A lot has changed in the past 30 years and the characterisation of the sleazy salesperson is outdated. With the professionalization of the industry and the transparency that the internet has brought, salespeople today are as professional as any other. 

However, when you look at various studies, salespeople are still ranked as dishonest as lawyers, journalists, politicians and real estate agents. But is it any wonder that consumers dislike these professions? Their jobs dictate, that they must find a middle ground i.e. negotiate and most people hate negotiating!

The act of negotiating means that from the very start of a conversation both parties know that the other will try and better their position. A customer will try and save money, which they should, and a salesperson is trying to make money, which they should. A customer enters a dealership in defence mode and salesperson in attack. 

The reality is that a new car today is hardly sold for a profit, in fact a recent report by Deloitte showed that the average dealer makes just $70 per vehicle in margin after negotiation. Dealerships mostly sell cars at a loss so they can sell more finance, sell more aftermarket, service more in the future and crucially make manufacturers targets. The aim of the salesperson is to lose less money! And it is the job of every other department in a dealership to earn it back.

Sales targets often come with large bonuses attached, if the dealership doesn’t get their target, they get nothing. Therefore, the central aim for a customer is to ‘get the best price’, but unfortunately, under the current system a salesperson has no way of knowing what the best price is. It varies from day-to-day or month-to-month depending on the dealer’s relative sales to their target for that period. And customers find this lack of consistency and transparency frustrating.

The current system of buying a car is broken and isn’t serving anyone well and perhaps it is the central reason why there are so many businesses trying to ‘disrupt’ the car buying process. However, many of these disrupters just magnify the current process i.e. negotiate a car purchase harder on the customers behalf. This just amplifies the current problem, as the dealer tries even harder to earn back the money they lost through up-sells and higher service costs.

Making the dealer honest through competition is important but to create better customer outcomes, the whole buying, financing and maintenance process of a car needs to be changed