(Part two of a two-part series)

I do not have enough space in this month's sales meeting for a little start up story so we are just going to get right into it. Note also that today's meeting will make more sense if you read part one in May's issue.

Points to ponder:

  • To increase gross profit you have to negotiate from small increments of money, not thousands of dollars.

  • Do not discuss the price or figures with the customer while you are standing in the showroom or on the dealership lot.

  • The salesperson or manager should always lead with the price.

  • Never ask the customer for an offer.

  • Always portray your numbers as favorable to the customer.

  • If the customer counter offers, whatever it is, be surprised (React).

  • At the start of your negotiations, write down the third verbal offer from your customer, get it initialed by the customer and get some leverage.

  • Never write down the first or second number the customer says.

  • Always enforce the numbers you have been given by your manager.

  • Remember your job is selecting the right vehicle for your customer.

  • The manager (dealership) approves the transaction.

  • Do not panic during your negotiation. It's a part of your job, get good at it.

  • No one leaves the dealership without the OK of the manager.

It's all psychology

How you start, present and handle negotiations will determine if the customer will purchase from you. It will also determine your gross profit and CSI/SSI.

The salesperson should always start the negotiation and if the customer has come to your dealership on an advertised special, this style of negotiation will not be used. In some situations — used cars for example — you can present the customer with no discount.

An example of a price negotiation:

You can use this style for payments and trade-in negotiations:

MSRP or Selling price: $30,000
Salesperson's
customer savings:
— $300
$29,700

Ask the customer:

“Ok! Mr. Customer all I have to do is get you to approve this!”

When you present this number (in the sales persons office, with no management involvement) the customer will react. You want them to. If the customer overreacts because your savings or discount is not enough, remind them what your position at the dealership is.

Tell the customer:

“Mr. Customer as I've said before, my job at the dealership is assisting people in selecting vehicles, so please let's see what I can do about the price.”

Ask the customer:

“What were you thinking you could get this vehicle for?”

When the customer counter offers, the salesperson must react.

Example: Customer offers $27,000. React!

Be creative with your reactions. Remember how they reacted when you gave them your price savings.

Never write down the first or second number the customer says. They will think they are close to a deal or you would not have written it down.

Your response to the customer:

“Where did you come up with a number like that?”

You and your manager will need this information to know how to work the negotiation from this point. The customer's response to this question will get them right to the point and they will tell you where.

You have to work from small increments of money, verbally go down on your number. Do not write your verbal numbers on your worksheet. The reason you are doing this is to get another number from the customer. You must get a third or fourth verbal offer from the customer.

Tell the customer:

“What if I could get you the vehicle for $29,600, (pause) What about $29,550, $29,500 …

When the customer has given you the third or fourth verbal offer, write it down, get the customer to initial the number and then get some leverage, sincerity or some money (financial commitment). Never say “financial commitment” or “partial payment” to the customer.

In the May issue, I said never to ask for a deposit too early in the negotiations. But definitely ask for something.

Here are three ways you can ask for money (commitment), without saying “deposit,” “financial commitment,” or “partial payment.” Remember that a deposit is only given when we have agreed on a number. This is the correct time to ask for the deposit. But until then you only need to say and use one of the following.

So how do you ask for money without saying “deposit,” “financial commitment” or “partial payment”?

Sincerity money:

“Mr. Customer to show the dealership that you are sincere about getting the vehicle I will need a Master Card, American Express or VISA card or do you have any money with you?”

Leverage money:

“Mr. Customer I will need some leverage to show the dealership that you are serious about getting this vehicle. I will need a VISA MC, AMEX card, or some money?”

Something money:

“Mr. Customer I will need something to show the dealership that you want this vehicle. Do you have an VISA, MC, AMEX card or do you have any money on you?”

Once the customer has given you some type of financial commitment, ask him:

“Mr. Customer, if we agree on a price/payment/difference, can we can use your sincerity/leverage/something money towards your deposit?”

At this point in the negotiation you will take your worksheet, customer's driver's license, and money to your manager and explain what is happening with this customer.

It is very important to get to the point with the manager so that they can assist you in closing the sales. The manager will give you a number that the dealership needs to make the deal. Take it to your customer and show them. They are probably going to react again, but just repeat what you know from how you started the negotiation.

Dealership number is $29,147. To get the customer to move up from his or her number, you will have to move down from your number slowly. Do not go to the customer's number.

Ask the customer:

“What if I could take off $47? (pause) How about $100…?”

If you do not slowly go down on your number, the customer will not move up on his. Try to get the customer to move up twice on their number and when they have, write it down again, get it initialed and then take it to your manager.

At this point in the negotiation you have to “keep negotiating” until you have agreed on a number.

There are only two places you can go from here: We sell a car or we let the customer go home, no deal. This decision is yours. Also remember that you have two jobs at the dealership: Helping people find a new vehicle and professionally negotiate.

Meeting wrap-up

There is no perfect way to negotiate and every sales person will have his or her own style. This example has been well-thought out, and gives you an exact procedure and the exact words to say. You can use all of this or some of it. It's up to you. Keep your head down and eyes on the ball. Practice, Practice, Practice.


Darin B. George runs the Automotive Sales College, which trains people for careers in selling cars. He also conducts sales seminars for dealerships and manufacturers. He's at 1-888-681-7355 and asccanada@sprint.ca.