Here’s something to keep in mind when you’re cruising the dealerships and checking out new cars.
While your mind is keyed on what you’d like to drive out of the lot, the used-car manager is more interested in the wheels you’ll be leaving behind.
An afternoon spent with Bill Dame, a used-car manager at a Toyota delearship, provided an intriguing insight into a person who is vital to the operation of a dealership, but who doesn’t have a specific job description.
“No one can ever train to do this job. It’s not part of a career path,” says Dame, who has been sitting on the sales desk for 3 1/2 years. “You either can do it or you can’t.”
Dame’s resume includes a stint as an Air Force mechanic, a father-in-law who owned a body shop, a thorough knowledge of cars (he did a frame-off restoration of a big block, 427-ci 1967 Chevrolet that he still drives) and a regular presence at auto auctions for more than 30 years.
One thing Dame knows is his numbers. His desktop may be clean, but one drawer down he’s got the latest auction sheets, plus the most recent National Automobile Dealer Association, Kelley, Galves and Edmund’s guidebooks.
“There’s a saying in this business that you can shake the book all day and no money will fall out of it,” he says. “You look at the book and you’ve immediately got three prices: Average trade, average loan and retail. Then you talk to five wholesalers and get five more different prices.”
Dame uses the guides for reference, but he studies the local auction sheets because they more accurately reflect his marketplace.
“These are the prices that the guidebooks use in their next edition so it’s the most up-do-date and localized information I can get,” he says.
Though Dame’s job is to put a price on cars, he’s in the people business. In the course of several hours, he’ll have chatted with salesmen, mechanics, customers, wholesalers and the dealership’s owner.
“If [he] asks me to keep an eye out for a car, I remember it,” says Dame. “I may not remember yesterday’s lunch but I remember what I paid for every car I ever [personally] bought, what I put into that car, and what I sold it for.”
Of his role with the dealership, Dame makes one thing clear.
“You’re not trading in your car,” he says. “You’re asking me to buy it. I have to dispose of it. I have to ask myself: `Can I sell this car for more than I have in it or do I have to get rid of it.’ I don’t want it sitting around,” he adds. “Once we buy the car, I have to decide whether it goes on our lot for sale or if we sell it on the wholesale market.”
Dame makes a lot of judgments in a glance.
That first glance tells him whether the car is “desirable” with a reasonable amount of mileage on its odometer. It tells him whether it’s a color that will sell readily: beige, sage, black, white and silver sell best; the red family not so fast.
“In real estate, they say, `location, location, location,’ ” says Dame. “In this business, it’s `condition, condition, condition.’ A nice car is a nice car.”
Once Dame decides a car is desirable and his gut tells him there’s no obvious mechanical problems, the car has one more hurdle before it winds up on the lot, the shop’s evaluation of how much it will take to put the car in A-1 condition for resale. “If we can then sell it for more than we have in it, we do it; otherwise, it goes to the wholesalers,” says Dame.
After nixing one offer, Dame says, “Sure, I was born at night, but not last night.”
That might sound harsh, but it’s the reality of a bottom-line business, one in which the price of new cars is available on the Internet.
“The good part is that people come in really attuned to the car they want,” says Dame. “The Internet is a tool–a great tool–and gives you good figures for MSRP and dealer cost, but it’s far from complete. We have to add to our base cost, a delivery charge–and it’s different for every model at every dealership–plus local dealer association advertising costs. If a customer will take that figure and add the 3 percent the Internet folks say is a fair profit, we’ll make that deal all day long.”
Dame’s resources are more immediate–local auto wholesalers. “These guys know all kinds of vehicles,” he says. “When I describe a car to them, I’m perfectly honest. They don’t know whether I’m figuring on keeping the car or offering it to them. Our relationship is based on a mutual trust.”
A salesman gives Dame a slip. He needs to appraise a 1997 Jeep Cherokee Sport with 38,000 miles on it that is being traded on a 2000 RAV4 SUV.
“This is a perfect example of an off-breed [non-Toyota] appraisal,” says Dame. “At 38,000 miles it’s out of warranty,” he notes, checking paint, tires, overall appearance and myriad intangibles to determine the car’s “desirability.”
“If this car has been repainted, it was done professionally because I can’t see it; and if I can’t, you can’t, either. He does find a rough spot on a fender seam that has had a minor repair. “But … there’s a lot of wax on this car. It’s been kept clean.”
Getting in, he appraises interior condition and options. “There aren’t many extras on this car, but there are enough [to make it desirable].” He takes a look ahead and says, “The hood is nice and right on this car. That’s another good sign.”
A short ride around the block tells him that the engine and transmission are OK, too.
“This would resell on my lot.”
Now to put a price on this car.
“A figure jumped into my head at first sight, and nothing I’ve seen so far has changed it,” says Dame. “I think I’ll have to offer $13,000 for the car.” A quick check of the books and a call to one of his wholesalers, pretty much sets the deal.
Then a snappy-looking Mustang rolls into the lot.
“That’s Jimmy,” says Dame of another wholesaler. “He’s on his way back from the auction. He must have had a bad day and wants to see if there’s anything for him here [the dealership parks all cars to be wholesaled in a back lot], but there isn’t anything out there today.” Dame waves Jimmy inside. “He’s a real smart guy,” he says. “Watch us play each other.”
The two talk back and forth, agreeing that the market is better for the Sport than a Grand Cherokee, but Jimmy, who had a good day at the auction, thinks Dame is paying too much for the Sport.
“He’d have liked it for a lot less,” says Dame, “but this one is going on my lot. In fact, I think we might have a buyer for it.”
And that is the bottom line.
