If you’ve been keeping up with my adventures in sales then you know I took a job as an auto broker in January. I figured I could make more money per sale selling cars than selling shampoo and I liked the idea of learning from experienced auto sales people.
I do like to make sure it’s clear that the auto brokerage does not use the same sometimes-underhanded methods as some car dealerships. I’ve discussed those methods elsewhere, but you should know I’m learning about them by asking, not as part of my training. Several of the people I work with have worked at brand dealerships and they don’t mind telling me their stories, which I then pass on to an unsuspecting public.
Anyway, let me tell you about my first sale!
A Used Car Dilemma
A prospective client called me and explained her problem.
“We spent about $3000 on a vehicle for my 17 year old, but not it needs more repairs than its worth. We want to buy another car for him, but we only want to spend about $8000,” she explained.
“Ok,” I said. “Would you like to come in tomorrow and talk about it?”
When you talk to me about the vehicle you want to buy, I’ll always ask you to come in to the office. Why? Because we want you to see all the details. I’m going to run your budget through a calculator and I want you to see where the money is going to go. We also want you to see the data we use to determine what you can get for the price.
We can do the best job for you when you feel you can trust us and the best way to do that is to be transparent with our information.
When you come see us, we’re going to give you financial options. The auto industry is big and complicated. Asking everyone to understand how to make the best car-buying decisions isn’t much different than asking people to make the best investment decisions on their own. It helps to have an expert on your side who understands the big picture.
I’m not quite an expert, since I just started in January, but my boss has been in this business for nearly 20 years.
“We could try to find you a good car for $8000, but if you can go to $11000 then we could find one with some warranty left on it, ” he explained as the three of us discussed it. “Another option would be to lease a vehicle. It would cost about the same over three years if you consider the cost of likely repairs on an older car.
The client was curious about buying a vehicle with some warranty left. Ten minutes of research revealed a 2016 Kia Rio in that range. We could have bought that particular vehicle on the spot, but she still wanted to know more about what was available for $8000 or $9000.
Charts and Graphs
I have a strange personality. I love socializing and can do it all day long, but I also love details.
“Nice,” my boss nodded approvingly, looking over the research I had put together. “I don’t know that I would have had the patience to make a chart like this.”
“To each his own,” I thought. If you ask me, putting the chart together was more fun than a barrel of monkeys.
I had researched subcompact used cars that were rated well by Consumer Reports magazine. Then I looked into the average retail prices for those vehicles in good condition. You can do this too. Call your local library for the Consumer Reports data and use a website like NADA.com or KBB.com to get the typical retail prices.
Next, I looked at what was available at the auto auctions, like Adesa. Auto auctions are only available to licensed dealers. I used the auction data to look for the cars that met our qualifications from the chart I made. I only looked vehicles that had never been in an accident.
The Results of My Search
I discovered that it is possible to find a used car that met my clients criteria, but there was a problem.
Nearly every vehicle had body damage, interior stains and/or an odor. I found one or two that were in better shape, but they were far away and the shipping costs put them over budget.
I brought this problem to my boss and asked what he recommended. Remember, he’s been doing this a long time and has come across nearly everything.
“Well,” he answered thoughtfully, “all used cars are a risk since we don’t know their history.”
This is true. Sometimes the Carfax information tells us about some of the maintenance, but usually the maintenance history of a used car is lost.
“I have a clean Toyota Corolla available that I bought from someone I know,” he continued. We don’t have a car lot, but we do usually have a handful of used vehicles available to sell.
“We can sell it to her for $3500. It’s about the same amount of risk as buying an unknown older car from the auction and she’ll have some of the budget left for the next car,” he concluded.
One More Option
I called my client and explained what I found and what we recommended she do. She was silent a moment.
“You know, I had another idea as I was walking the dog,” she said. “What would it cost to lease a small car? If I’m going to have nothing left at the end of three years then I might as well consider it.”
What she said is true. The chance that she would have to buy another old used car in the next three years is pretty good.
What did she decide to do? Stay tuned and I’ll tell you next week.