I once spent more than two hours with a nice couple on a limited budget. They kept telling me they didn't want to get over their heads in buying a new car. I sympathized with them and wanted to get them a great deal.
I asked what they could afford. The MSRP was $20,000. They offered $17,000. I asked them if they could go $18,000. No, they said. I negotiated with my manager. I was good at getting him to come down.
But I never did sell the frugal couple a new car. How many mistakes did I make? Plenty.
Points To Follow:
- Negotiate with the customer, not your manager.
- The salesperson controls how much gross will be made on every deal.
- The manager directs and approves every deal.
- Don't negotiate or discount your price until you know the customer wants the car.
- To increase gross profit, negotiate by small increments not thousands of dollars.
- The salesperson or manager must always lead with the price.
- Never ask the customer for an offer or what they can afford.
- Always present your numbers as favorable to the customer.
- Always focus on the numbers you have been given by your manager.
Do not panic during negotiations. It's part of your job. Get good at it. How you negotiate determines if the customer will purchase from you. It also determines your gross profit and customer satisfaction scoring.
Most customers expect some kind of initial savings. Start at 1%. If the MSRP is $20,000, price it at $19,800. Ask the customers to approve. They'll react one way or another. If they overreact, remind them of your position at the dealership.
“As I said, my job is assisting people in selecting vehicles, so please let me see what I can do about the price. What were you thinking you could get this vehicle for?”
When the customer makes the first offer, the salesperson reacts positively or negatively.
Do not write down the first or second number customers say or they'll think they are close to a deal. Instead, ask how they arrived at their number.
You and your manager will need to know that to further the negotiations. Work from small increments, verbally reducing your number. The customer will eventually move up verbally.
Get a third or fourth verbal offer from the customer. Then write it down. Get the customer to initial it. Try to get a financial commitment without calling it that. For instance, say:
“Mr. Customer I will need something to show the dealership that you want this vehicle. Do you have a credit card or any money on you?”
Once the customer has given you some type of financial commitment, say, “If we agree on a price, can we use your leverage money towards your deposit?”
Go to the manager. He or she will give you a number that the dealership needs to make the deal. Show that to the customer who will probably react again.
To get customers to move up from their numbers, move down from yours, but slowly. Focus on your number, not theirs. Try to get them to move up two or three times. Then write it down again, get it initialed and take it to your manager.
Keep negotiating until you agree on a final number. There are only two places to go from here: Sell a car or let the customer go home without a deal.
In my rookie year, I thought the manager controls the gross on every deal. Looking back, I realize the salesperson does.
Darin B. George, founder of the Automotive Sales College, is at 1-888-681-7355, ext 225 or [email protected]. The college is looking for interested people to help operate training facilities across North America.