Q & A: The car sales process

Q: Why do car dealerships play this game with people where the salesman and manager run back and forth to discuss the price plus the financing?

A: The negotiation process at car dealerships, where salespeople frequently go back and forth between the customer and the sales manager, is a well-known and often frustrating part of car buying. This tactic, sometimes referred to as "desking" or "the four-square method," serves several purposes:

1. Control and Delay: By having the salesperson leave to consult with the manager, dealerships aim to maintain control over the negotiation process. This delay can wear down the customer's resolve and make them more likely to agree to a deal just to get the process over with.

2. Psychological Pressure: Each trip to the manager gives the impression that the salesperson is fighting on the customer's behalf to get a better deal. This can make the customer feel obligated to accept the terms out of appreciation or reciprocity, even if the deal isn't the best possible.

3. Information Asymmetry: The back-and-forth allows the dealership to gather more information about the customer's needs, preferences, and financial situation, which can be used to tailor the deal in a way that maximizes dealership profit while appearing favourable to the customer.

4. Manager Authority: By introducing the manager into the process, dealerships create a hierarchical structure that reinforces the idea that the manager has the final say, making it seem more difficult for customers to negotiate further concessions.

5. Multiple Levers: The process often involves negotiating several aspects of the deal simultaneously, such as the vehicle price, trade-in value, financing terms, and additional warranties or services. The back-and-forth provides an opportunity for the dealership to adjust different levers to find a combination that the customer will accept, often focusing on monthly payments rather than the total cost.

6. Building Rapport and Trust: Salespeople use the intervals when they leave to consult with their managers to build rapport with the customer. This can make customers feel more comfortable and trusting, which might make them more amenable to closing the deal.

Overall, these tactics are designed to maximize the dealership's profit while making the customer feel like they are getting a good deal. Understanding these strategies can help buyers be more prepared and assertive during negotiations.

Source: Some or all of the content was generated using an AI language model