What does it mean when a car salesperson gets a “bump” from you?  It does not mean that that two of you are so excited that you have decided to dance.  Instead, it refers to a point in the car negotiation process, or the verbal dance between you and the dealership.  When a salesperson gets a “bump” from you, he or she has simply gotten you to raise the price you have offered to pay for the car.  Be sure that you really want to give that bump, and do not be pressured into doing so.

Car dealers have their own lingo.  We have posted about “bird dogs” and “be-backs.”  What about bumblebees?  We all learned as kids to stay away from wasps.  I still remember a couple times when a wasp got the best of me.  Real bumblebees are not usually aggressive, though they will sting if provoked or to protect their nests (http://en.wikipedia.org/wiki/Bumblebee).  Bumblebees at car dealers are different.  They are not hard to spot.  In fact, you might be able to look into the mirror and see one.

A bumblebee, to a car dealer, is a consumer who goes from dealership to dealership but never buys anything.  They talk.  They test-drive.  They say that they will “be back” after looking at other cars.  Car dealers dont like this type of bumblebee, because they can’t make money without a sale.

There is nothing wrong with being the right kind of bumblebee.  Take your time.  Compare prices and features.  You will likely have that car (and possibly a payment to go with it) for a long time.

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You have been walking the lot with the salesman for 45 minutes, and you have actually driven one vehicle.  The salesman keeps pushing you toward a vehicle that really does not meet your needs, but for which he says that he can get you a “great deal.”  After another hour-an-a-half of prodding, and two more test drives, you have been beaten down.  You finally begin to believe that what appears to be the salesman’s favorite car is actually the best deal on the lot.

The car is not the color you want, but you rationalize that your favorite color is really too flashy for your age.  The car only seats 4, and you have a family of five.  Well, your family can always take two cars, right?  The model year is two years ago, but the car is still “new,” right?  Oh, and then there is the fact the the salesman can get a “spiff” or a bonus for selling that particular car to you.  What?  You didn’t think about that, because the salesman did not tell you.

A “bonus car” is one for which the dealer will pay a salesperson a “spiff” (usually cash) or a bonus.  There is usually a reason that the dealer needs to pay a bonus.  The car is “new,” but the model year is two years old.  The car has a horrible Consumer Reports rating.  The car was previously wrecked and repaired.  The list of potential issues is long.

If a car salesperson keeps steering you (no pun intended) toward a particular car or truck, ask her (and yourself) some questions.  Its always great to see someone get a bonus, but it should not be at your expense.

Do you remember your first set of keys?  Were you fortunate enough to have keys to your own car, or were “your” car keys really your parents’ keys for their “not so cool” car?  Whichever was the case, your car keys represented a lot of things.  Freedom.  Mobility.  The ability to “get away.”  Car dealers understand these things, and they can use them to your disadvantage.

The longer a car dealer keeps you at the lot, the more likely it is that you are going to buy a car.  You begin to feel committed to the salesperson.  You feel like you have invested so much time in the buying process that you should complete it.  These are valid feelings, but they do not help you make an intelligent, economic decision.  Nevertheless, car dealers play into these feelings.  If a car dealer cannot use more subtle ways of keeping you at the dealership until the deal is closed, they might “throw your keys on the roof.”

If you have driven to the dealer a vehicle that you might trade, a car dealer might ask for the keys to the vehicle.  The salesperson will tell you that she needs to get an appraisal of your trade-in.  She will then hand the keys off to an unknown employee, who in turn disappears.  If it seems to the salesperson that negotiations are not going well, your keys will be magically “lost.”  The car dealer has effectively thrown the keys on the roof, so that they cannot be found.  There was a time when some dealers would literally throw the keys on the roof in order to “lose” them.  Now, dealer employees might say to each other “put them on the roof” as a way to say, “Let’s play keep-away with the keys.”  At this point, the dealer will pull out every sales technique in the book to sell you a car.  You continually ask for your keys only to be told, “We are still looking for them.”  You are stuck.  Your car is at the dealer, and you have no way to leave.

How do you avoid this situation?  Do not give your keys to anyone until you have a written deal, including terms for your trade-in.  This might seem cumbersome, but you need to avoid allowing a dealer to control when you can leave.  Otherwise, you might make a car-buying decision that you will later regret.

There was actually a case in the Dallas-Fort Worth area years ago in which a hearing impaired person was allegedly treated this way.  Here is the Fort Worth Court of Appeals opinion (later reversed by the Texas Supreme Court) -

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Car salespeople want to make sales, but they cannot close deals without a steady source of consumers.  I have talked to more than one car salesman who quit a position at a dealership due to the dealership’s failure to commit sufficient funds to advertising.  When a dealer does not provide a sufficient, steady flow of customers, car salespeople must use other avenues to find buyers.

A “bird dog” is a person who will send customers to a car salesman.  Bird dogs are many times paid by salesman for referrals.  Thus, bird dogs might not be the best source of advice about a particular dealership.  How do you spot a bird dog?  Well, if a person seems far too excited about referring you to a particular dealership or salesperson, and even offers to go with you to assure the sale, be wary.  You might become the bird dog’s next prey.

What in the world is a “be-back?”  The term dismays most car salespeople when they hear it.  It means that they might not get a commission.  It means that they might not meet a sales quota.  It means that they might not bonus that month.

A “be-back” is a consumer who says that he will “be back” later, the next day, the next week, when the Texas Rangers win the World Series, whenever.  A car salesperson wants to sell a car or truck to you not just today, but right now.  Those customers who promise to come back likely never do, or so believe most car salespeople.

There is little a dealer can do when you say that you need to leave to eat lunch, and that you will “be back” afterward.  However, many dealers will send you to lunch in a dealer vehicle.  This assures, assuming that you are not a car thief, that you will truly “be back.”

Don’t be pressured into buying a car.  There will always be plenty of cars, plenty of dealers, and plenty of salespeople when you have done your homework and are ready to buy.

Many consumers care about only one or two things in a car transaction.  Perhaps it is the price of the car being purchased.  Perhaps it is payments.  Or, a consumer might be most concerned about the value she will receive for her trade-in.  A consumer that falls into this last category is an “allowance buyer.”

An allowance buyer is most concerned with the allowance he will receive from a car dealer for his trade-in.  The consumer has a number in mind for the trade-in and will not go below that number.  Car dealers love allowance buyers.  Car dealers understand that they make profit a number of ways in a transaction, including:

• Manufacturer rebates
• Special incentives
• Warranties
• Undercoating
• Window etching
• Interest rate or yield spread premiums
• The price of the car being purchased
• The price of the car being traded

A car deal involves a number of moving parts, made up of products and services with attached varying dollar amounts.  Consumers have knowledge about only some dollar amounts, and car dealers use that to their advantage.  If a consumer cares about only one of many dollar amounts in a transaction, such as the price the consumer will receive for the trade-in, the dealer can jack up and/or change dollar amounts attached to other items.  It is like a magician coaxing you to watch one hand while she does something with the other.

Car transactions are complicated, involving various costs and fees attached to different products and services.  Don’t get caught in the trap of being simply an allowance buyer.  Look critically at every expense in order to reach a “whole” transaction made up of a number of “good” parts.

Photo Source: Wikipedia

Car dealers have a number of ways to make a profit.  One way is to add non-factory installed equipment to a new vehicle, and then to mark it up.  These “add-ons” have have quite a high profit margin.  Common add-ons include pinstriping, chrome wheels, navigation equipment, truck bedliners, and (at times) nonexistent undercoating and seat protectant.  Most dealers will then tape a sheet, listing all the add-ons and respective prices, next to the label listing the manufacturer’s suggested retail price.  One Texas dealer attempted to sell last-year model trucks by installing custom-type add-ons to attract customers.

Don’t forget that there is almost always dealer profit built into every add-on.  Also remember that some add-ons might be for products never provided, such as window etching or fabric protectant.  I am aware of one dealer which charged for fabric protectant but did not have equipment necessary to apply the protectant.