≡ Menu

False Misconceptions About Used Car Dealerships

Time has a way of changing things. Think of everything we are tolerant of today as opposed to 10, 20, or even 30 years ago. Boy, how things have changed!

Luckily, for used car dealers in Lexington KY the auto sales industry has changed their image over time.

It used to be quite a stereotype. The used car salesman. Images of “Larry” from the old 1970’s sitcom “Three’s Company” used to come to mind. You know the one. A guy in a leisure suit, slicked back hair, a toothpick between his teeth and swimming in cologne. “This beauty has it all”, “A little old lady used to only drive this car to church on Sunday.”, “I’d drive this every day.”, etc.

The oozing sent of nervous desperation because they needed the commission on a sale. Any sale. Usually, this came with a high-pressure sales pitch that left the customer less than enthused to be at the dealership. The integrity of selling a “lemon” of a car wasn’t there. Just get the money.

Granted, not all used car dealerships ever were like that. That was just a very poor stereotype created after a small handful of bad reps and bad deals. You seem to always hear about the bad more than the good when it comes to things like this. The truth is there has always been used car dealerships filled with pride and integrity around the country and some of the most popular are used car dealers in Lexington KY. In other words….there are a lot of myths about used car dealerships. Let’s go through some of the biggest and most popular misconceptions about used car dealerships.

Misconception #1 – Dealerships are super rich!!!

There is a belief that all dealerships are rolling in the dough. Most dealerships really wish this was true. Every business does for that matter. The truth is that most dealerships will tell you that they earn a net margin of somewhere near 1-2% (It came be more or less based on a lot of different factors. The car buying industry tends to be very seasonal). When you do the math on that 1-2% net margin it works out to be close to $500 in profit on a vehicle they sell at $25,000. Most sales associates would rather sell used cars. See, new cars earn a little less and used cars earning a little more. Reason would mean that selling a used car means more money for the dealership.

Think of it this way. The big guys like Apple, Google, and Microsoft earn about a 20% net margin. Let’s stop laughing at all the nerds from high school. They are making bank now.

Misconception #2 – “Dealers cannot be trusted! They will screw me!”

This plays right into our opening paragraphs. Funny thing is people really love to think this is true. In most cases. It isn’t. Sure, there might be a few “bad apples” but that applies to every business. Most dealerships realize that screwing over a customer is bad business. Especially now with the internet being so important to car sales. Now customers are not afraid to voice their opinions in the form of online reviews. Bad reviews are bad for business.

Bottom line….tricking a customer into a bad deal or bad service just isn’t worth sacrificing your entire business.

All dealerships want to avoid losing business, and any gains made from tricking customers is quickly lost if there’s a regulatory action, a lawsuit, etc. Plus those bad online reviews are murder as far as future business!

Can an employee act illegally? Yes. Can they try to force a bad deal at the end of the month to try and meet a quota? Sure. But that certainly isn’t trained or condoned at most dealerships – the risks to the business and the staff are just too great.

Misconception #3 – “We’d be better off without dealerships”

There is a growing belief that dealerships are not needed because consumers can get all the information they need from the internet.

The major problem with this is that it completely overlooks some really serious things that dealerships provide. It is a lot more than just putting cars on display.

Dealers are usually locally owned businesses that are highly competitive. This is one of the reasons why they earn a measly 1-2% margin. If dealers were replaced with corporate owned stores, it’s hard to imagine the corporation being satisfied with those types of margins.

Dealers often cater to secondary and used vehicles. The truth is that dealers are a big part of the reason that older cars are in demand.

How do dealers make money? They sell cars. DUH! They buy as many cars as they can at auction, via dealer trades, or via consumer trade-in.

Because of this consumers can quickly and easily sell or trade their old car. Dealers really do need those cars!I

The “Finance and Insurance” department of any dealership is ALWAYS busy. Can you imagine trying to work financing and insurance online only? There is a lot of paperwork to make things go smoothing and the F&I department is one of the most intricate parts of the dealership.

Misconception #4 – “Those salespeople are master manipulators”

Look, being manipulated is one of those things that YOU ultimately control. When you are sitting in the dealership you don’t have to agree to anything. You have the ultimate power. Simply walk away from the desk if you don’t like the terms in front of you. How can that be a manipulation? Of course, salespeople DO want to make a deal with you. That is how they make their commission (in most dealerships). Some dealerships do have “non-commission” sales people.

So, yes…obviously they want to close you on a deal.

So, some customers might feel “tricked” or “convinced” that the sales person talked them into doing something they didn’t want to do, but if you sign on the dotted line…you did so because it was YOUR decision. Make sure you are happy with the deal. If anything doesn’t fit what you want…..keep working the deal. The reality is most dealerships want you walking out completely happy. They want your repeat business over and over. Making you happy guarantees that long term commitment from you.

In the end, used car dealerships are not scary places filled with typical “bad salespeople”. It is unfortunate that there are a lot of misconceptions out there.

Every business has their superstars and their dudes. Bottom line, do your homework on the dealership. Look at reviews. Visit the showroom. Get an idea about who runs the dealership and take a look at the overall philosophy of the company.

Do they offer a clean, polite, and friendly atmosphere? Does the dealership have a good overall reputation in their community?

Often times dealerships that are popular in their community tell an amazing story. You are popular if you are well liked. You are well liked if you have integrity, honesty, and always stand by your product.

Doing some basic research will help you steer clear of any myths out there that may still exist. In most cases new and used car dealerships are there to give you the best experience possible.

{ 0 comments… add one }

Leave a Comment