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This week in 1988: Taming the Import Jungle

This week in 1988: Taming the Import Jungle

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Published by AutoweekUSA
At most dealerships nowadays, there aren’t that many differences in terms of how domestic and import dealers are set up and run.
Flashback to 1988 and things were a bit different. During this issue, we cover some vital keys in saving money on your next car purchase and how they worked.
For instance, domestic dealers at the time could more easily get cars to sell than foreign dealers.
And for import dealers, an empty lot usually meant the prices were lower, meaning that a full lot wasn’t always a sign of a dealer desperate to make a deal.
We also covered negotiation tactics that would help you at any type of dealership such as: never talk price on the first visit, seek out your original salesperson and know the market value of your car to avoid being gimmicked.
At most dealerships nowadays, there aren’t that many differences in terms of how domestic and import dealers are set up and run.
Flashback to 1988 and things were a bit different. During this issue, we cover some vital keys in saving money on your next car purchase and how they worked.
For instance, domestic dealers at the time could more easily get cars to sell than foreign dealers.
And for import dealers, an empty lot usually meant the prices were lower, meaning that a full lot wasn’t always a sign of a dealer desperate to make a deal.
We also covered negotiation tactics that would help you at any type of dealership such as: never talk price on the first visit, seek out your original salesperson and know the market value of your car to avoid being gimmicked.

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Published by: AutoweekUSA on Jul 16, 2013
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09/28/2013

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A
former
import
carsalesmanletsyou
in
oninsiders'secrets
that
will
saveyoumoneyon
the
next
caryoubuy
By
James
Underwood
I
sixyeanofsellingimport
cars.
I'vemadeanumberofobservations.Some willprobablysurpriseyou.Somemay evenmakeyou
angry.
nanycase.agood dealof
the
informationI'maboutto
sham
withyou
has
neverkeninprintbefox.for reasonsyou'llfindfairlyobvious.Disclos- ingthisinformationmightmakeitdiffi- cult,ifnotimpossibleformeevertowork in
the
businessagrun--dealerprincipalsin generalhavinga
poor
senseofhumorabout suchthings.
This
informationwill,how-ever,openyoureyesandhelpyoubecomea sWr,better-informedbuyer.Tobeninwith.most~eo~lc.venveteran
I
import
&I
buyers,don't
hize
thattherearefundamenddifferencesbetweenhowan
mwr(
dEa~eIShi~
nd
a
domestic
dealers hi^
wdrk.
Or,
ifth&do,theyhaven'tcome
tb
therealizationthat
these
differencescallfachangesinbuyingsmtegy.Oneofthemost fundamentaldifferences
is
inhow
the
two
types
ofdealershipsgettheirinventory. Domesticdealers,iftheyaren'ttoopar- ticularabouttheirmodelmix,havefarless troublegetting
more
carstosellthanalmost anymajorimport.Totheimpondealerthe distributor'sgreafest"catrd'
is
something
calledtheallocation.And
that
allocationislinked,inmanycases.towhatiscalled "theturntoeam"4emoreyousell.the
more
yougettosell. Whatdoestheallocationsystemofdistri- butionmeantoyou? It'stheendofthemonth.Youdriveinto aForddealershipandnotice
400
carsininventorywithavanspottercirclingthe blockwithmoretounload.Thenormal assumptionwouldbethatyou
had
foundavolumeordiscountdealerandthatyou couldexpect
him
togiveyouaminimum pmfit
deal
aloteasierthanadealerwitha smallinventory.Atadomesticdealershipin mostcasesyouwouldberight,butinan importdealershipyou'vemostlikelyfwnd thedealerwhosellshiscars
at
higherpricesthanhiscompetition.There'sasayinginthe imponbusiness:"Hewhohas,getsmore." Andthisishowitworks. If
bee
importdealersinaregionhavea similarallocation,
perhaps
50
cars
amonth.
30
At
an
mpotldulerohlp.
a
fulllot
Is
m
and
evenasmallnumberofpeoplecom- parisonshop,whodoyousuppose willsell
their
canfmt?Thedealerwhogives
the
ktrices,ofcourse.Andbecausehecan't getmorecanfrom
the
distributorduetothe constraintsoftheallocationsystem.youcan
see
howhislotmightlook
way
barebytheendofthemonth.Atthesametime,the dealerwho holdshiscarswillhaveplentyof
cars
tosell.And,ofcourse,thisis
the
ratio-
nale.Becausethehold-outdealerwillhave carsavailable
fa
eliveryatatimewhen
his
cornpetitasdon't,he'llbeabletosell themforasubstantialamountmareto
the
peoplewhoneedacarrightaway.
So,
ifthislinlegameworkssowell,why don'talldealersholdtheir
cars
until
the
endofthemonth?It'sasimplematterof money.Mostdealersdon'thaveenough moneytowarehouse
a
largenumberofcars withoutborrowingmoneyfromthe
bank
todoit.You'veheardthistermbefore;it's called"floorplan."Bankersloveit. Dealershatetopayit.Andsoeachdealer strikesabalancebetweenhowmanycan hehasonhandtosellandhowmuch cashflowheneedsweektoweektokeep everythingfunctioning.Holdingcars,there- fore.isagameforthestmngonly,another reasonwhyitworks. Butdon'tfeelsorryforthesmalldealer. There'sa
game
hecanplay,andit'snearly asgood.It'scalledwarehousingbuyers.It's avariationon
the
same
rheme,
and
also
I
Y
.I"#,
I
I
-
p.w
IU
UI
dimflyrelaledtotheallocationsystem. Eachyear,themanufacturersdecide
I
ahead
oftimebowmanyofwhatmodel they'regoingtobuild
and
inwhatcolors.Tbenthedistributordecideshowmanyeach individualdealerisgoingtoreceive.It comesdowntoadefinitenumber.Ifanin- dividualdealerisslatedtoreceive
600
carsoverthemodelyear.number601isnearly impossiblefor
him
toobtain.Soitstandstoreasonthatifadealert&s moredepositsoncarsthanhe
has
intotalallocation,someoneisgoingloget
lofl
out.Whomostoftengetstheshortshaw?Those huyerswiththesmallestgrossprofitsin
theiu
deals.Ironically.thesameoneswho wercotherwise
the
bestnegotiatm.Now,of
cciuse,
whatI'vedonehereis putyouintoanewinsituation,haven't
I?
Pleaserealizethatnolalldealersplaygames likethesewiththeirhuyers.ThepointI'm tryingtomalteisthatsomedo,andyou
need
toknowhowtoprotectyourself. Let'stalkabouttheoriginsofyournew
ca~.
don'tmeanthecountryinwhichit wassupposedlybuilt,eventhoughthat'san inlerestingstory
.in
itselfsince
some
Ger-
man
carsarebuiltinBrazil,someSwedish carsarebuiltin
Caoada,
andsomeJapanesecarscomefromtheU.S.,ofallplaces. WhatI'mtalkingaboutisthis.Nowthat you've"ordered"yournew
car,
howis
the
dealergoingtotillyourorder?
You
havea
nghl
toask
this
question.
In
fact,
as
a
mat-
AUTOWEEKJULY
18.
1988
 
agttement.)
he
minuk you
start
tal~ing
te~
f selfdefense, it's
nsessary
for you
to
st&
(with
lbe
exaption of
heavy
shipmnt
ask
this
question.
petiods
early
in
the
model
nm
when manyYou
see,
in
the
Detmit scnse of the word.dealers have
large
inventories on
hand).
Thc
them
is
w
such thing
as
an
ordered
car
advantages have
to
&
with knowing that
wbcn
you
are
dealing with the majority
of
you have a finalized deal. Knowing that
the
imports.If
the car you're buying isn'tyour price will not change overnight he-rtually "in
stock,"then
it's
eithu
"in-
cause
of
sudden
pria changes (a valid con-
coming"
or
it's
to
be
"located."
Nobody
eem
given tlucluations
in
exchange
rates
as
ever
even
so
much
as
calls
the
factory on
well
as
"d'
rioc
h*cs).
KnoW
your
behalf;
it wouldn't
accomplish
a thing.
wbcn
you can
take
delivery.
Knowing
that
La's look closely, then.
at
some of the
pros
your Jalespemou isn't going
to
call you in a
and
cons of
each
of
thcsc
the
ategories.few weeks
and
tell you
that
your
car
arrived
In
Stock.
'll~re
rc
a number of advan-with more equipment
than
you expected,
a
tages to buying a
car
that's immediately
that
you
are
now subjat
to
a mmufactuer's
availabk,
very
few of whkh
are nlsted
to
price
increase.
(Thm
is
no
such
thing as
price.
In
fact
as
we've already
discussed,
pria pteCtion on an
ordered
car,
and
if
you're
apt
to
pay
mae
faa
car
that's inyou
doubt
this,
Md
tbe
back
of ym
nlcs
AUTOWEU(
nLY
18, 1988
sboutacarinanymyothaearegory&sidcsin
stock,
to
some extent you're rolling
the
dia.
Som
pcoph
would
her
deal
in a
known
wmmcdity
then
gamble
umrcauar-
ily. You may
be
ooe
of
lbcse
pecrpk.
lmwnlng.Thisisacartha(mthetimcof
pmchsseisMuaUysbowiDgmthedalds
next monthly alloclton.
In
most
case8
ar
whose scrial number is available to youupon signing your
purchpse
contrst.
Typi-
caUy an
import
sakspmon
w& heavily
from
this
ineomiag alldon. When busi-
ness
is strong, it isn't
umnnmon
to
havemost of
this
gmq
sold hefm tky everarrive at
the
dealemhip.
You'll
most
likely
maLcyourbestdulononeofmesc,but
remember
you
are
hying
somclhing
sight
unseen
and
there's always a
ar(ain
amount
of
risk involved.
M
o gel
dnmaged
inshipping,
and
in some
rare cases
thcy
ac-
tually do
disappear
from alMw.
The
pria could
slso
change.LaateorDakTn&Thisisacothat
the
dealer sells you litaplly
m
mC
"if
come." It isn't in
stock.
It isn't in
his
nextallocation. He may have aldy old
out
his
allocation of
this
rnular
model.
He
taLes
ywr depositinhopes
that
he
can come
up
with the car. Locate
cars
cause the mostproblems for buyers
and
for dealers
alike.
This doesn't mean, however, that youshould
drain
From buying a
car
this
way.
If
you
do,
there
is
a fairly simple
safeguard
31

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