Should franchising and commission be taken from car sales?

"LJ909" (lj909) 10/03/2015 at 18:45 • Filed to: None

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First, I wrote this a few years ago on the Motor Trend Forums and wanted to see what kind of responses I would get here from it:

I’ve been thinking trying to get a law passed or getting some signatures for a petition or something concerning commission based auto sales. Mind you im an ex car sales person myself, and I feel that the commission part of the car sales corrupts the buying experience. I have seen and heard some dirty things when I was selling cars and that’s one of the reason I got out of it. Sales managers and sales reps are rarely sincere, and will do and say anything to get a sale. My old sales manager threw out a lot of deals because he was always thinking about his pockets. Yea i know at the end of the day we are all there to make money but people should be thinking about the customer first. And yes I know not all sales people are like this but majority are.

I just basically wanted to know how most people felt about commission being eliminated from auto sales.Personally, from experience in auto sales and being a customer myself, I think that commission combined with all dealerships being franchised, take away from the customer experience and can cause fraction and greedy behavior in the workplace.

Basically any job that has some kind of incentive, bonus or c omission type of pay has ruthless, non caring people that are only thinking about their pockets (again this is from my experience. Not saying all but most are. I now other people have/had different experiences.).

For example, my girlfriends sister works at a distribution center for a well known retail store. They have some kind of incentive based program called “blue chip”. Basically the more packages you scan or whatever, you get blue chip. But its not much. Especially considering the amount of work that you have to do to get anything decent from it. Its basically a way of getting the people to work faster and harder, and a lot of the people are ruthless about it to the point of tearing up their pay stubs on pay day if they didn’t get enough blue chip.

With car sales, its sickening. I’ve seen snakes from all sides thinking about that next sale or deal. Sales managers sabotaging a sales persons deal because they aren’t getting enough out of the deal on their end (this has happened to me personally), taking a sales without going half on the deal, etc.

Franchises ties into this too and affects the customer and the customers experience, which is all that matters. MSRP’s have becoming almost meaningless, especially with special models and dealers price gouging. There’s no reason the same model and trim of the same exact car should be 5 different prices at 5 different dealers. It even happens with food. I’ve seen a Big Mac almost 7 bucks at a Mcdonald’s in a nice area and just a few miles down the way in a not so nice area, the same Big Mac is almost 3 bucks cheaper.

Why cant I be able to build & price a car on an auto companies site, see what it comes out too, go to the dealer, be greeted by a sales person that’s AT LEAST making a decent salary or hourly wage, see the price I saw on the net, and be gone in 2 hours or less? Anyone agree or disagree with me? What steps would need to be taken for any of this to happen (besides the obvious first step of auto companies needing to take control over dealerships).

TheHondaBro > LJ909 10/03/2015 at 18:47

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I agree 100%.

CB > LJ909 10/03/2015 at 18:50

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I think commission should be removed from sales of every kind, personally.

Nymphicus Hollandicus > LJ909 10/03/2015 at 19:09

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Many car salesmen don’t seem to follow the Golden Rule of Selling: Always put your customers first. They all suck donkey balls, and make me worried about when I will possibly make my first new car purchase (well lease most likely) in a couple of years. I feel like they’ll mock me for trying to get the manual base level car without all this social media or safety crap.

LJ909 > Nymphicus Hollandicus 10/03/2015 at 19:14

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They won’t mock you for that. They will mock you behind closed doors because your going to be a first time buyer & because they think you think you have the upper hand because of whatever research you have done about the car.

DrJohannVegas > LJ909 10/03/2015 at 19:20

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Saturn?

Nymphicus Hollandicus > LJ909 10/03/2015 at 19:22

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And that’s why I will be bringing my dad with me. He knows how to make even the most thick-skinned salesmen cave in and give him below MSRP and such. He got a Volt for a killer deal because he knows the system. Plus he’ll obviously make sure they don’t take advantage of me.

LJ909 > DrJohannVegas 10/03/2015 at 19:25

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A brand that didn’t have badly excited products.

dogisbadob > LJ909 10/03/2015 at 19:33

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Totally agree

Urambo Tauro > LJ909 10/03/2015 at 19:40

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As a “car guy”, I already know what I want when I’m looking for a car. I don’t step foot in a dealership without doing extensive research. I honestly don’t see a salesman as anything but an annoyance and a hurdle in this situation.

However, the average buyer is much more likely to need help choosing a car, and I can see why it can be helpful for there to be someone whose entire job is to help a customer through the process.

So, wouldn’t it be better if the buyer had the option to skip the salesman altogether? And if the buyer actually wanted assistance, could they then pay some kind of premium (commission) for the service?

DrJohannVegas > LJ909 10/03/2015 at 19:44

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Not sure what “badly excited” means. I just mentioning that the fixed-price model has been used before.

Also, on your hamburger example: When you buy a Big Mac, you are paying for the ingredients, the labor used to prepare it, the advertising costs, and the cost of maintaining the property where it’s made. All of those things factor into the price a location charges. Customers are the one “in a nice area” may be willing to pay more for the overall experience because it’s qualitatively different than the alternative.

For the most part, Big Macs are commodities, so the market wouldn’t support that big a price divergence (and would lead one place to closed down) if there wasn’t a perceived difference in quality.

Edit: Franchising does create an oligopoly market, so that does distort things a bit.

LJ909 > Urambo Tauro 10/03/2015 at 19:55

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That’s not a bad idea. Only have a sales person arubd if you actually need it. Sales people are like children and can be creepy because when they go away to let you look, they don’t actually go away. But this is a great idea. Have them get paid off the fee for assistance.

ranwhenparked > LJ909 10/03/2015 at 19:59

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In both cases, I’d say it should be the choice of the manufacturer/business owner. I’d be more likely to shop at a dealer where salespeople were paid a decent salary, rather than commission, so I know that I’d seek out that sort of business if they were to publicize it.

Furthermore, I would probably prefer the option to just buy a car direct from the manufacturer with no middleman at all, if it were available, so I definitely would like to see those laws mandating sales exclusively through franchises be repealed.

I’m not saying get rid of dealers, I’m saying give consumers the choice of whether or not they want to buy from dealers and let the dealerships prove their worth.

Urambo Tauro > LJ909 10/03/2015 at 20:15

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Well, I’m just trying to think of what the purpose of a salesman is, and how they came to be. It seems to me that a customer would walk in and need help choosing a car, so the salesman shows them around. Once they pick out a car they like, the salesman sits down with them to have a chat and talk about what options would better suit their lifestyle and needs.

You could say that’s still the case, but it seems that things have changed for the worse. In today’s cut-throat world, the focus is more on profit. How much money can the dealership get out of the deal? How much money can the salesman make via commission?

In the used-car sales world, there is radically different pricing between purchasing from a dealer, and purchasing from a private party. Why is it hundreds (sometimes thousands) of dollars more expensive to go through a dealer? What is the customer paying such a premium for? (Especially if the terms of sale are AS-IS, no warranty.)

Well, to be fair, there are indeed several things a dealership offers here. A dealership’s cars are gathered in one place for shopping convenience. They are carefully cleaned inside and out. Most (if not all) mechanical problems are addressed prior to it even being put up for sale. Dealer plates are available for test drives. These are great lengths that you often won’t get from a private seller. That’s worth something. But how much? It’s hard to say...

desertdog5051 > LJ909 10/03/2015 at 21:01

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As a veteran of commissioned sales, I can say it is a good thing as long as you think about the customer first.

I spent way over 20 years selling medical insurance. In that field, you must take the customers concerns foremost. If you do not, you risk putting them in financial jeopardy should a serious thing occur.

I walked away from many sales that I could have made because I could not get the product into their price range without compromising the benefits they needed. I would not deceive them to get a sale. Many called me later to accept the offer I presented. (insurance is not like cars. There is no room for change in price).

Car sales are different, I’m sure. But integrity is what makes a good sales person.

I

LJ909 > desertdog5051 10/03/2015 at 21:22

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Your right. But car sales people don’t have any integrity. I’ve often likedned them to crack beads: always looking for that next hit. They care nothing about the customer no matter how genuine they come across. You can tell by their body language. The over laughing if you make a joke, looking around while your talking to them. As soon as your down at the table it begins. If they really cared about customers they wouldn’t have the reputation that they have.

desertdog5051 > LJ909 10/03/2015 at 23:15

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Probably very true. My only experience with a car salesman was one of “really, you said that?)