Mr Smith visits his local Mercedes dealer. He knows he wants a new car and other than the fact that he’s pretty sure he wants a Mercedes he hasn’t done any other research. So he enters the Mercedes showroom and the following happens:
Mr Smith is immediately approached by a salesman (let’s call him “Andy”). He’s offered a coffee and made to feel relaxed. Andy asks Mr Smith to join him at his desk and takes him through the Mercedes product range. Andy is keen to keep the information he provides to a minimum as he already has a car in mind for Mr Smith, which will earn him the most commission. Andy then begins to “qualify” Mr Smith.
When a salesman qualifies a customer they are determining if they are “qualified” to buy from them. They also need to determine where they are in their “buying cycle”. Is the customer ready to buy or just getting ready to buy? The salesman will also qualify the customer for need, want and use of a particular car. Qualifying is simply finding out what you want, what is on your mind, and what it will take to make you happy; any good salesman should do this much. We’ll go into these techniques in much more detail later on.
So Andy starts to ask Mr Smith “qualifying questions” to establish his wants and needs. By asking a series of leading questions and by ensuring that he gets answers to each question, Andy will try to funnel Mr Smith into making a decision.
“How many miles do you do, Mr Smith?”
“What will you use the car for?”
“Is it a first or second car?”
“What specification is important for you?”
All perfectly acceptable questions given the circumstances but Mr Smith is having to think quickly and will be mentally “on the run” because some of these questions he may not have even considered and, of course, he is underprepared (in fact, make that completely unprepared).
So rather than saying “I don’t know” Mr Smith feels inclined to give reactive answers.
“Oh, probably average mileage.”
“I have a company car so I’m looking for a weekend family vehicle.”
“I’m keen on satellite navigation and I guess it would be nice if the kids could watch DVDs in the back.”
Bingo! Andy has just the car in mind and its right out back.
Main dealer car showrooms carry an amount of what is called “primary stock”, in other words showroom cars and new stock that is physically at the dealership. These cars have usually been paid for by the dealer and are what is called “adopted” and no longer “funded”.
“Funded” basically means that the cars are funded by the manufacturer. Typically, the dealership will commit to a certain number of vehicles and will be able to get these “free” for around 120 days. If, after this time, they are unsold, they will be funded at special low interest rates either by a finance company or by the financing arm of the manufacturer.
Once these cars are “fully paid” they are costing the dealer a lot of money and the sales team will be under pressure to shift them, meaning these will be the first ones that a salesman will offer a customer.
Andy mentions the R280 for the first time and invites Mr Smith to step outside and take a look at one of the demonstrators. Andy is now in the business of “creating desire”.
“You said you were looking for a weekend family vehicle. Well, the R280 would be an excellent choice. This particular car has satellite navigation and a DVD entertainment system for the kids.”
Andy can sense that Mr Smith likes what he sees.
“Would you like to take it for a spin, Mr Smith?”
Mr Smith is quickly offered a test drive (the selling mantras are always “test drives sell cars” and “create the desire”). Once out on the test drive Andy attempts some “trial closes” such as “if we can get the figures right are you in a position to buy today?” It’s much easier now Mr Smith is driving this shiny new Mercedes down the high street. This is the first car he has driven but already Andy is trying to find Mr Smith’s “hot-spots”.
Unbeknown to Mr Smith he has been emitting “buying signals” to Andy throughout the test drive:
He has agreed with most of the points that Andy has come up with.
He’s been forthcoming in answering any questions Andy had – eager to please and open to what Andy had to say.
He’s been upbeat and positive in his use of language.
He has asked Andy to go over a point again or has sought clarification on something he didn’t understand.
He has also asked specific questions about the car, such as how much it will cost, how quickly it can be can delivered, etc.
These are all classic buying signals and Andy will have been trained to pick up on every single one of them.
During his conversation with Andy he has also let slip that he is a cash buyer so won’t be requiring any financing and doesn’t have a vehicle to trade.
Andy’s trial closes have all got the green flag so, on arrival back at the dealership after a short cruise up and down the High Street, the “close” will commence in earnest.
Andy starts by sitting Mr Smith back at his desk. He then goes off and informs his Manager, and the Business Manager, that he is with Mr Smith and what the “state of play” is.
This is a progress report; the key thing here is control. The Sales and Business Managers have to be in control of Andy to ensure he makes the right moves in order to “close” Mr Smith.
Andy comes back to join Mr Smith and asks him questions along the lines of:
“So, did you enjoy that? Lovely car isn’t it?”
Adding: “We have that car coming in with your exact colour choice, and the good news is you could be in that in one week.”
“So here are the figures including road tax, fuel, etc. and look it’s within your budget.”
And the ultimate: “When did you want to take delivery?”
By this time Mr Smith could have found himself backed into a corner because Andy has used all his answers to fit him with the R280 and is compelling him to sign the order and leave a deposit. Mr Smith will not want to look foolish by going back on the answers he gave and it soon becomes “crunch time” as he hears the following line:
“So Mr Smith, you like the model, you like the drive and spec, we have your colour and you can have it next week. Shall we complete the paperwork?
All I need today is a small deposit [typically £500] on a credit/debit card and I can process your signed order.”
Note that once you have parted with your £500 and signed an order you have entered into a contract, meaning this deposit may be transferable but is not legally refundable. It may ultimately be refunded but it is at the discretion of the dealership as some or all of it can be legitimately retained for admin and/or interest charges.
We have not gone into the precise details of the negotiation and closing because we don’t really know what happened and we will cover this in much more detail later on. This does, however, give you an indication as to what can (and regularly does) happen in new-car showrooms every day.
So there you have it. Mr Smith is now the proud owner of a new Mercedes R280 and has probably left the dealership with his head in a bit of a whirl. It will cost him upwards of £46,000, but is this the car he really wanted? Did it completely suit his needs? Did he achieve the best deal? Did he compare the deal he was offered with other dealers? Did he discuss it with his wife or partner and did he give himself time to consider the car and deal before committing?
Well in this case the answer to all these questions is a resounding “no!” and by not doing any of these things and being unprepared he could have made a costly mistake both in what he paid and what he will lose in instant depreciation when he discovers that he has bought the wrong car. Every single day all over the country people are trading nearly brand-new cars in and losing thousands of pounds because they have not done the groundwork.
To conclude our little story about Mr Smith, one possible outcome was that Mrs Smith didn’t like the vehicle. She “couldn’t get on with it”. Mr Smith had said he wanted a weekend family vehicle but who was going to drive it during the week? Yes, you guessed it – Mrs Smith. Also, Mr Smith only took it for a cruise up and down the High Street. He didn’t take it onto the motorway, so how could he know what it would be like on long journeys. One criticism we’ve heard of the R280 is the small boot space. Did Mr Smith check out the practicalities of owning and using the R280? Probably not. Running costs are very high with these vehicles but, let’s face it, if Mr Smith is able to buy one for cash that’s probably not a big concern to him. However, after pressure from Mrs Smith and with only 3000 miles on the clock, he bites the bullet and holds his hands up to a rather costly mistake. It’s unlikely that Mr Smith will make the same mistake again but there are many more people out there like Mr Smith and many happy salesmen like Andy.
A very extreme case known to us was that of a lady who ventured into a showroom and met a very sharp salesman who gave her the full routine and managed to persuade her to buy a small, 6-month–old, 3-door hatchback with a manual gearbox. It was only when she came to collect it after it was taxed, registered in her name and paid for in full that she realised she could only drive an automatic!
With all this in mind we present Motor Trade Insider’s 15 reasons people buy the wrong car…
|1||Didn’t realise they couldn’t drive an automatic!|
|2||Didn’t test drive it first|
|3||Didn’t research and prepare properly|
|4||Didn’t discuss it with another key decision maker (wife, husband, dad etc)|
|5||Got closed by a sharp salesman before ready to commit|
|6||Thought they could afford it and then realised they couldn’t!|
|7||Didn’t realise when they bought their 3 door hot hatch that their wife was pregnant with twins. (Significant change in lifestyle)|
|8||Didn’t take into consideration that the annual service and insurance costs on their sports car may cost more than they pay for their mortgage!|
|9||A friend down the pub talked them into it!|
|10||Their wife/girlfriend/husband/boyfriend thought it a great idea to keep the peace. (Appeasement)|
|11||They got bored very quickly|
|12||They didn’t reckon on friends and colleagues taking the micky (peer pressure)|
|13||They bought a Roomster / Multipla / Berlingo or any other hideous car you can think of|
|14||They bought a Renault! (reliability issues)|
|15||They thought buying a very cheap car like a Daewoo would be ok (short termism)|