Jason Mickelson

Jason:

Thanks for your inquiry about how it was done on the sales floor in the past. Back in the 70's 80's and early 90's the dealership and sales person had much greater control as well as greater margins. If a consumer trusted a dealership or was a previous owner, he really had little leverage of looking at the market to see what else was there other than classified news paper ads. Then he had to invest the time and effort to vist the competing dealership. Often to be disappointed because the description was not accurate. This still happens today by the way.

With significant more margin, over allowances on trades were common. A customer who was shopping had troubl understands th difference in his appraisal from one dealership woh used ACV and discounted his new car and a second who use dsome of that new car margin to inflate the ACV. Usually the inflated ACV got the deal. We operated i na metro market with same brand competitors on each side with-in seven miles. The good news was our location was in the middle, so shoppers going both ways usually stopped.

A good sales associate asking the right question s knew after a few minutes how to structure the deal to maximize his commission and still make a deal. The advent of the Internet and OEM margin compression becasue of other back-end monies like EBE and sales objectives changed the world of new car retailing and added competition with added brands made for less loyal customers.

Even with all the changes, it is still a great business and dealers will make it work. With fewer location  after 08 and 09 the through put in most dealerships is rising and if the SAAR number continues to track at or about 15 million, most dealeships will have very good years.

I really enjoy reading your comments.  Keep up the great work.

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