Monday, July 27, 2009

The Truth About "Cash for Clunkers"

More like "Cash for A-holes"...

I heard this story on NPR explaining how the new CARS program is going to work, and for the most part, David Shephard from the Detroit News was fairly spot on... except that part at the end.

Click on the link and listen to the story.

As many of you know, I work for a dealer who is participating in the CARS program. Here's how the program works from my understanding:

1. If you have a car you think would qualify to turn over, go to and plug in your car and see if it qualifies. You can also go to

2. If your car qualifies, according to David Shephard and "other consumer reports", you should then go to a dealer of your choice and select the car you want to buy, but don't mention you have a "clunker" until you have done the deal. This is where I get pissed off.

There IS a reason why car sales people have such a bad reputation. You the consumer go into a car dealership with the expectation that the salesperson is going to try and screw you over. So it's screw them over or get screwed over. The problem is, most customers don't have a CLUE what the car they are trying to buy is worth. Even if they do the research online... a "good deal" is totally subjective. My manager once told me that he's been in the car business for several years. He knows the industry well, he makes deals, he negotiates with the banks, etc. If he were to walk into a Ford dealership or a GMC dealership, he STILL wouldn't know whether or not the deal they offered him was a "good deal".

When it comes right down to it, you, the buyer, have a budget in mind. You walk into a dealership trying to buy a more expensive car than you can afford, and try and get the dealership to cram it into the budget restraits YOU set out for yourself. It has NOTHING to do with the actual value of the car. And it's up to the dealership to decide if they are going to DEVALUE the car for you so that you can take it home. Sometimes that gap is reasonable, most of the time it's not.

There's a famous book out there that teaches you how to buy a car, and in it they tell you if you have a trade-in vehicle, to bring that up after you have settled on the deal. This is smart for the consumer, and both annoying for the dealership as well as USUALLY disappointing to the customer. But the reason why the book recommends it is correct. Many dealership inflate their trade-in value by taking what it's actually worth and adding on some of their profit from the vehicle you want to buy, thereby showing you a "discount" on the vehicle and showing you more for the trade-in. But if you go in, negotiate your "rock bottom price" and then bring up the trade-in, don't be surprised when your POS car is not worth what you think it is.

In fact, we tell a lot of our customers to take their trade-in to CarMax. It's less hassel for us, and CarMax almost always pays more on trade-ins/wholesale transactions than the dealerships will. The reason is, they have access to the markets where YOUR call will likely sell for the highest amount of money, so they're able to pay you a higher dollar amount.

Where most people's disappointment is when they negotiate this "rock bottom deal" with the salesperson, and everyone's happy because the payment is perfect and we're ready to sell/buy the car, and THEN you bring up the trade-in, it's then, we the salespeople get to discover how upside down you are in your current vehicle, and when we roll the substantial negative equity that YOU owe on YOUR car, your payment doubles or raises significantly, and now you want to negotiate the price down back to where it was. Guess what? THERE'S NO ROOM LEFT! YOU JUST NEGOTIATED THE ROCK F*CK!NG BOTTOM PRICE!!!

Okay, but that's trade-ins. You're saying: Don, David Shephard was talking about the CARS program, not trade-ins.

You're right. He was. But he DIDN'T tell you what you need to bring in addition to your POS car you're going to turn in for a rebate, which I was hoping he would have, which would have made this tyraid unnecessary...

If you go into the dealership, after having qualified your car as a legitimate "Clunker" that will get you a rebate, and you wait until AFTER the deal has been negotiated to bring up that you have a qualified clunker to get your CARS rebate, the dealer then is going to ask you for the following:
- Proof that you have owned the car for more than a year (which means two consecutive years of registrations in your name)
- Proof that this clunker has been insured and drivable for more than one year (which means two consecutive years of insurance cards for your clunker car)
- The ORIGINAL title
- A printout of the side-by-side fuel economy comparison between your clunker and the car you want to buy

See, YOU are expecting the dealer to just give you $4,500.00 or $3,500.00 rebate, whichever one you qualify for. And when they ask you for it, you're not going to have it, because who the crap carries that stuff... then you're going to go home disappointed and upset, and thinking that dealership is trying to screw you over, and now you have to hunt for all this BS paperwork so you can get your freaking rebate... when it's actually the effing government not having their crap together in educating people about what it's going to take, and oh by the way, the "quick reference guide" for the dealers is like 80 pages long and you need to be a lawyer to read it. But that's not your concern...

So if you're going to be a douchebag, I mean, a smart, informed consumer, and bring up this CARS rebate program after you've negotiated your "rock bottom deal"... do your homework and bring all the required paperwork and make it easy for the dealership. You've already done all the hard work of negotiating the salesperson's paycheck away (does anyone find it weird that no one negotiates with a waiter their tip? Or with the cook how much they think the food was worth paying for?) at least do US the courtesy of bringing everything you're going to need to make the deal happen.

Oh, and about that "rock bottom price", I say it like that because that's what we always hear in the car industry "What's your rock bottom price"... You're not actually asking for the rock bottom price, you're asking for a starting point to begin your negotiation. You say you want to cut out the back and forth negotiating BS, but in the end you end up doing it anyway because no matter what number the dealer gives you, even if they've awarded you significant savings even in this economy, it's still not good enough because it doesn't fit in your budget. It's not because the dealer is trying to screw you, although at this point you may deserve it... it's because you're on the WRONG CAR.

Don't expect me to devalue my product just because you got a lower price at a different dealer. My car is a 4-door with premium audio, a sunroof, 18" wheels, an ipod adapter and leather seats. You have seen and touched my car, and my manager has given you an aggressive deal because we have taken our best guess as to what we could get away with on the car and what we think you would say yes to. It happens to be the maximum amount we're allowed to sell the car under invoice. Except you call around to other dealers and one gives you a price $1800 lower than the one we gave you. They say it's the same car, but until they give you a VIN number, the managers name, and what the deal is associated with that VIN, WE have NO reason to believe that deal. You're telling me Peter Pan will sell you the same car for $1800 less than what we quoted you, and we worked hard for your business. IT'S NOT THE SAME CAR. And how DARE you ask me to devalue my product because someone else said it costs less and aren't willing to prove it.

You don't negotiate how much you'll pay for groceries, or your cell phone bill, or your new refrigerator you buy at Best Buy...

It's a stupid cycle and both the customer AND the dealers/salespeople are equally to blame.

Find a sales person you like, someone you want to do business with. Do your homework, and by the way, Kelly Blue Book and does not count as homework. That's a start, but until you get an offer from Kelly Blue Book to buy your trade-in, it doesn't count. They don't buy or sell cars. Your dealer knows the auctions and the market for what they can make a profit from your car, and if you don't like it, take it to CarMax and be done with it. But find a dealership, a salesperson and a manager you like that you want to support, negotiate a fair price for everyone involved, and be prepared.

Being prepared means bring all the necessary documentation you'll need. If you think you're credit's sketchy, bring some pay stubs, 3 months of your most recent bank statements showing income, a recent phone bill or something proving your address. Bring proof of insurance. Bring your driver's license.

Don't be an A-hole. If you're going to screw someone out of their paycheck, make sure you have everything you need to bring to transaction in order to make it happen.

No comments: