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Road Rush

Secrets of the car showroom exposed Add to ...

My wife and I decided to buy a new car a few years ago, which meant a trip to one my least favourite places - the sales department of an auto dealership.

We started at a Toronto-area emporium that shall go unnamed. I told the salesman we wanted a grey Odyssey van with a towing package and leather interior (hoping that it would stand up to the kids better than the ruined fabric seats in our last car). The salesman disappeared for a few minutes, then returned with a sheet of paper that he held to his chest like a poker hand. He gave us the news: finding a grey Odyssey with a leather interior would be tough. "Hard to get right now," he said with a rueful air. "High demand."

There was a gold Odyssey on the lot, but he knew we didn't want it. The salesman had instantly recalibrated the artificial economy of our sale in his favour - supply had been reduced. To get the vehicle we wanted, we would pay full price. Maybe more. We walked away.

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The next day, I called a car broker, a new breed of sales rep who sells direct. I told him what we wanted. He called me back in five minutes with a price that was about $5,000 below list. Three days later, we had our new Odyssey - grey, towing package and leather interior. The hard-to-get van, it turned out, wasn't hard to get at all.

I'd always wondered about car dealerships. Along with cellphone companies, they've provided me with the most miserable consumer transactions of my life. I've met a few salespeople I liked and trusted, but most of my experiences have been like scenes from a bad movie - fluttering plastic pennants, high-pressure deals, and the good-cop, bad-cop sales routine that commences with the code line we all dread: "Let me take this to my manager."

On a car lot, I often felt like a steer headed into a meat-processing plant - ahead of me was a set of well-tuned processes designed to extract as much from me as possible. I got my first insight into the way they operated back in the 1970s, when I worked briefly as a mechanic at a Vancouver car dealer. Although there was a church and state separation between the service and sales departments, I did learn a bit about the other side - like the "closing room" where waffling customers were hammered into deals, and the "ups" protocol that determined which sales rep would get to work a customer.

I was glad I was a mechanic instead of a salesman. But the showroom was a necessary evil. If you wanted a new car, that's where you had to go. But I wondered - did everyone hate going to car dealerships as much as I did? Turns out many do. "People would rather go to the dentist than the car dealership," says Bruno Lucarelli, a consultant who helped set up eBay's online car sales division. "It's not a great experience."

But now things are starting to change. For a car buyer, knowledge is power. And the internet has finally provided it - with the click of a mouse, you can see the price of any car you want, or check the average value of a trade-in. The Canadian Black Book and Canadian Red Book, the bible of used-car prices, were once secret, runic tomes available only to industry insiders. Now you can see them online.

"Customers can shop anywhere in the country," says Lucarelli. "All you have to do is look up the car you want."

In the old days (as in just a few years ago) a car sale followed a well-known choreography. The process was not unlike trapping a lobster. When a prospect walked into a showroom, the dealer would do almost anything to keep them from leaving. One of the oldest tricks in the book was "losing" the keys to your current car while you were out on a test drive, giving the sales staff more time to work you over.

Another key tactic was avoiding specific pricing until you were ready to sign on the dotted line - if you knew the price, you could use it to bargain with another dealer. Instead, the focus was on forging a relationship and arranging a test drive as quickly as possible. The test drive achieved two critical objectives. First, you got to experience the car, which probably felt far better than your own. Second, you felt beholden to the dealer for letting you drive his vehicle. How could you leave without giving a few minutes of your time?

After the drive, you were quickly ushered into the salesperson's cubicle (known in the trade as "the box"). Paperwork was laid out on the desk, and negotiations began. If you insisted that you weren't ready to buy, the paperwork would be characterized as a mere illustration of how a deal could look when you were prepared to commit. At some dealerships, the sales manager watched from an elevated glass office known as a tower. (More aggressive dealerships monitored the discussion through the telephone intercom system). If the sale appeared to be slipping away, a second, tougher salesperson would take over, like a tag-team wrestler sent in to finish off an opponent (this was known as a "turn").

Car industry professionals will tell you that there is fault on both sides. A car lot isn't exactly an Eldorado - the overhead is high, profit margins are thin, and the sales staff deal with a cavalcade of tire kickers, cheapskates and buyers with no money and poisonous credit ratings (car salespeople refer to them as "credit roaches").The web has created a new breed of customer who gleans information, then uses it to negotiate harder than the dealers once did.

"Some guys walk into a dealer with the VIN number of the car they want," says Lucarelli. "If you won't sell it for the price they want, they just go somewhere else. Some people will fly across the country to save $500."

But the business is evolving. "The old days are disappearing," Lucarelli says. "The whole game has changed. Instead of tricking people into coming, dealers have to turn into service organizations. People will pay more if they have a good experience. They don't like being tricked. They don't like being pushed around."

Todd Bourgon, executive director of the Toronto Automobile Dealers Association, says the negative experience some consumers have undergone should not be used to characterize the industry: "It is not systemic, and it is not representative of the industry as it stands today."

Bourgon says new legislation (like Ontario's recently enacted Motor Vehicle Dealers Act) has increased transparency for car buyers, and has also been welcomed by dealers because it stops competitors from luring customers with false advertising. "The fine print is disappearing," Bourgon says. "And it levels the playing field."

A new and better car sales world seems to be on its way. And I don't think it can come soon enough. I remember reading Confessions of a Car Salesman, written by Chandler Phillips of Edmunds.com after going undercover on a car lot:

"I had become the enemy," he wrote. "And they were afraid of me. What were they afraid of? The short answer is, they were afraid they would buy a car. The long answer is that they were afraid they would fall in love with one of these cars, lose their sense of reason and pay too much for it. They were afraid they would be cheated, ripped off, pressured, hoodwinked, swindled, jacked around, suckered or fleeced."

There was a sense of déjà vu. Been there, done that, paid too much.

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Follow on Twitter: @cheneydrive

 

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