IamA General Sales Manager at a new car dealership AMA!

Why does the finance person want to upsell you more stuff? Tire packages, extended warranty, etc. Why is all of that not discussed during the back and forth with the sales associate? By the time I get to the finance person I am already tired of sitting there and just want to sign, get my keys and GTFO.

Because we make a lot of money in that department. All of that stuff is optional and you do not have to purchase it if you don't want it.

I can say on my wife's current leased vehicle I have the tire package, it cost me around $300 (cost) and I've used it to cover 5 popped tires and 1 scraped rim in about 18 months. The tires are 21 inch low profile tires and would have cost me around $350 each time to replace and the rim resurfacing is around $150.

If you had to pick one optional extra when buying a car, of all the choices available, which gives you the best bang-for-buck?

Remote start or heated seats, both are my favorite options on any vehicle

Heated seats is a luxury that should be had by all.

Life changing!

Agreed!

What's the most you're willing to lower the price of a new car, on a percentage scale?

I dont do discounts on a percentage scale, it goes by dollars. If someone is asking for something reasonable and is willing to give me a commitment to buy today I'll negotiate with them to a point.

If they're asking for $5,000 off on a $30,000 car it's not gonna happen and I'm going to wish them well and say goodbye, we're too far apart. $1,000 off of a $30,000 vehicle for a customer buying today is usually doable somehow.

How much discretion do you and your sales team have over used car purchases? Does the customer have much wiggle room to negotiate or are you working on a set formula?

The customer has much more wiggle room now then they had a few months ago but it definitely depends on the vehicle and what selling price is being offered.

I price my used vehicles below CARFAX values so that usually helps to cut down on the negotiating aspect.

However, If I have a vehicle here for awhile and I need to move it I will come down on the price if I have to, within reason. If my price is say $20,995 and a customer offers $15,000 then I'm shaking their hand and wishing them good luck on their hunt for a new vehicle.

And anyone saying "I'm paying cash" is usually not getting a discount since when they finance we get paid extra by the bank.

And anyone saying “I’m paying cash” is usually not getting a discount since when they finance we get paid extra by the bank.

I’m always baffled when people act like paying cash gets you a better deal. It’s just a complete misunderstanding of how a car dealership works or the value of financing.

100%, it's usually customers 70 years old or older that use that line.

What are the kickbacks and dealer incentives you get from the manufacturers and the banks?

On a new car the dealership makes what's called holdback, it's money built in by the manufacturer. Dealership pays what's called invoice to the manufacturer. The amount between the invoice and the MSRP is the gross. On something like a Chevy Trax the difference is around $600 or so between invoice and MSRP and the hold back is around $800. If we hit our monthly goal set by the manufacturer we get around another $400 per car.

If it is a lease deal we get a flat $200 from the bank for doing the deal and keep the gross on any aftersale products that are sold.

On a finance contract typically the bank gives the dealer a 2% mark up on the interest rate. What that means is if we get you approved at 6% from the bank we can sell it to you at 8% and the store keeps the 2% difference as profit.

Is inventory back to 2019 levels? Ballpark how much profit does dealer make of average car?

New car inventory is not even close to 2019 levels, I currently have in stock and at my dealership 22 new vehicles, my store used to carry about 125 new vehicles.

Profit is hard to ballpark but i'll try. On a mid sized suv lease pre car shortage the dealership would blow out a vehicle $1000 below MSRP and make around $1000-$1300 from holdback and around $400 from manufacturer cash when sales goals were met. Now we sell the same vehicle with a $3,000 market adjustment ABOVE MSRP so the gross would be around $4000 on the front end, same holdback amount and same sales goal money from the manufacturer. These numbers do not include back end warranty and maintenance extras. Big difference but we are selling less vehicles.

What’s your monthly salary looking like?

My GM would get mad and I would joke around with my coworkers that “he’s crying because he’s only taking home 50k a month rather than 60k”.

Last year between salary, commission, some manufacturer bonus money and vacation pay I made more than 300k and less than 400k before taxes. That's not typical compensation but I really am the GMS, the sales manager and the used car manager all in one. I negotiated my compensation before I started at this store and totally turned the store around. The year before I started, the sales department gross, front, back and wholesale was like 300k before salaries and commissions which is going out of business numbers. For 2022 we made 2.9 million in gross.

I know a guy who owns a couple Chevy dealerships in Ohio and he told me that the only thing worth buying is a Tahoe and Suburban, true?

Buying wise I would say Silverado, Tahoe, Suburban or Corvette.

Leasing I would say they all have their plus and minuses but stay away from the Trax, I hate that vehicle!

If you were thinking of going electric, which models would you focus on? Completely avoid?

I sell Chevy so I am really looking forward to the EV Blazer and EV Equinox that are coming onboard in the next 6 months or so. I am not a fan of the BOLT, it just doesn't appeal to me. I used to hate the thought of EV vehicles but after learning about them and the charging network being installed cross country I am now onboard.

From sales to assistant manager, to the desk, to GSM? You skipped F&I? I'm an F&I guy who went from internet sales to F&I, then to the desk, then back to F&I because I didn't like the paycut at the desk but I've never heard someone skipping finance altogether in the climb up. Also, what is "assistant manager" at your store?

I was offered F&I at my old store before assistant manager but I turned it down because I actually enjoy selling cars and didn't want to start selling tire and wheel packages.

As an assistant manager I covered the desk when the sales managers were in meetings with the GM, closed the store on days the sales managers left earlier and worked 1 Sunday a month

What’s all this “market adjustment bullshit!” Is it just because they know some rich asshole will pay it?

Yes.

Anyone try to scam you before?

No but I've had the bank ask for proof of income and the customer brings in fake pay stubs that get picked off everytime.

What do you think the biggest thing you learned from having to turn a car dealership around is?

Good question! This particular dealership was like a zoo with no bars. The sales people did what they wanted to do with no processes, the finance manager had no clue what he was doing and the last 3 or 4 managers were just there to collect a salary. I worked at a competing dealership pre pandemic, same brand same market and used to get customers that came in all the time and wrote them up in like 10 mins due to the mistakes my current dealership used to do.

A big thing in the car business is that you have to ask for the sale, the people that used to work here never did that. The customer would get a price per month, walk out, come to my old store and I'd beat the number by $10 a month and it was a done deal.

Now, since I know how the other dealership works the customers are usually sold without leaving my dealership and shopping around. I also have tons and tons of referrals that have followed me to my new store since I always treat them right.

We added on additional stuffs like lease guard and tire guard on our lease and signed a vehicle lease order form at the dealership.

We haven't signed the lease agreement yet and the car hasn't arrived yet. Can we ask to have the add-ons removed at this stage (or even after signing the lease agreement)? We still want to lease just don't want the add-ons anymore

Thanks in advance!

100% you can decline the add on stuff before you sign the lease agreement and you can cancel the add on stuff after the lease is signed and getting a pro rated amount back.

Example, if the tire package cost $600 over 5 years and you want to cancel it after the 1st year they would pro rate the amount and send you a $480 refund back, your payment would stay the same.

Hi. I’m a 56 year old woman. I retired from a high profile job in entertainment marketing. I miss interacting with people, and using my brain. I’ve always been passionate about cars ( not fixing, just aesthetics and performance. AND strategy of the industry)! Objectively, I’m attractive, look a bit younger, but do need to lose weight (50-60 pounds). I’m Not naive to believe appearances don’t matter.

Are dealerships reluctantly open to women salespeople or do they think it could give them an actual sales advantage?

Thanks in advance for your response.

I can not speak for other dealerships but I hire people based on if they can do the job, if they have a great personality and if I would buy a car from them.

Compared to the price on the car, what percentage on average is the actual bottom dollar?

You can hit me with "it depends on trade in value blah blah".

Were talking cash in hand, no loan, no trade in.

I get that the loan is actually more appealing but thems the terms.

It would actually depend on the individual car is it new or used?

For example, I sold a vehicle today that when all is said and done we are going to lose around 2k on it.

I bought the vehicle off lease months ago when prices were sky high. I gave equity to the customer and it needed brakes, rotors and a few other things to be sold as a certified used car. Long story short, it sat for awhile, the value went down and now we'll lose on it. That is not typical, maybe happens 1 out of 100 vehicles these days but sometimes it happens.

If I sell a customer a new 2023 Trailblazer today (have no more in stock right now), before commissions are paid the store can expect to make around 5k on it.

What’s your churn on sales people? What makes a good sales person?

What do top reps make?

I dont have high turnover but I'm also at a smaller volume store.

Top sales guy in my store made about 150k last year.

A good salesperson would be someone that doesn't need to lie to sell a car. Build a rapport with the customer, find the car that fits their needs and listen when they speak.

Do you think most people downvoting you have any idea how nearly all businesses work?

What's your "favorite" misconception people in this thread seem to have?

Mine, personally, is the obsession on the interest rate spread dealerships get - as if literally every loan/financing people do everywhere in life doesn't operate the same fundamental way.

I dont care about downvoting, but yes, most people ITT do not understand how businesses work and make money.

They're ok with going in to Best Buy qnd paying $1000 for a TV that cost $10 to make by some underage kid in a foreign country getting paid pennies an hour but will argue till they're blue in the face to save $5 a month on a car payment.

How about car insurance companies that charge $300 a month to insure your car cause you live in a bad zip code but no one tries to negotiate with them.