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Prices Paid: Buying & Leasing Experiences Mercedes-Benz S-Class Lease Questions
134 messages, Last post on Sep 30, 2009 at 8:43 AM
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Replying to: delta737h (Aug 06, 2007 8:40 am) I would have questioned the $499 doc fee. Seems a little high. We charge $275. New York dealers charge approx. $45. The question is what does Georgia rule say about tax. Can it be payed upfron or does it have to be rolled in? In CT it has to be rolled in. In this scenario, if your payment is 497, your security deposit should only be 500. Always the nearest $50. The rest of it is a bit complicated but seems right. Now to your 4 points. 1. I try to negotiate as well on big tickt items as well, and do my shopping. But when it comes down to it if I meat someone that did their job well, and treated me right I usually give them the business, without much resistance. I guess I dont want to give out what I receive, unless the guy is a total jerk. 2. Suggested is what the manufacturer thinks that piece of metal is worth, and suggests you pay for it. Again a supply and demand question. Some dealers on certain cars will go above MSRP, and there is a reason for it. Grated a 328i is not a B7, and should not be treatd or sold the same way. 3. The big question on the $800 profit margin is hopw would you pay your sales people? And what do you consider a good salary. This is a very difficult question, for a person outside the car buisness. Salespeople are a dime a dozen, and are very easily replacable. A sales professional is not as easy to come by. Dealerships mostly do not live off of the profits generated by the sales department, but on service and satisfaction scores, when the manufacturer kicks back money. In our store the saleperson gives you all the figures and there is no going back and forth to managers. I am here to oversee that all the paperwork is done right, and the customer is happy. 4. Do not misunderstand the fact of the $800 profit on an SL. I as a finance guy really doesnt care about the front end profit. It is purely a statement of what the business has come to. $800 is not alot of money on any deal. You DO need a dealership to be there for you at some point, and be happy that you have had good vehicles, and no problems with the banks, DMV, etc. When that day comes and you need to ask for help from your local dealer, and all of a sudden he is not there anymore, but bought up by some huge car mall, that doesnt care about your problems from the past, then you will see why it is important. Its sort of like the mom and pop harware store that went out of business because of wal mart. It is just a nicer experience dealing with people that know you and care, rather than the rockbottom price and when you are over the curb you are forgotten. I personally would always pay alittle more for a person to be there in the future than be on my own. But thats just me. By the way what do you do? hope to hear from you soon. Julius
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Replying to: juice1220 (Aug 06, 2007 10:59 am) Yes, the $499 doc fee seems steep to me. Typically, doc fees vary between $100-$250. Georgia taxes the payment streams. If you carefully read the scenario, the base payment is $497 and the payment w/tax is $531.79. So, the security deposit amounts to $550 ($531.79 rounded up to the next whole $50). Regarding the other issues... #1. We agree. #2. You're absolutely right. The MSRP is a first cut and reflects the manufacturer's "best estimate" not withstanding market demand/supply factors. #3. As I've already indicated, if I owned a high end dealership, I would want the very best people who graduated from top colleges and universities. I'm particularly interested in those with very strong quantitative backgrounds much like myself. They would need to have completed rigorous course work in calculus as well as calculus based statistics and regression analysis. ALG residual factors are derived via regession analysis that capture historical depreciation time-line profiles. The money factor equation is derived via a binomial expansion. My front line business associates would be required to understand this and much more. Most run of the mill sales people couldn't careless and that's very sad. Only the academically accomplished need apply. I don't want order takers. After completing an academically rigorous education program (financial mathematics, economics, accounting, marketing, salesmanship, etc) and demonstrating exceptional people skills and awesome communication skills, these gifted people will be empowered to make good business decisions... that's why I'm paying them the BIG BUCKS. So, they won't be running back and forth to some sales manager... that's a lot of horse dump. In short, my staff will be the gurus of the automobile sales industry. No one in the industry will surpass them in terms of their knowledge and their ability to structure deals. A dealership needs to do a good job managing both the revenue side and cost side of the ledger and that's what these folks will be hired to do... manage the business and make quality decisions. As far as starting salaries are concerned, I haven't a clue. I would need to do considerable research. However, I would anticipate that the salary structure would be tiered with annual step increases coupled with PERKS (health care benefits, profit sharing, bonuses, etc). Those who work smart and survive after, say, five years would most likely be making a six figure income. I'll be working right along side them and it will be a privilege and an honor to work with such accomplished people. I'm not going to hide in some back office. I want to be on the front line with my business associates. Say, Julius, you want to work with us? #4. Personally, I wouldn't give a hoot whether I made $0.05 of $5,000 off someone. Regardless, I'm going to treat them the same and give them the best of the very best in terms of service. Under no circumstance will I gouge someone even if they're willing and able to pay an amount such that my profit would be outrageously high. I don't think you would do that either. I'm going to be a straight shooter and play the game fair. I live by the golden rule... treat others as you would want them to treat you AND always do the right thing regardless of the consequences. My guess is that one profit center for the F&I folks is reserves. I know that the cost of money structure, whether from banks or the captives, are generally tiered... 6% +0% reserves (buy rate or base rate); 6.5% + 1% reserves; etc. I always try to get the buy rate with 0% reserves. If they refuse, I simply deduct the dollar amount of the reserves from the agreed upon value... I bet you would just love me. As for my background, I teach mathematics/physics part-time at a local university and have been writing a series of college level math texts for Addison-Wesley Publishing in Boston. Once this series is completed, I plan to write an extensive textbook on car leasing. My first love, of course, is aviation. I am a certificated commercial pilot with instrument and multi-engine ratings. My undergrad work was done in aero engineering and mathematics and my grad work done in math, econ, and operations research. I plan to write a book on quantitative methods for the aeronautical sciences as well. So, I keep myself very busy in addition to working out everyday... that's a constant battle. At age 57, I guess you can say that I'm semi-retired. I only teach one class per semester as I don't have the time (nor desire) to teach a full time load anymore. Julius, you sound like very nice guy. I've never been to CT but if I ever get up there, I'll have to drop in to meet you. It would be my pleasure. Best, John PS #1: I became interested in economics after leafing through the 1970 edition of the University of Connecticut course catalogue. The word econometrics caught my eye. I had no idea what the hell it was until I read the description. Up until then, I never knew that one could apply math and stats to economics. After that, econ became my new best friend. PS #2: Sorry for this long winded response.
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Replying to: delta737h (Aug 06, 2007 3:17 pm) Your long winded message are a relaxing thing for me, and I enjoy my job as a finance manager, so you would be a customer that I would enjoy talking to because I can learn from you. You are not a typical customer. Typical customers have no idea of money factors or how deals are structured and are just going on hear say, and what they heard from someone. I would enjoy having you sit on the opposite side of my table, and we could play some mind games.  Which is basically all the car business is. A game. If the words are played out right, it is a beautiful ballet, and the right salesperson, will know what to say next, and what button to push. Like chess. But as you said most dont care, or have the patience or know how, and are just looking for the lay down. That is exactly why I became a finance manager. I didn't enjoy selling cars anymore, and the "game" didn't give me any satisfaction. Here I basically do the same thing, except in 5 minutes. I try to upsell the customer on products, which by the way, I tell people upfront, which ones i recommend to their particular needs. I do not force things i do not believe in myself. For example, road hazard tire coverage. If your car comes with run flat tires, this is a very good product, because the smallest thing as a nail, will cause you to replace a tire. Which on a 3 series is about $350 per tire and about $600 per rim if you hit a pothole. I sell it for $599. I have a slight profit in that, but will negotiate because I would rather see you have it and have worry free driving than to be angry about how expensive bmw tires are. To get back to your "uber team" of sales people. It sounds great and would gladly join your team, but you will have some issues finding "intelligent" salespeople with those qualifications. With all that knowledge I think the last place you will look is the car business. I consider myself a fairly intelligent person, but if I had all that background I would jump out of the car business, quicker than you could say F&I. Just to give you an example on my payplan. My salesmen structure the deals and do not get pais on lease reserve or finance reserve. I get paid on reserve and aftersales. So since they are structuring the deal, and dont get paid on reserve guess how much is in there. You got it $0. So i have to rely on selling product, and looking for ways to pick up some reserve here or there. We sold 121 new cars, and 20 used last month, and i am at $577 a car with a 78% product penatration. there are 2 F&I guys here, and we split the deals. So in short it isn't easy. The hours are brutal, and the stress is sometimes way to much. But its a living, and I can support my family, and pay the mortgage and all my bills on time. So thats me in a nutshell. Hopefully, I also am not too long winded. If you ever do come up this way, i would be happy to meet you. See ya, Julius Ps : If you ever do write a book, dont bash us. There is enough bad press out there about the car business
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Replying to: juice1220 (Aug 06, 2007 5:08 pm) You're absolutely correct; the car buying process is a game. In fact, if the game is played fairly it can be described as a zero-sum game. Operations research folks are very familiar with this term. Basically, it means that one's gain (+) is another's loss (-) so that gain + loss = 0. However, one needs to recognize that there are gains and losses on both sides that are effectively neutralized. Unfortunately, some folks choose to play the game unfairly. It's always in everyone's best interest to preserve the integrity of the game and play fair. As I had previously indicated, the game is played with the following objective... Dealer: Max{Revenue} Customer: Min{Cost} Of course, there are also those intangible benefits (customer satisfaction, repeat business, etc.) that are difficult to quantify. As far as car sales is concerned, I think it's all in the approach and presentation. Some dealerships need to take a much more professional approach. I can spot a faker faster than you can blink and that's why I find it convenient to FAX/email lease proposals. My instructions are crystal clear: Transplant the numbers to the lease contract, have the papers ready for me to sign and the keys ready for me to go! Proposals have saved me a lot of time, money, and aggravation. They are professionally done by me and send the dealer a very strong message: I know a lot about leasing so let's cut the bull and get down to business because my time is valuable and so is your's. Should they ask silly questions such as how I arrived at the agreed upon value, I politely tell them that it is irrelevant. What is relevant is whether or not they can do the deal. The only response I want to hear is either: (A) YES, WE CAN DO THE DEAL OR; (B) NO, WE CAN’T DO THE DEAL. I want to be sure that they are in complete agreement with every last bit of detail described in the proposal and want to make it virtually impossible for them to claim that they made a mistake once I’ve arrived at the dealership. If they say that they made an error once I’ve arrived, they’re going to look awfully silly. Afterall, one of the purposes of creating a proposal is to prevent mistakes. Years ago, the GM of a dealership once told me he forgot the tax on the bank fee. I reminded him that there is no tax on this fee in the state of Ohio. Unfortunately, some dealers are like children. Either the GM was lying or; he was just plain incompetent. Either way, it didn't reflect well on him. I was gone because I have zero tolerance for deceit or incompetence. I have heard that maintenance costs associated with BMW's is sky high compared with similar makes. I have no idea whether or not that's true. I actually heard that from a BMW mechanic who works for a local BMW dealership. I was pretty sure that you guys were paid on reserves and aftersales (warranties, term life insurance, etc). I also know that it's far from a glamorous life... I certainly don't envy you. Frankly and, to be very candid, I'm not really a people person. I tend to have a short fuse. I'm very direct and am like 20 bulls in a china shop. I have absolutely no diplomacy whatsoever and I hate the term "politically correct" as it doesn't apply to me. I have no problem with confronting people and holding them responsible and accountable. And so, yes, I have some pretty rough edges. In our politically correct society, it seems that no one wants to point fingers or hold each other accountable. That's a lot of horse sh*t! If I screw up, believe me, I'll be the first to admit it as I am my own worst critic. I remember when I worked in my dad's insurance business when I was in high school. I understated a customer's auto insurance premium by $67. My dad docked me $67 and said: "when you're in business and you make mistakes, you EAT your mistakes". It was a great lesson and one that I will never forget. God bless that man; rest his soul! As far as my lease book and "bashing" dealers is concerned, that's out of the question. It's both tasteless and classless. My book is going to be more like a college level textbook complete with some pretty high powered mathematical discussion. It's not going to be like the pop books that you see at Barnes Noble or Borders. Those books are worthless conversation and amount to no more than a very long drink of water (kind of like my posts... lol). By the time one finishes reading my book, they're going to be extraordinarily knowledgeable about leasing and will know much more than most dealership personnel. Knowledge = Power! This is in no way meant to impugn your background as I'm sure that you are exceptionally well versed in the F&I field; certainly much more so that I am. At any rate, it has been a pleasure to dialogue with you, Julius. I hope that we can one day meet. Regards, John
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Replying to: delta737h (Aug 07, 2007 5:08 am) Just a quick response, because I am having a day from hell in the car buisness. Everything that can has gone wrong, and I am about to tear my hair out, walk, and flip burgers in Mcdonalds. Your book sounds like very good reading, and I certainly would buy it. BUT, the average consumer, wouldnt care becaus it would be too in depth. The average customer would buy the book, on how to screw the dealer when leasing a car. But most people dont want to know how to compute a lease. Its sad, but that is the state of todays society. Hence we have hours and hours of media coverage about trainwrecks like Lyndsay Lohan, and Paris Hilton. That is what sells. Making people better and more intelligent is blah blah blah today. Anyway, I gotta get back to my nightmare day, but thanks for the refreshing break. Julius
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Replying to: juice1220 (Aug 07, 2007 1:34 pm) Sorry to hear about your day from hell. Anything I can do to help (lol)? I do hope that things are going much smoother for you now. Regarding my book; I couldn't agree with you more. Many people are just brain lazy and have their priorities all screwed up. Academics in this country takes a back seat to everything else and sports occupies all the front row seats which is why we have to import all that magnificent foreign brain power (Asians) to do our math, science, and engineering. How this nation is going to compete in a very tough and competitive global market 10 or 15 years downstream is a mystery to me. We have some very fine young talent but the problem is that we don't have enough of them to meet future demand. Anyway, I refuse to cater to the ignorance of the masses in this country even though it will severely compromise my royalty income. So many authors pacify their readership by over simplifying complicated concepts. Anytime you simplify something that is inherently complicated, you necessarily risk distorting it and that I will not do. I cringe when I browse through the "pop" books on car leasing. You can't begin to imagine the number of mistakes that I see and that goes for just about any other "pop" book. I'm sick of a nation loaded with sports fanatics and World Federation Wrestling TV-watching morons. TV programming, newspapers, and advertisements speak volumes about the intelligence of a nation. My book is not meant for everyone. Anyone who reads it will have to have a strong academic orientation, be disciplined and motivated, and commit themselves to some very serious study. It will be no Sunday afternoon stroll in the park. Wishing you a better tomorrow... John
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Replying to: delta737h (Aug 07, 2007 2:41 pm) Well a new day is here, and hope it will be much better than yesterday. For some reason when the morning starts with a bad thing, it just keeps building and every deal has something wrong. A car we had to deliver had a scratch magically appear in the rear bumper, and we wont deliver like that. Not fair to the customer. Then my tinting guy showed up an hour late with the customer waiting here, drivers license got lost from a deal, so literally everything went as smoothly as as a bad case of acne. But today is a new day, and hopefully a few "good" deals come my way, with some rate and aftersales in them. For me by the way a good deal is how much money is on the backend, I could care less if they give the car away at triple net. I hope you have a great day ! Hey, do you think anyone else reads our daily chats? Julius
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Replying to: juice1220 (Aug 08, 2007 4:33 am) Good day my friend. John |
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Replying to: delta737h (Aug 05, 2007 3:56 pm) |
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