What secret is your car dealer keeping from you?
Whether you are looking for new car buying secrets or used car buying secrets, there are two things that dealers would prefer that you didn’t know. Aside from the sales tactics, finance scams, and hidden incentives, the results of these two car dealer secrets can determine the success or failure of a dealer:
1. Dealers are evaluated by manufacturers based on your satisfaction.
2. Dealers are rewarded by manufacturers based on your satisfaction and sales volume.
1. Evaluations are based on:
* Sales goals based on the number of cars sold
* CSI (Customer Satisfaction Index) ratings
Dealerships are given monthly, quarterly, and annual sales goals to meet. This alone can make a difference in the price you receive on a new car. At the end of each month, there will be some dealers that are scrambling to meet their sales goal and some dealers that have blown past their sales goal. By using multiple car quote applications like the ones on Automotive.com and Edmunds.com , it is much easier to tell which dealers are desperate to meet their sales goal and willing to sell you a car at or below invoice price. (Read more at Dealer Incentives )
Customer Satisfaction Index (CSI)
After purchasing a car, customers typically receive a letter or a phone call asking for their opinion of their overall experience with a dealership. Did you receive something in the mail after you bought your last car?? J.D. Power & Associates is a well-known company that frequently conducts this research. J.D. Power & Associates has been known to send out a survey to car buyers that includes a $1 bill to elicit participation in the survey. Low and behold, the results of these surveys determine the direction of dealerships’ business in the future. So, if you felt you have been ripped off by an auto dealership, this is the time to voice your opinion.
Salespeople have even been known to bribe customers in exchange for “excellent” responses on C.S.I. surveys. This tidbit of information may come in handy when you negotiate the price of your next car. However, it isn’t necessary to tell the dealer that you are aware of this information though. Car Buyers that follow our New Car Buying Tips typically have an easy car buying experience anyway. (For more new car buying secrets, read Dealer Incentives )
2. Dealers are rewarded based on reaching these goals and good CSI ratings.
The results of these CSI ratings impact which cars a dealership receives, which auctions (used cars) dealers are invited to, the incentives paid to dealers, AND whether a dealership is allowed to expand its business. A low rating on overall CSI can be very costly to a dealership.
Auctions are big money for many dealerships. They buy used cars cheap and sell them for a profit. In July 2007, Chrysler banned 463 dealers from participating in auctions (12.5% of all Chrysler dealerships) as a result of relying too much on used-car sales and not reaching their new car sales goals.
To reward dealerships for reaching their sales goals, manufacturers offer some hefty incentives (manufacturer-to-dealer incentives). These incentives are typically not public knowledge and are not always available on the internet. Edmunds.com provides a list of incentives, but not all of manufacturer-to-dealer or local incentives always appear on this site. These manufacturer-to-dealer incentives can amount to $100,000’s for each dealership. So, dealers keep a pretty tight lid on what they are getting paid by manufacturers.
Therefore, the lowest price quote won’t always come from the same dealer. Each month a different dealer may be desperate to reach their sales goal. If a dealer is desperate to meet a sales goal – your negotiating power will increase. Dealer participation varies with manufacturer - to - dealer incentives. The only way to weed out the dealers that are very motivated to sell a car is to use the multiple Car Quotes approach.
The automotive industry is a volume based business and these incentives can play a major part in the price you receive on your car. “Turn and earn” is the term used to describe how many cars a dealer sells (turn) in a given period and how many vehicles the dealer will receive (earn) for the next period as a result of those sales. High Sales = More Vehicles in the Future. Unfortunately, there is no way to know which dealers are participating in a manufacturer - to - dealer incentive or how close they are to reaching their sales goals. Due to these manufacturer - to - dealer incentives, it is also impossible to know how much a dealer really paid for a vehicle. By collecting multiple car quotes at Automotive.com or Edmunds.com you increase the competition among dealers. Those dealers that are aggressively participating in the manufacturer - to - dealer incentives will compete. And When Dealers Compete You Save! (For more new car buying secrets, read Dealer Incentives . For more used car buying secrets, read Used Car Buying Tips )