Much of a dealer’s profit is made in other ways than gross these days, such as D&H, interest rate markup, and things they’ll sell in the finance office (as I cover in next chapter). Many of the more successful dealers advertise their cars using what’s called “market based pricing,” where they use complex software to track what cars and trucks are selling for both locally and nationally.
Then they set their ad prices to within $3-$500 of what they expect to sell for after negotiations. These lower, more accurate ad prices generate more showroom traffic.
I try to do the same (without the software), and I am always happy to try to meet realistic demands from clients new to me, who might have come in to buy one of our cars via Internet ads. But I do ask them why they think I should shave off more money. If they can point out that a similar car (year, miles, equipment, condition, etc.)
If you leave a dealer without buying, chances are they will “Put you on the bubble.” This is industry parlance for throwing out a statement that will make it appear that they will meet your conditions if you come back to them.
The reason it’s called that is that if you do return, they will pop the bubble, deflating your expectations, making them vanish like the fantasy they were all along. In other words, not doing what they implied they would.
The bubble isn’t real
The dealer will not meet your expectations when you return; if they had, you’d never have left in the first place! But if you come back, they can take another crack at you. In the meantime, you’ll be out, trying to match that false “mind deal” at competitors, most likely without success. The dealer that put you on the bubble will look stronger in comparison.
Pay attention to each product’s price, not its affect on payment
The menu will often show the price of each item in small print, and more boldly, what your monthly payment increase is if you choose it. That’s because it’s much easier to sell $10/month than $600 up front. Keep both in mind.
Sometimes the manager will run into resistance from an astute customer. They’ll set the menu aside, perhaps print some of your sales documents, and then approach it obliquely, using what’s called the “step sell,” wherein they incrementally suggest things that will have only a minor impact on your payment. They can be very, very good at this; a subtle expression of surprise that you don’t see the value in something they’re selling is a common—and successful—tactic often employed.