Just when we thought we were finally done negotiating with the Chinese-American car salesman the options, purchase price and so on, this Indian-American business manager of the dealership threw one more pitch at us – an optional extended warranty of the vehicle that would cover road service and repair for mechanical/electronic failures in next 7 years. My wife and I smiled at each other; we thought of the same thing simultaneously that this Indian-American would not understand. We were both reminded of the story where the Chinese word for (self-) contradiction矛盾 (Mao Dun) originally came from. The word itself literally means spear 矛and shield 盾. Nearly 2300 years ago, famous Chinese philosopher Han Fei韓非, a leading legalist school scholar, wrote in his book Han FeiZi 《韓非子‧難勢》：「楚人有鬻盾與矛者，譽之曰：『吾盾之堅，物莫能陷也。』又譽其矛曰：『吾矛之利，於物無不陷也。』或曰：『以子之矛，陷子之盾，何如？』其人弗能應之。」
What Han Fei was doing was to illustrate the notion of contradiction with a story a salesman who was selling spears and shield. The salesman told his prospective customers that the shield he was selling was the best in the world which could stand up to any attack. He then went on to sell his spears and declared the spears were the best in the world that can penetrate any object. Of course, the guy was stuck when he was asked what would happen if he uses his spear against his shield. The Chinese word for contradiction 矛盾was thus born. How would you sell the extended warranty service contract of a Japanese car that you said is extremely reliable?
After almost 16 years, our family car, a ’95 Volvo 850, has finally reached the point that it should retire from the service. I still remember vividly how I smashed its front-end including the axle right in front of children’s Chinese school only a month after we bought it. After that, it hasn’t had any major injury or illness, other than the usual wear and tear, and few small organ replacements, nothing that an average mechanics can’t handle. But when its heart and lung had deteriorated to the point that a heart transplant or an open heart surgery would be needed, we decided with sorrow that we should let it go.
Buying a new car is a serious undertaking especially for those who plan to keep the car till it dies. It is an extension of yourself – it does wherever you go and yes, people judge you in part of what car you drive. In practical terms, it is usually the 2nd most expensive capital purchase for an individual right after the house. Then there are so many choices from the type of car to the make, color, style and accessories.
The most intimidating part of car buying is when you have to deal with car salesmen. We the shoppers are at a disadvantage since the stake is high and yet this psychological warfare is something we don’t often get a chance to practice. Worse, there is no secret that car salesman is one of the least trusted professions, after politician. There are plenty of jokes and anecdotal stories about dishonest car salesman, especially for the used cars. Luckily, with Internet, various free online car shopping services like Edmunds.com and Trucar.com have made the exercise much less painful. It helps you with reference prices so that you can formulate your position before you visit the dealership. That is exactly what we did.
Have you ever been curious about the car salesman profession? What their job is like? What does it take to be a “good” car salesman? How much do they make and is it easy to make a living? Do they have to lie and rip customers off and if so, how do they manage to sleep well at night?
If you are interested in getting some insights, you should read the fascinating article by Scott Jacobs who went undercover for Edmunds.com to be a car salesman for three months. The article was initially published in Jan 2001 and was updated in May 2009. After an interview and answering a series of personality profiling questions, Jacobs managed to get himself hired first at a high volume high pressure dealership of Japanese cars and later a contrasting no-haggle small dealership that sold American cars. Here is what he wrote about when he had his first prospective customer came into his car lot:
“They turned and, in an instant, I saw the fear on their faces. Fear of me! Let me quickly add that I'm not the type of person who normally elicits fear from the people around me. I've been called shy, reserved and quiet — all euphemisms for meek, mousy and at times practically invisible. But here I was with my white shirt and tie, my employee's badge hanging from my belt. I had become the enemy. And they were afraid of me.
What were they afraid of? The short answer is, they were afraid they would buy a car. The long answer is that they were afraid they would fall in love with one of these cars, lose their sense of reason and pay too much for it. They were afraid they would be cheated, ripped-off, pressured, hoodwinked, swindled, jacked around, suckered or fleeced. And, as they saw me approaching, all these fears showed on their faces as they blurted out, "We're only looking!" ”
Now, does it jog your memory of how you felt when you went into a car dealer place and was greeted by one of the aggressive salesmen the last time? Don’t worry for Scott Jacob. He was already equipped with lines for those “lookers”. My favorite is "Last time I was only looking I wound up married." Now, let us go to my office and …
Does this sound vaguely familiar? Sales is not a job for the fainted heart or people who can’t take rejection. There are a lot pressures especially for those who live on commission that include car salesman. The 1992 classic movie Glengarry Glen Ross got it right: it is all about closing the deal. There shall be nothing else but the single-minded obsession to close! close! close!
Indeed the system is designed around creating the max tension, earning and penalty included, to close the sale. New car salesmen are typically paid at a regressive commission at 20-30% of the front-end gross profit of the dealership; the higher the profit, the higher the percentage. Wouldn’t you be trying anything if your next meals depend on it? Wouldn’t you be trying to increase the gross profit whether it is through higher price, lower trade-in value, or by stretching the truth? When the manager’s whiteboard shows visibly you have only sold three cars this month when some of your colleagues sold 20, don’t you feel inadequate? When you know you are at risk of being fired after not having a single sale for days especially after you did have client test drove the cars, wouldn’t you cranked it up another notch?
Oh, before I go, I should get back to the question about how much does car salesman make. I gathered from various articles on the net that car salesman probably make around $30-100K a year. A decent salesman moves about 10 cars a month in average. It may not sound right as we all see so many salesmen standing idle around in the lot or office. But if you figure into the long 60 hours a week with significant down time, this estimate seems not unreasonable. As a reference point, Honda has close to 900 dealerships across the country and sold around 1 million new cars annually in recent years. In other words, the sales volume of a Honda dealership would be around 100 cars a month and is operated at about 10 salesmen in average. It sounds intuitive to me.
Do you still want to be a car salesman? By the way, I have never met a car saleswoman? Have you? I did meet an Internet car salesman though. When he told us that 60% of their dealership’s sales now come through their Internet channel, I figured car salesman’s modus operandi will go through significant changes if it has not already.
Talk to you soon!
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