Car prices are zooming, sales tactics are stuck in 1953

Car dealer techniques from the 1950s persist: Wear Out the Customer, I’ll Talk to the Manager and The Closer.

Many people hate buying cars and really hate walking into car dealerships. President Joe Biden says he loves cars – we’ve all seen his prized Corvette – but probably has not himself taken a car to a dealer for repair in 40 years. Flunkies do it. It’s easy to love cars if somebody else takes care of them and handles the arguing with mechanics and salespeople.

Photo by Juan Pablo Melo on Unsplash

Those were the days.

America’s love of cars acquires more significance with news the average selling price of a new car has reached $48,000, with the average new-car monthly loan payment hitting $730. These are serious numbers.

There are many car-buying absurdities, including baffling “trim levels” that make comparison shopping hard, and the disappearance of the stick shift.

For today let’s do two issues – lack of coordination between carmakers and tire makers, and how modern computer-equipped vehicles are sold using 1920s dealership arrangements and 1950s high-pressure tactics.

First the dealers. When you purchase a Buick you are not negotiating with General Motors, you are negotiating with an authorized dealer who legally owns the vehicle you desire. With a few exceptions General Motors does not set the price or control the sale, the dealer does.

Most buyers cringe about haggling with car dealers – whether it results in lower prices for the consumer is anybody’s guess. Different dealers discount in different ways, making apples-to-apples comparison shopping difficult.

If there is a problem with your Buick the dealer, not General Motors, is the entity to whom you complain. The dealer and General Motors will blame each other. You will have little or no recourse.

Dealer-carmaker dysfunction is a core reason so many people hate car-buying.

Tesla didn’t just innovate the drivetrain, Tesla innovated by direct-selling to customers. Dealers have political power in most states owing to campaign donations, and tried to outlaw direct-selling. They succeeded for a while in New Jersey, for instance, though a consumer can now buy directly from Tesla in the Garden State.

Dealers also once had media power because they, along with department stores, were leading advertisers in newspapers. Now that neither buys lots of pages of print ads, media power for both has declined. But the only-dealers-have-the-cars structure, a relic of the 1920s legal fights, remains true for most brands in most states.

So you walk into an authorized dealer. You’ll be hit with 1950s high pressure sales tactics, another thing most people really don’t like. Different prices on different days. Verbal offers that change when written down.

All kinds of mystery charges. The Acura RDX I purchased included $995 for SmartShield, whatever that is. I said I didn’t want this, the dealer claimed all their cars had whatever SmartShield is, and it cannot be removed. Also cannot be seen, so far as I could tell. This is a calculated insult to the intelligence of the consumer – if the dealer simply said, “It’s markup because the model you want is in demand,” I would have respected that.

If Biden really wants to tackle junk fees, how about car dealership tactics?

Three techniques from the 1950s that persist are Wear Out the Customer, I’ll Talk to the Manager and The Closer. I was taught these when I worked as a salesperson at a Massachusetts Toyota dealership as I put myself through college.

Car sellers want you weary so you will sign anything to get out. I was taught to stall, stall, stall to get the customer tired.

In February I went to a reputable dealer near Washington D.C., a dealer from which I’d bought cars before, to purchase the new RDX, a fine vehicle built in Marysville, Ohio. Over the years I have owned several Hondas (parent company of Acura) and Acuras. I’ve always been happy with the vehicles themselves, which deliver on the promise of reliability.

The sales foolishness? Not happy with that.

The salesperson and I already had worked out the framework of the deal, and I made an appointment, so I expected things to go quickly. It was a weekday morning and the dealership was quiet. Still they kept me cooling my heels in a small room for almost two hours, to make sure I was desperate to get out, before we got down to brass tacks.

I named the number at which I would sign. The salesperson said he had to talk to The Manager and disappeared for a while.

All but certainly he already knew at what price he could sell the car. For decades car salespeople have been going into the back the “talk to the manager” and (then) smoking a cigarette or (now) checking their smart phones, just for theatrics.

He made a counterproposal and I agreed to the price.

Deal finished, right? No way.

In came The Closer, a guy I’d not seen in hours of negotiations. His role was to sell-up – financing, extended warranty (what you get robocalls about), rustproofing, special this-and-that. He was selling the frills that are nearly all mark-up for the dealer. There’s nothing wrong with mark-up in a free-will transaction, of course the dealer wants to make money. The point is you don’t even hear about this stuff till you’re worn out.

You’re sick of talking and you thought you already had a deal. The Closer stands between you and freedom. This is a deliberate selling tactic. And if you had a trade appraised – he's got your car keys. You’re going to have to get them back somehow if you want to flake. (A buyer who walks out is said to “flake.”)

One of the things consumers like about Acuras is the first two years of maintenance are free. (BMW includes three years free.) Pretty good, huh? No, turns out the offer is ersatz. The Closer tells me I need to buy the dealership’s extended warranty because Acura’s free scheduled maintenance does not actually cover scheduled maintenance. I could be facing major repair bills!

The whole reason I’ve bought numerous Hondas and Acuras for self and family is reliability. Now The Closer at a leading Acura dealer is telling me I need a special extended warranty because Acuras fail constantly.

Two years of free maintenance -- Acura makes the promise, the dealer says don’t believe it. Who’s lying to me, Acura or the authorized dealer? One of them’s lying.

Acura is a positive-reputation company. Why does Acura tolerate use of high-pressure sales tactics by dealers?

I left without paying extra for something that already came with the car. Probably others have fallen for this. In any case I am stuck with the $995 mystery fee.

To show it had a sense of humor, a month after my purchase the dealer sent me an advertising flyer urging me to buy another Acura which would have “all scheduled maintenance included.” 

Now the tires. A few days after driving home my shiny RDX packed with high-tech safety features plus front seats that are both heated and cooled – sadly, you can’t have heating and cooling on at the same time -- I came out in the morning to find a tire flat beyond repair. The dealer was apologetic, then handed me a bill for $190 for a new tire.

One really doesn’t expect a $190 repair bill in the first week of ownership.

I’d hit a nail, and it’s true anyone can hit a nail on any day. Still a company like Acura with a consumer-friendly reputation ought to replace an absolutely brand-new tire. But the dealer wouldn’t and parent company American Honda Motor of California wouldn’t. Repair bill of $190 in the first week!

It seems though I bought a car labelled ACURA whose bill of sale read ACURA, because the tires were manufactured by Continental, Acura claimed it had no responsibility for the tires.

But every car from every marque contains parts that are built by vendors. The carmaker warranties the outsourced parts as if they were built by the carmaker – except for tires.

As a practical matter a consumer cannot enter a dealership and say, “I want a new Acura up on blocks, I will contract for the tires myself.” I had no choice but to purchase Continental tires through Acura, which immediately claimed not to be accountable for the tires it just sold me.

My situation was not unusual. Almost all car buyers have no choice but to purchase the tires mounted on the wheels of a new car. Then if something goes wrong, the new-car manufacturer won’t take responsibility.

How does Acura decide what tires to compel customers to buy? I asked Chris Naughton, a spokesperson for Acura, who replied, “Our specific criteria regarding tires is not something we would divulge.”

In recent years consumer groups have made considerable progress on car-buyers’ rights, including (in most states) lemon laws and 48- or 72-hour windows in which to cancel deals signed under high-pressure sales circumstances.

Seems like the next frontier for consumer groups is consumer rights regarding original-equipment tires that are sold by automakers who deny responsibility for them. Public awareness campaigns to expose common auto sales tricks wouldn’t hurt either.

Bonus: The Saturn Experiment. In fairness to carmakers, when General Motors created the Saturn brand, which featured standard apples-to-apples pricing across dealers, customers haggled anyway. Saturn had some good innovations but many engineering and marketing problems, going out of business in 2009.

Bonus: Summertime and the Summer Tires Are Easy. If you are buying a new Corvette in order to race Joe Biden, you get to spec your tires – all-season or summer.

Summer tires have become an option on many high-end autos. They look sharp and provide maximum handling on dry pavement, also, can withstand the heat generated by multiple hard turns at speed. They have significant downsides – they’re loud (if you are ever in a car with summer tires you’ll know), more likely to blow out, and wear quickly.

Basically summer tires equip the car for a situation 99 percent of drivers never experience, or even want to experience – high-gee racetrack adhesion. They sure do look nice. My feeling is that most drivers who order summer tires are announcing to the world, “I am Joe Cool and I have no idea why I paid extra for these tires.”

The stylish retro rims on my new RDX.

Bonus: The Rims on the Car Go Round and Round. Though I don’t like the tires on my new car – my previous Acura came with excellent Michelins that wore well and did not burst when I hit one of D.C.’s infamous Chicxulub-class potholes – I am pleased the standard rims hark back to the Cragar SS, greatest of all mag wheels. Auto designers should put Cragar-styled wheels on every car.

Coming Soon: Save the Manuals! Your writer will lament the demise of the stick shift.