General Motors has begun to tool up for a leaner and meaner GM. With the very real possibility of Chapter 11 Bankruptcy in it’s immediate near future (read: Monday), they will be concentrating on high end, luxury compacts hoping that the American public will rush out to buy them instead of the big gas guzzlers of the past 70 or so years. It remains to be seen whether this strategy will save them from going belly up in the years to come.

With bankruptcy looming, a new GM begins to emerge

Let’s face it…times are really tough. The country (and the world) is in a deep recession. The US auto industry is falling apart. Billions of dollars have been thrown at them in order to keep them solvent…but it hasn’t worked. Obama has taken control of GM and Chrysler. Well, maybe not real control, but the scuttlebutt is that he is trying to forcing GM into Bankruptcy, and Chrysler (already in bankruptcy) may be forced to sell itself to a foreign auto conglomerate headed by Italy’s Fiat. These are amazing times aren’t they?

GM has just turned 101 years old…the oldest auto manufacturer in the states, and now they are being forced into receivership. They’ve already given notice to some 1500 stores that will be losing their franchise. And the old saying “As General Motors goes, so does the country” couldn’t be more true.

On the positive side, atleast for consumers, is that this is the best time in history to buy a Chrysler (and other makes for that matter). Most Chrysler dealers are having a real ‘fire’ sale and some are  going to be selling new cars way below  cost just to move the inventory. And for those dealers, ’selling below cost’ is the real deal this time, not just an advertising ploy. As part of its bankruptcy proceedings, Chrysler will close 789 stores across the country, nearly 25% of its 3200 dealerships.

And that, my friends, is fucking amazing!

Walter P. Chrysler and a Chrysler Six circa 1924

With all the bad news about the economy and the auto industry in particular, there are a lot of potential car buyers that need help financing a car. But most dealerships can’t finance problem credit.

I suppose we’re one of the lucky ones…

I work for a small used car dealer in Southern CA and make most of my living providing sales leads obtained from the internet. Occasionally, I’ll make a sale or two, just to keep myself in the game, but for the most part I work from home only going into the store on the weekends.

Now, because of the rotten economy, 99% of our customers have BAD CREDIT and you’d think that with the credit market being as bad as it is, we’d have trouble getting the banks to let loose of their funds. But that’s not the case…far from it. We’ve been averaging 35 or so cars/trucks each month, and with only 4 salesmen that’s a pretty decent job.

True, we have to pay the banks a fairly substantial discount to buy the loans, but after all is said and done we’re happy with our paychecks. And our customers get a decent vehicle and a chance to re-establish their credit, so they’re happy.

And after all, isn’t Life, Liberty and the Pursuit of Happiness what it’s all about…

All buyers are liars.

That’s one of the first things I learned when I got into the car biz back in 1981. Whenever a potential customer would tell me they wanted to:

A) go home to think about it…

B) go to lunch to think about it…

I knew what they were thinking about was how to get a better deal someplace else.

I knew they weren’t coming back.

What they were doing was going to the dealer down the street with the knowledge they had just gotten from me…and they would buy there. Unfortunately, the car buying experience has, over the last 50 years or so, become a very adversarial process. Car salesmen have had to come up with creative ways to ‘get the sale’. And the car buying public has had to come up with ways to ‘get the best deal’. Who can blame either side?

The new car salesman has tons of competition. A customer can buy the same make and model with the same color and options at the same franchised dealer on every street corner. So the ‘new car’ consultant has to be either a Super salesman…or he has to lie to make the sale. The Super salesmen did not lie. They didn’t have to. Most of the top car sales guys I know treat their customers well. Really take care of them. These Super salesmen know that repeat business, word of mouth business, is what pays the mortgage and puts food on the table.

But the mediocre salesman…that’s another story. These guys have to try every trick in the book to get the customer to buy…and to buy NOW. Their jobs depend on making the sale. Once the customer leaves ‘to think about it’, once they leave the store without buying, the sale is lost.

And because most dealers treat their salesmen as just another piece of meat…they’re a dime a dozen…the pressure put on the sales force is tremendous. Turnover in some of the bigger ’stores’ can be a weekly thing. I knew one store in LA that turned over 70% of its sales force monthly…7 out of 10 salesmen got canned every month! So these guys will do anything to make the sale and to keep their job. And you know what…I don’t blame them…well, not much. Selling new cars is a dog eat dog business. Especially in these times. Most ‘new car’ salesman are new to the business otherwise they would work a ‘used car’ lot. That’s where the real money is made.

Think about it. New car sales are one of the most competitive selling jobs on the planet. A customer can buy from any dealer that has the make/model he wants. All dealers pay the same price from the factory, so they all have the same ‘wiggle room’. And the customer can go down the street and ’shop’ the price because there probably is another dealer of that make within 10 miles* who might just take a smaller profit to move his inventory.

But think of the ‘used car’ salesman. His cars are basically ‘one of a kind’. Since it’s used, his cars will be of different years, makes, models, mileages, colors, options, and condition then the guy down the street. VERY HARD to shop the price! The dealer also paid a ‘unique’ price for his car, so he has room to negotiate, up or down. The used car salesman just needs to sell that car, and he has literally no competition.

So guys, if you want to make ‘the big bucks’ you absolutely must sell used. It’s the only way to make it in this business.

Used Car Dealer in Melrose, Massachusetts circa 1939

*although things are changing rapidly now that the big 2 are eliminating dealerships left and right–Chrylser loses nearly 800 and GM a whopping 1500!

How it all began…

1981 was a very bad year .

I had just gotten divorced, was forced to sell my house, gotten dumped by the  ’other’  woman, quit my job, become homeless, totaled my car…and lost my self-respect…all in the space of 12 months.

Yes, 1981 was a very bad year.

During that year I also learned how to ride a motorcycle, out of necessity, because I had no car (it was totaled, remember) and all I could afford was a used rice burner.  And to top it off, I was renting a room in a house for twenty bucks a week.

As I said, 1981 was not a good year.

But then 1982 rolled around.

And one March day as I scanned the classifieds, I found a local Pontiac/Buick/Isuzu/GMC dealer looking for a car salesman. I had had very little experience in sales (although I had briefly been a Realtor) and decided to give it a shot. I set up the appointment and, on a brisk Monday morning, rode my motorcycle, striped tie flapping in the breeze, to the dealership for the interview.

And, as fate would have it, I was hired on the spot. Thus began my three decades long love/hate relationship with the retail end of the car business.