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Thank you, Mr. Auto Dealer, for my Free European Vacation
What would I do if I owned an auto dealership, was struggling to find inventory, and had limited supply on hand? What would I do?
Depending on the limits of my supply, I would likely charge full sticker price. If my inventory was substantially low, I might even ask over sticker. But how far over sticker is too far? At what point does the customer see it as piggish and greedy?
For more than a decade, I have invested in a new vehicle every 36 months at the same dealership. Ditto for my wife. It works out to where every 18 months, one of us is buying a brand new vehicle. We also did and do all of our service and repairs with this dealership. We even finance through them and their manufacturer.
Being in the business and knowing how hard everyone works to get a deal, I never grind my salesperson to the point where they are making little or no commission. Instead, I always negotiate a deal that is fair to both of us. Call me a fool, but I do not like it when my clients grind me, so I do not play the role of the hypocrite, even if it costs me a little more money when it is my turn to buy.
This all changed a few years back when a tax law was put into place that allowed for corporations like mine to invest in a vehicle and apply it as a tax write-off. Seeing this as a huge benefit, we accelerated our purchases to once a year. My wife, Candy, would get a car one year and I would get one the next. We did not negotiate the price. Doing so would only give us less to write-off. Everybody was a winner.
My year for getting a new car was 2021. Knowing what was happening in the auto industry, I started my purchasing process four months early. I contacted the dealership I had been loyal to for over a decade and communicated what it was I wanted in my next vehicle. The timing was perfect. They started watching for the exact type of vehicle I was looking to purchase. A month or so later, they identified a vehicle that matched my wish list. They notified me and asked if I was interested. If so, I needed to put down a deposit to secure the purchase. I quickly agreed, until I found out about the one new stipulation. They were going to add 30 percent to the purchase price on top of full invoice.
Not happy, I started reaching out to other dealers in my area and found that to get what I wanted, it was going to cost me another 25 to 40 percent over sticker, depending on the dealership. Sure.
Initially insulted and mad, I started thinking, who am I to judge? Would I do the same thing? Never judge another until you have walked a mile in their shoes.
Isn’t that the old saying? I’m not so sure what I would do, but I can tell you what I did.
As I have already stated, my first reaction was to call their competitors to see if they would sell me a vehicle at a reasonable price. The dealership that I had been loyal to for so many years, let a sure-shot, count-on- them-every-year-customer walk out the door and shop them.
When their competitors were discovered to have the same mindset, I started shopping other manufacturers. Again, the dealership I had been patronizing for twelve years, not only let me shop them, but they also forced me to consider an alternate brand. I did have a client of mine offer to sell me a similar vehicle of a different make at sticker. I knew it would be a loss to her because clearly the market was going to allow her to get over sticker. I politely declined, mainly due to the fact that the car was not really what I wanted, and I knew I would not be happy.
Next, I contacted my accountant, made an appointment, and reviewed the other options I had that did not involve getting a new car. As tax laws ebb and flow, so do the options. As it turns out, I did have options. My wife was exuberant. She never really liked buying a new car every two years. We only put about 4,500 miles a year on a car and getting a new one that often seemed kind of dumb.
Fortunately, we discovered it’s not necessary. We found a whole host of other things that we can do with our money that sounded much better and even fun. For instance, did you know that holding an executive board meeting in Europe, or anywhere for that matter, can be written-off just like a new car? The new benefits we uncovered were appealing and interesting to us.
We went from being upset by the way we had been treated by the dealership, to being grateful to them for getting us off our asses to review our situation and all of our options. We found that we were not the only ones. Many of our friends are business owners and they have found themselves in our same predicament. They have also made similar changes as to where they are spending their hard-earned dollars. As a person in business, I will admit that although I don’t understand why the auto industry is allowing this to happen, I do at least consider that I may not have the total picture.
After all, I don’t walk in the auto dealer’s shoes.
My question is simply, is it worth it? What about the non-business owner who has remained true-blue to their local dealer and wishes to continue to do so? What does this look like through their eyes? Every intelligent person would know that just because you own a car dealership does not mean that you are a billionaire. But in the community where I live in, there is no hiding the fact that dealers are some of the wealthiest. The people who live in our community see the excessive wealth of the dealership owners first-hand. You have to wonder, does the average person think that the dealers are just reacting smartly to the current supply and demand challenges? Or are they solely acting to maximize their bottom line profits, not giving a thought to the negative impact it will have on the loyal customer? Does the consumer see the dealer as being the stereotypical greedy car salesman, ready to stick it to whoever, whenever they can?
It’s tough to know, but I can tell you this, loyalty takes years to build and seconds to crush. Looks like I will be sitting out of the car buying game for a while. Yes, I am positive that in the future, long after the current chip situation subsides and inventories return to normal, I will be back in the market. That is a given. When I return to the car buying market and where I return to buy my next car is up for grabs. I do intend, however, to make it a prominent agenda item for discussion at my next “executive board meeting” in Sweden… or maybe Amsterdam.
Jeff Cowan – Jeff@jcowansprotalk.com
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1 Reply
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Great information, I will be reviewing options with my professional team – I will add a personal note. Just the thought of all the depreciation value of those vehicles makes me wonder if you were getting good advice from your CPA?
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