a reply to: learnatic
i never could get a straight answer on the why's. even when i was at the dealership, the GM and the service manager didnt tell me anything. it is
getting to the point where you have to take it in. of course now there are still things we can fix but those things are going away.
here is my theory. dealerships are split in half. service and sales. the service department is what makes the nut(the monthly income)...the sales
department is the profit.
so i think it goes like this.
little by little cars are getting to where you have to take them to the dealership. now, most people are loyal to 1 make of car(ford guys/chevy
guys)..from there they are usually loyal to 1 dealership and thats where they bought it. so, they take it in for service. then again and again. this
goes on for months and years. each time he brings it in for issue x the techs will advise that along with x, you fix y and z also... starting to get
more frequent cause its getting older and it is starting to get more expensive.
so what winds up happening? x amount of years and miles in he is tired of all the crap that he has had to fix so he is going to buy another vehicle
and the cycle starts all over again.
the sales department knows the customers that have been in for their cars. they know what problems, how much has been fixed, how much it cost. the
sales managers get all those reports.
then the pitch starts.
customer will get a card in the mail from sales saying they see you have a service appt on monday the 23rd..well since youre a loyal customer bring
this card in while your car is being serviced and redeem the card for a free this or that from the sales department. all the while mr customer is
talking to sales and he is giving him info and answering questions.
sales guy is saying how much he can get him for his trade and blah blah....this guy trades in and buys a new one.
ive seen it happen a lot. one of them really struck with me. this dude had a cavalier. it was almost 5 years old cause he was in making his last
payment. one of the sales guys knew this and went to chat with him. about 3 hours later the guy got low balled on his trade and drove out of there in
a brand new high interest cavalier.
happened all the time.
my theory is design them so customers have to take them in. most people take them where they bought them. after so long vehicle gets traded in(and now
for sale in the 'pre owned' section) and the customer rolls out with a new vehicle.
thats the theory.
i could tell you some stories about how shady it is. after i left the tech position there i worked sales for a year(recovering from surgery) and let
me tell you i hated it. worst job ever.
i dont know where to start the thread but i could tell you how their F&I works when you buy a new one. it is so disgusting it should be illegal.
i will tell you one but i will try to be fast.
its called points on the back end. hopefully i explain this so you understand. i am going to use easy numbers
so john is buying a new f-150. they run his credit and send it over to the bank to see if they will float the deal. the bank buys it so great news for
"customer john, great news. wells fargo has qualified you for the fantastic rate of 11%. if you give us a moment we can go into the finance office
and sign the papers and have you on your way in your new truck. dont worry we are going to wash it and fill it up with gas for you"
so great deal? first off on what planet is 11% good on a car? its not
thing is john was just stoked to get a car. now for what john dont know. the back end points.
when they sent the deal to the bank they didnt just send it to 1 bank. they send it to about 30 banks. not even in the same state all of them. lets
say wells fargo was the best deal because they agreed to finance it at 7%.
what do you mean 7? this is the crap rip off part that should be illegal
the dealership gets the deal financed through the bank at 7% but they told the customer the great news about him getting 11%....the bank actually took
it at 7% but he knows nothing about it and is signing papers at 11%
where does the extra 4% interest go? right to the dealership. they keep the back end points.
i guess it is not illegal but it is shady. they told him he qualified for 11% and he did. he also qualified at 7% but they didnt tell him that.
happens every day all day at those dealerships. i guess we cant blame the customer. how is he supposed to know about back end deals?
there are MILLIONS of dollars made every month for the dealership doing this and this is just 1 tactic.
there are things called hold back and dealer cash. the customer should get some of that but the dealership keeps it.
not lying when i say millions per month either. the ford dealer a few miles from my house sells 400 new cars every month. even if they held back
points on half of them, that is a ton of cash....its crazy.
if you buy a new car and they run your credit and come out with the great news we got you 10% line, my advice would be to take their worksheet with
the numbers and go to YOUR bank and have them run your credit, i guarantee you that you will get a better rate almost 100% of the time. have your bank
buy the deal and then walk into the dealer with a bank check.
best way to do it.
the 400 new cars per month is just new cars too. they probably sell 600 used cars every month. i would say the service department sees at least 50
cars per day. they have a couple fast lanes for easy stuff.
when you put it like that you can see how much cash is flowing through those places. its insane. it is in the best interest of the auto engineers to
manufacture the cars like this so they can have them serviced and start the process.
last thing about the banks that buy the deals... we used to get schmoozed by the local banks every day. reps would come in almost daily with gift
cards for nice restaurants. they would pay for golf trips. send us to baseball games. we would get personalized coffee cups and what not. all the time
this was going on. its like a pharmacy rep with free samples. these reps would schmooze us so when we had a deal we would send it to their bank so
they could buy the deal at a few points higher than what they qualify for. dealership keeps the back end and the bank just signed a 60-72 month loan
at 11%....ching ching my friends....hell ive seen people sign car loans for 84 and even 96 months...THATS 8 YEARS....
sorry to get off topic