Americans painstakenly balance their checkbooks to make sure the bank hasn't cheated them out of a dime--and then they walk right into their neighborhood auto showroom, says former car salesman Remar "Bubba" Sutton, "and blow, waste and throw away forever hundreds of dollars.
"The car business is one of the last roundups in America, the great slaughterhouse of wheeling and dealing, where millions of people each year willingly submit to being taken."
"If you pay $500 profit to a dealer for a car," he says, "and someone would happily have sold it to you for $100 profit, you've been taken."
The auto sales business, he says, is a "tricky and complex maze" only the knowledgeable can negotiate successfully.
"Though everyone buys cars, no one has the vaguest idea of what's going on. I have always wanted to have the ostrich declared the national bird of car buyers," says Sutton, 40, now a magazine writer, advertising consultant and part-time scuba-diving teacher in the Bahamas and Mexico. "It would be the most appropriate symbol: one of those slick color renderings of a bird with its head buried in the ground, tail wagging in the wind.
Dealers try to romance you into signing a contract that will put extra bucks into their pockets, he says, including winning your confidence with a big smile and then confusing you with hard-to-comprehend number juggling. "Obfuscation is the name of the car game."
Dealers, he says, will make you a cut-rate offer on your trade-in, charge you more for financing your purchase than your credit union, load you up with expensive options and sell you such costly, and usually unnecessary, add-on items as rustproofing, undercoating and glazing.
But from a free-enterprise point of view, who can blame them? he asks. "It's not the car dealer's fault. No car dealer can be expected to look at someone who has offered him a $500 profit and say, 'We'll take $200 instead.' "
As always in the marketplace, the watchword is buyer beware. "Car people do not literally cheat you," he says. "It is a business of integrity, but it is also a business of making money." To help the buyer hold on to as many of their dollars as possible, Sutton has turned his car-selling experience into a readable, informative how-to book, Don't Get Taken Every Time: The Insider's Guide To Buying Your Next Car (Viking, 381 pages, $12.95).
Sutton, who either worked at or shopped 50 dealerships across the country in a two-month period in 1980, has filled his book with a cast of characters he says is typical of many American showrooms. The star is super salesman "Killer Monsoon" who never lets a naive customer off easy. The sales people are composites, "but every incident in the book is real. Car people love to sit around the local bar and tell their favorite story of what they have done."
The book is rapidly making Sutton Public Enemy No. 1 of the car dealers, so much so that when he buys a new car--something he does every three months to keep up-to-date on the business--"I wear a beard or moustache in disguise. I've been thrown off the lot. They perceive me as trying to destroy them."
He denies this: "I like cars. I want people to buy cars." (He is convinced, by the way, that Detroit is now producing quality cars that compare favorably with foreign imports, and cost less.) On the other hand, "Too many people are ruined by the transaction," especially "poor people" and "old people who desperately need transportation. The people who get hurt are those who can least afford it."
Even while a salesman, sales manager and co-owner for a year of a dealership in Valdosta, Ga., "I had some reservations about the morality of the business." He admits, however, that he used many of the "psychological tricks" he describes in his book.
"I was some of Killer . . . I could get virtually every single customer to trust me, and I made more off of them."
At one dealership, a couple he calls the Nelsons showed up looking for a new car. Though obviously of limited income--they worked at a nearby doughnut shop--they were attracted to the most expensive and sporty car on the lot. The salesman, instead of directing them to something cheaper, sold them the costly model, bringing in a nice $2,400 profit. He also arranged financing and credit life and health insurance (to meet the payments in case of long-term illness) at added profit.
Though the car cost twice their annual salary, the Nelsons were able to keep up the payments for seven months until first one, and then the other, got sick and each missed a paycheck for two weeks. Reluctantly, they returned to the dealership trying to sell back their car. They were told their car had depreciated to the point where they owed $3,500 more than it was currently worth.
Still, says Sutton, the firm "was not totally devoid of heart." It agreed to fix up an almost worthless 6-year-old station wagon for them, and the Nelsons were able to borrow $3,500 on it to pay off their first loan. As a result, the couple wound up driving an old car on which they owed a hefty $3,500.
Although he doesn't say so in the book, Sutton acknowledges now that he was the salesmen in that transaction. "That has hung in my memory. Those people literally were destroyed."
People tell him that they dread the thought of buying a car. And no wonder, he responds, "It's like a tooth-pulling session." But by preparing themselves ahead of time, he says, they should become more comfortable with the negotiating process.
Step One--Find out the wholesale value of your present car before you drive up to the new-car showroom. He suggests getting purchase offers from three or four new- and used-car lots. Don't forget to dicker. If they say $4,500, ask for $5,000, and maybe settle for $4,700.
"Probably for the first time in your life, you will really know what your car is worth in wholesale dollars. The vast majority of customers who receive bad deals in the automobile business do so because they don't know this simple figure."
Relying on "black books" or "blue books" for a used-car value, he says, is a sign "you're a sucker. These books are simply the average prices for which particular cars have been selling at various used-car sales around the country."
If you are willing to make the effort, he advises trying to sell the car yourself. You already know the wholesale value--what you can get for it from a lot. Just add on the same kind of profit the car lot would expect to get, maybe several hundred dollars, and take an ad out in the paper.
"A nice, low-mileage, medium-sized car is worth anything you ask. The most-wanted cars are those you can buy for $2,000 to $3,000."
Step Two--Arrange for financing before you go to the dealership. Your best choice is a credit union, if you belong to one, because interest charges usually are lower. Try for a bank loan next, and only then consider the terms offered by the dealership. Dealership financing tends to cost more, although it is often easier to get.
Your budget will fare better if you shop for a car with a price limit in mind rather than choosing a car at the showroom and then trying to figure out how to meet the payments.
Step Three--Find a couple of specific cars that fit your needs and then compute as closely as you can what the models you want actually cost the dealer. Sutton suggests checking the manufacturer's sticker on the car window and then comparing the prices with the latest edition of Edmund's Car Prices Buyer's Guide, available in many bookstores. "This little book is a gold mine."
"Have your facts on paper," Sutton says. "If you know the true wholesale value of your terms before you shop, salesmen won't be able to lead you on some mini-safari around their lot."
Says Oldsmobile dealer Jack Pohanka of Marlowe Heights, who has appeared with Sutton on a radio talk show:
"I feel that an informed buyer many times is an easier customer to sell to than an uninformed buyer. I don't view the customer as an adversary. If I did, I ought to get out of this business. If he doesn't buy a car, we've both lost."
Pohanka agrees with Sutton it's a good idea to shop your trade-in for a wholesale price. "It would make our job easier. Many people have an inflated value of what a car is worth. Cars do depreciate." Pohanka, who joined his father in the auto business in 1949, served as president of the National Automobile Dealers Association in 1976.
To hold down car price increases, he adds, manufacturers "have reduced our profit margins in domestic cars. Customers come in expecting more allowance on their trade."
As for Sutton's warning to beware the smiling salesman, "I can't think he really believes that," says Pohanka." Naturally we want to try and gain the trust of our customers."
Conceding that auto dealers are trying to make their way in a tough economy, Sutton says your chances of getting a good deal are sometimes better at certain pressure periods--when business is slow or at the end of the month when quotas have to be met.
"If you really want to be mean," he suggests, "go down to a dealership 30 minutes before closing time on a rainy night on the last day of the month."