About a decade ago, Edmunds.com paid journalist Chandler Phillips to get sales jobs at a couple of L.A.-area new car dealerships and then write "Confessions of a Car Salesman" about what he'd learned. I stumbled upon this during the long debate initiated by Malcolm Gladwell when he responded incredulously to Judge Richard Posner and me objecting to his contention in his bestseller Blink about why car salesmen charge blacks and women more. Gladwell contended that car salesman discriminated against blacks and women in price negotiations only because they didn't realize they were unconsciously discriminating even though it was costing them money. Posner in The New Republic and I in VDARE argued in negative reviews of Blink that car salesmen tend to be jerks who have a pretty good idea of how to weasel more money out of people.
In defense of Gladwell's position, you have to admit that car salesmen don't dress in a manner calculated to inspire trust. Phillips writes:
What [car salesmen] think is cool is viewed by the public as tacky and obvious. For example, why do they insist on wearing white shirts and silk ties? Or what about gold watches, rings and chains? Who wears that stuff anymore? Don't they realize they are turning themselves into walking cliches? The only answer I came up with was that, as a salesman, I spent all my time with other salesmen. They were my friends. Believe it or not, I tried to fit in, to belong. So I began to develop an interest in gold ties, white shirts and dress shoes. I even grew a goatee because a lot of the guys had beards. And I put gel on my hair and combed it straight back.
On the other hand, Phillips hints at car salesman lore that fits the Informed Jerk model better:
Since I was still a "green pea" the other salesmen tried to push me to wait on undesirable ups — the undesirable customers who the salesmen thought wouldn't or couldn't qualify to buy a car. My manager had, at one point, described the different races and nationalities and what they were like as customers. It would be too inflammatory to repeat what he said here. But the gist of it was that the people of such-and-such nationality were "lie downs" (people who buy without negotiating), while the people of another race were "roaches" (they had bad credit), and people from that country were "mooches" (they tried to buy the car for invoice price).
I'll repeat what Michael, my ASM, told me about Caucasians . He said white people never come into the dealership. "They're all on the Internet trying to find out what our invoice price is. We never even get a shot at them. I hate it. I mean, would they go (to a mall) and say, 'What's your invoice price on that beautiful suit?' No. So why are they doing it here?"
Presumably "lie downs" are African-Americans. The study by Ian Ayers of Yale Law School that Gladwell brought up as evidence that salesmen were unintentionally discriminating showed that black law students couldn't negotiate as low a price as white law students.
The rest of the sentence is a little ambiguous, but I'm guessing that "roaches" are Mexican-Americans (although Mexicans could be the bad negotiators and blacks the bad credit). I suspect that "mooches" "from that country" does not mean from Mexico, but is more likely referring to hard-nosed Asian immigrants such as Koreans.
In Phillips' experience, the American brand dealership he worked at second was less obnoxious, while the popular Japanese dealership was pretty much plain evil. That's been my experience over the years with a certain gigantic T-y-t- dealership in the San Fernando Valley. They ripped my deaf octogenarian father off for a ridiculous interest rate when he could have paid cash for his Corolla. Mostly, though, they seem to exist to psychologically intimidate Mexicans into paying too much.
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One thing for sure, gays stopped dressing so flaming gay and I guess it worked for them.
"when he responded incredulously to Judge Richard Posner and I
And me. He responded to me.
So why do people only ask for invoice price at dealerships? Why doesn't this practice migrate into other goods?
Why not buy a late model used car from a distressed private seller and forgo the car dealership treatment altogether?
Disclaimer: I used to be a salesman. Had the combed-back hair, some gel and a nice tie & shirt collection. Shoes too.
cipher
Japanese auto industry generally has extremely high satisfaction with their product and extremely low satisfaction with dealerships. This is especially true of Toyota.
Why is this? One reason is that when, for example, Toyota, was entering the U.S. market some decades ago, western business practices were much less well known to Japanese and they entered into extremely unfavorable business contracts. Southeast Toyota Distributors is a good example of this.
So they have little or no control over much of the the dealer/distributor network set up for that time.
This is one reason for the emergence of the premium Japanese brands (Lexus, et al) a few decades back, to make an end run around the legacy dealership deals for at least part of their offerings. These new dealership under "brands of convenience" tend to get much higher customer satisfaction ratings as they are more under the thumb of manufacturers.
FWIW, it is only the past year or two that Lexus models were sold as such in Japan, for the decades previously they were sold w/Toyota badges in Japan.
You got that right about T-y-t- dealerships. I got ripped a new one on service and never went back there.
Good cars though.
Can't explain why, but somehow this post of Mr. Sailer's put me in mind of the delightful old song "I've Got A Lovely Bunch Of Coconuts."
For example, why do they insist on wearing white shirts and silk ties?
That's not cheesy. Where I come from that's business conservative. It's what Steve's wearing in his new picture. Anyway, basically all ties are silk, or trying to look like silk.
Cheesy is a shirt that's darker than the tie.
Cennbeorc
I thought that the suit and nice watch was to intimidate the dealers worst enemy, white guys (particularly working class and lower middle class) who know about cars. It always struck me as if they we trying to look like the white guys boss in order to suppress his negotiating.
You haven't seen strange dress codes unless you've tried selling life insurance. Typically, life insurance salesmen spend most of the week in the field and come into the office just once or twice a week for meetings or "phone clinics" (a term that makes me want to vomit). Everyone wears a suit, the life insurance scam, er, industry is very big on "professional" appearances, but you soon notice that many of the agents wear the same suit all the time and it's often threadbare.
Peter
Seems a little dated. I'm shopping for a car now, and so far the salesmen and saleswomen we've met have dressed conservatively and the men haven't had gelled hair.
Now, back in '89 or '90, I was a young idiot and bought my first car (an '85 Mustang) from a Latino salesman named Jesus who had slicked back hair and wore pointy, silver-tipped shoes. I bought this car against my father's advice, and it was an absolute piece of sh*t. Every time something broke on it, my father reminded me about the folly of buying a car from the salesman with pointy shoes.
Where in America do lower class whites interact with guys wearing suits and flashy watches at work? There boss looks and dresses like him only he is called a foreman. There is this weird hatred of business executives which is completely out of synch with the whole give us back our 1950s california vibe.
I know a lot of car dealers through my IT business. They do what they do because it works. It makes money. Dealers I know are small business entrepreneurs who work extremely long hours. 80+ hour weeks are very common. (Many are bad with money and have social pathologies such as drinking, drugs and gambling.)
Why do some customers pay more or less than others? Every sale a negotiated deal just like buying a house, airline tickets, hotel rooms, food, clothing, etc.
Upper income folks with internet, research skills, Consumer Reports magazine, business experience and good credit pay the lowest.
Also, credit rating is a huge factor, and customers know it.
Buyers with bad credit pay the most. They are called "bogues" for bogus credit or "get me dones", because they say "please get me a car" or "please get me financed". I have actually heard people say, "I can't afford $200 a month but I can pay $50 a week."
Asians and middle easterners negotiate the most. Some continue to negotiate even after a contract is finalized. My Asian and ME customers act like this too.
I hate it. I mean, would they go (to a mall) and say, 'What's your invoice price on that beautiful suit?' No. So why are they doing it here?
Auto dealerships have a local monopoly enforced by both the government and the manufacturers. Cloths on the other hand can be purchased directly off the internet, or at many stores, sometimes in the same mall. When you get the invoice price you are signaling you will go do a nearby sales territory to get a better price.
New immigrants may not be able to travel to nearby dealers so they do not get as good a price. One more pressure group in favor of immigration, auto dealers.
"Why not buy a late model used car from a distressed private seller and forgo the car dealership treatment altogether?"
Because dealers offer certified pre-owned cars that come with 152-point checks, warranties, etc. and they're pretty transparent these days with Car Fax reports.
If you're a Teuton, you get all this in grade school via 'Kleider machen Leute".
I talked to a former car dealer (he was Hispanic) and asked him about particular minorities and their abilities to negotiate. I only remember two things he said:
(1) It's easy to get Persians to pay a lot; you simply have to flatter their egos.
(2) It's impossible to get Vietnamese to pay a lot.
What [car salesmen] think is cool is viewed by the public as tacky and obvious. For example, why do they insist on wearing white shirts and silk ties?
Is there another kind of tie? White shirts are "tacky and obvious"? What is this guy tlking about?
one of my best friends, a cum laude physics phd, and a great smart colleague of mine both recommended gladwell's book to me..
what is it with this guy that good smart people like? his works and reasoning are lame dumb and forgettable.
kennie powers from eastbound&down almost seems wiser!
FWIW, it is only the past year or two that Lexus models were sold as such in Japan, for the decades previously they were sold w/Toyota badges in Japan.
What a difference a name makes.
As a whit person, to me the only winning move in this is not to have to deal with a salesman at all.
Nothing positive can come of it for me. I think that is why I would buy a new car off the internet if I were going that way.
Kind of makes you wonder why it hasn't evolved into that by this point. I know of very few people who look forward to car shopping, at least the dealing with salesmen part.
I hate to stereotype people (well maybe not), but should deaf people be allowed to drive?
' but should deaf people be allowed to drive?"
Worse, at age 91, the state of California renewed his driver's license for 5 years -- until he was 96!
"Why not buy a late model used car from a distressed private seller and forgo the car dealership treatment altogether?"
Because the used car market ain't what it used to be. You don't seem to save nearly as much going used as you did once-upon-a-time, especially if you're looking at one of the more reliable brands, like Honda and Toyota. If you intend to keep a car for most of its useful life then new is almost as cheap as used.
In many dealerships these days, it seems the mid or low level salesmen wear khakis and polo shirts with the dealership logos.
"Why doesn't this practice migrate into other goods?"
because you can't negotiate on them? real estate and vehicles are the only things a consumer can haggle on in the US, generally speaking. and maybe even that will go away eventually for cars.
when saturn was in business there was no negotiating, the price was the price. i think it was either daewoo or hyundai who was considering something similar about 10 years ago, though they didn't switch to that - it was blocked by US law which forbids manufacturers selling directly to consumers. dealer distribution is required for automobiles in the US. their plan was to sell the cars directly from the factory to people for a fixed price, no negotiating. american lawyers informed them this would not be allowed. disintermediation could be the future here.
but the "no negotiation, the price is the price" system does greatly speed up and streamline the economy. transactions simply happen or do not happen. there is no standing around arguing with the guy at best buy about how much you're gonna pay for that television or that computer. "No way, Samsung ships those to you for 850 bucks in lots of 100. I'll give you 900 dollars. I'm not paying 1100 for that 50 incher."
what if people stood around in the pharmacy, negotiating with the pharmacist over the price of their prescription? it would take forever to get your medication. "Come on, I have the internet. I know what you're paying for those Oxys in bulk."
i used to go to mexico about 3 times a year, and you could negotiate lots of things. i can't even imagine that being the norm in the US. envision a US where cheap chinese penny pinchers in california are arguing with the cashier in the supermarket over every item in their shopping cart. i'd never go food shopping again. i occassionally see them pull this even now, willing to argue for 20 minutes to save 2 dollars over a coupon they read wrong or thought wasn't expired.
i guess you can still argue over the bill in a good restaurant, a lot of those places care what the customers think. so if you're paying 300 bucks for 4 people somewhere, and you complain, they'll take charges off the bill.
"Why doesn't this practice migrate into other goods"
The time factor. How often do you buy a house or a new car? I buy a hundred shirts or sweaters for every car I buy. Thus i take my time and shop carefully on rare big-ticket items.
My recent car buying experience was not painful, but mildly annoying. I expected and experienced some silly sales stuff. Going in there, I knew what I would spend and had to follow the dances of the salesman and finance guy. The latter lied pretty well, and when I declined his heartfelt offers for maintenance progs he got noticeably pissed. Interest-free* loaning for a change!
Something I've learned. Many car sales guys put a few things around their desk space to signal sameness with the locals. For example, around a very militarized area around here, one guy had special forces insignia displayed in his cube. That was very effective before 2005 or so. I saw a Euro ex-NATO guy buy an old Chevy because of that.
Another salesman around a nearby big university had models of sci-fi characters in his cube. I wonder how many kids came by and asked, "OMG, you like Star Wars?!"
Fish in a barrel :)
Former car salesman here.
Blacks are generally "lay downs" and pay more because they have obnoxious credit, so they have zero leverage in financing. Blacks tend to have ridiculous credit, and that's a fact of life.
I recall one black gentleman, who was an engineer, had great credit, wanted to trade in his winabago for a new lincoln with all the options, and he negotiated the price down below invoice as any other customer because he had leverage and knew it. He came from a position of power, and had my respect from the get-go.
Then I've gotten idiot hoodrats trying to get into a car that they have no business trying to purchase, and the negotiating process is like a burlesque show. That's why "green pea" salesmen get thrown to the hood rats. It's not fun dealing with idiots trying to front, no matter what the race. It might make for funny stories, but I want a check.
In my experience, selling a car didn't have much to do with skin color. Our respect or disdain for a customer is based solely on their credit report. If you have comical credit, doesn't matter what race you are. You will pay more, because we're taking a bigger risk. To ignore that, and sell them a car anyway, is the perfect way to go bankrupt.
you can also haggle on big ticket electronics, although there's little point when you can usually get as good a deal shopping online
it seems like car salesman should be a fading profession because it's too easy to find out what the invoice price is, but there are still a lot of people who aren't comfortable haggling so there is money on the table
I imagine the biggest factor is how big a part the car plays in the buyer's identity...I'm not a car guy so negotiation is just a process of waiting out the salesman's obvious psych tactics and trying (often unsuccessfully) not to laugh at him while he's doing it...whoa, you need to run this buy the general manager? never heard that one before, scooter
In my experience, selling a car didn't have much to do with skin color. Our respect or disdain for a customer is based solely on their credit report. If you have comical credit, doesn't matter what race you are. You will pay more, because we're taking a bigger risk. To ignore that, and sell them a car anyway, is the perfect way to go bankrupt.
Poor, downscale car shoppers regard the car salesman as a banker and loan officer as well as a salesman.
The downscale car shopper is worried about qualifying for a car loan.
This kind of customer won't try for and won't get the lowest total price for a car. He's anxious about getting a car loan, and Mr. Salesman, can you please make the down payment smaller?
... To ignore that, and sell them a car anyway, is the perfect way to go bankrupt.
Car dealers all across the USA "repo" cars all the time, don't they?
http://gas2.org/2012/11/26/judge-sides-with-tesla-in-dealership-lawsuit-foes-vow-to-fight-on/
Current car salesman here:
IMO, the reason why the T-y-ta buyer c.laims to have a less desirable experience at the local dealership is that buyer is more discerning... i.e.- the dumb schlub buying the Dodge Charger is less likely to identify things he dislikes in the process than the steadfast well read guy buying a Camry he plans to keep for 12 years.
As for race/ethnicity and negotiating:
about 7 out of 10 blacks can't get financed to buy smoke of a hot dog right now. The questions that blacks ask and claims that they make are certainly anecdotal proof of no life skills being taught at home. Period.
Vietnamese and other Asians are a nightmare to deal with, will try to steal and do anything they can to save a buck. We are most effective by treating them more rudely in negotiating. You will have more success by making them leave and come back and getting loud with them.
Ethnic Indians are similar.
That edmunds piece on Confessions of a Car Salesman is excellent evidence of confirmation bias. And that, ultimately, is the phenomena that I see more day to day than the typical stereotypical we're all out to screw you perception that folks have.. It all comes back to confirmation bias, the customer is convinced coming in that they will have a negative experience and every micro-interaction in moving forward is used to confirm that position.
@Dave Davenport: "Car dealers all across the USA "repo" cars all the time, don't they?"
They certainly do. An acquaintance of mine recently purchased a used 2000 Buick Century from a used car dealer. Sale price at $5000. $400 down + $300 due two weeks after the sale. 6-year loan at 20%. Bi-weekly payments were $134. She made payments for three months before missing one. Fourteen days later the car was repo'd in the middle of the night. It apparently had a tracking device on it.
So, basically, she rented a car for three months for $1500. This was at least the second time the car was reo'd. It'll just be resold and probably repo'd again. Sounds like a lucrative business.
In 2002, I purchased a like new '01 Ford Taurus SES w/ 20K miles for $12,000 cash from National Car Rental. I tried but it was no haggle. The car has been great and now has 105K miles and I drive it everyday.
On the other hand, I've been very satisfies w/ several private sale purchases over the years.
I've been trying to figure out who the "lay downs" and others in the article were. Thanks for the article and comments lol. First generation Vietnamese American, so sad what you guys think of my people.
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