more to say other than… I told you so…