Buying a New Car, Know how does a car dealership salesman can make you pay higher amount. Negotiation Skills of Dealer Sales Executive with Consumers
Its been over 10 yrs now, since I have been associated in Automobile Industry. Have worked with Maruti Suzuki, ICICI Bank and now for over 2 yrs in this Online Auto Sales Business. Have worked up and visited several dealerships as Manufacturer Sales Personnel, Banker and as been a customer too to know the deal and offerings of Dealer on there cars
Below are some of my on field observations about dealer tactics and there Internal Work Methodology
Combo Savings : A Dealer executive has a company discount plus has a slight cushion with internal approvals. A Dealer executive has highest Incentive Slabs, if he sells you :- Loan + Insurance + Accessories and ofcourse the car.
On, top of it, if he makes the customer convince to stay within assigned combo discounts - (which are been provided to him as cushion discounts, over and above regular discounts) - gets even higher incentives.
Know that a Car Dealer always has :- Regular Company Discounts + Additional Cushion Discounts + Margins. Cutting off discounts from Margin is also given for stubborn and high negotiating customers as approval from Sales Head or Showroom Manager. Though, this in most likely scenario happens for achieving targets or to clear the Inventory
Exchange Benefits : Customer sees a convenience in selling his old car to Dealer and buying new from Him. However, taking advantage - the used car valuator at dealership offers a significant lower price and the new car personnel to sweeten it merges exchange discount benefit and instant buy in advantage to customer
Customer Feels as if hes getting say 70,000 for old car + 20,000 as Exchange Discount + Free Insurance worth Rs. 20,000 on New Car and complimentary accessories worth Rs. 10,000 = making in effect as 1.2 Lakh
However, the actual value could be much low. Insurance Premium are published at regular price (without discounts). So Car Insurance of Rs. 20,000 shown in actual could be Rs. 15,000 and dealer has very high margin on Car Accessories.
Net Actual Effect would be :-
- Dealer Offering you Rs. 70,000 as Price where in the Actual Price Could be Rs. 90,000
- Manufacturer Offers Support of Rs. 20,000 - herein the general sharing could be 50-50 between manufacturer and dealer
- Insurance Worth Rs. 20,000. In Actual could be priced and bought at Rs. 15,000 if bought directly from Insurance Company
- Car Accessories worth Rs. 10,000. Actual Price could be Rs. 5,000 as 50% margin
So, the Outflow and discounts shown of Rs. 1.2 Lakh in actual could be worth Rs. 1 Lakh only and in 1 Lakh - your actual car value is Rs. 90,000.
In effect, the net benefit a customer gets is only Rs. 10,000
Selling Loadings (Car Accessories) : Car Accessories makes up a major revenue for a New Car Dealership and they always sell it at sticker price
If you feel the new car and feel like spending Lakhs on it, a sales executive also shows you accessories to add on charm to the car and takes up additional Rs. 10,000 - Rs. 15,000 - which in actual costs him quiet low
Packaged Deals : A Most Likely Trap by a Dealer Personnel. Marketing as Single Door Window and Convenience, the package price could be much appealing on face of it, however if you break it and buy them individually - in most likely scenario will get a much better price.
Offering Combination of Deals like :- Low Finance Rate, Cash Discount, Complimentary Accessories and Trade in for Old Car can see as an attractive proposition. However, When Worked up Individually - one can always negotiate and command better price
Offering Test Drives : Test Drives are a good attempt to give customer a feel, but is rather more a sales strategy. The Aura of a Short Drive and Making Customer Aware of the Accessories and features of the car, a sales executive gives a customer feel on the product and simultaneously before the aura closes, makes his best attempt for seizing the deal by taking up a booking cheque
Holding a Customer: Dealership Jobs are high pressure jobs, the Sales Executive can not afford to sit and relax back without having prospective customer name, visits and confirmed bookings of the week. The Pressure happens right from Sales Executive to General Manager to sell on high numbers
To boost up the Spirit, the Manufacture also launches some Mid Month Schemes for Dealers that if they overachieve the target by 10% to 20% from say 200 cars to revised target of 240 cars, if they achieve will get additionally Rs. 8,000 per car means a cool 20,00,000 Rs. Thus, the target spills from Top Management to Dealer and further to executives to outperform and bet on it by offering additional incentive on revised targets and slightly raising the cushion discount to customers too.
This tactics generally is best applicable between 20th - 27th i.e 3rd Week of the Month stating as Month End Limited Time Offer to Customers to increase Dealer Sales Numbers