The writer, a Los Angeles freelancer and former Detroit News business reporter, blogs at Starkman Approved. This column is republished from there with permission.
By Eric Starkman
Growing up in Toronto in the '70s my dad would let me tag along when he bought a car. He only bought Oldsmobiles and he’d only buy them from George Davey, the general manager of what was then Dean Myers Chevrolet Oldsmobile on Dufferin. My dad believed, possibly mistakenly, that he could negotiate a better deal dealing with the dealership’s top dog.
Watching Davey sell was something to behold. He was an affable, high-energy lanky guy, and he knew how to move cars. Davey had a certain affectation when his eager fingers hit the keys of his adding machine.
“The car I want you to have comes with a steering wheel.”
Ka-ching!
“An electric defogger. Gotta have that in these Canadian winters!”
Ka-ching!
“AM/FM radio. “Trust me, you’ll never listen to AM radio again.”
Ka-Ching!
Morris Starkman (Family photo)
Davey would add up all the costs, rip the paper from the machine, and then show it to my dad. Then on a separate paper he’d write down a lower number and show it to my dad, who responded, “C’mon George, you can do better than that.” Davey would then write down a different number, show it to my dad, who in turn would knock down the price a tad, and Davey would meet him halfway.
“Morris, that’s as low as I can go. I’m not making any money on this sale,” Davey invariably insisted.
A deal was struck, as always with the same pricing dance. Oh, forgot to mention the time my dad came in to buy a Delta 88 and Davey upsold him to a more costly and luxurious Oldsmobile 98.
I’ve always admired and respected great salespersons, and car dealerships were once chock full of them. People supposedly in the know are predicting car dealerships will soon go the way of the dodo, and surveys show that most people would welcome their demise. Until last week, I was not among them.
Dean Meyers in Toronto
Since I switched to buying Japanese cars decades ago with a brief BMW foray along the way, I’ve lived a charmed life in my dealings with car dealerships. Only once did I ever feel ripped off, and that involved the $21 or so the Toyota dealer in Manhattan charged me to replace a headlight that I felt should have been covered under warranty. Going to a car dealership in Manhattan, one should expect to get taken, so I considered myself lucky that I was out only $21.
Mr. Lee’s Acura
As buying or leasing cars have always been among my biggest purchases, second only to buying my homes, I’ve always appreciated those who could make me feel good about them. Another great salesman in the George Davey tradition was Mr. Lee, who worked at Mike Harvey Acura in Burlingame near San Francisco International Airport, just south of San Francisco.
I met Mr. Lee, an older, distinguished man who I didn’t think it was appropriate to address by his first name, when I was killing time waiting to pick up someone at the airport. I’d already decided to lease a BMW 328i, but I thought I’d check out the Acura, which wasn’t among the brands I’d considered before opting for a Beamer.
Mr. Lee approached me while I was examining the Acura TL in the showroom, and I was open that I’d already decided on BMW’s comparable car. Mr. Lee’s expression was clearly one of disbelief, and he was determined to show me the error of my ways.
Mr. Lee quickly walked me through some comparison features on a turbocharged Acura he had on the lot that quickly made clear it was way more car for the money than a Beamer. Then he insisted on me going out on a test drive, where he got frustrated with my reluctance to gun the engine as I entered the ramp to the freeway. “C’mon, you have to see what this car can do,” I recall him as saying.
I ended up buying the Acura, but it wasn’t the stats that ultimately swayed me. It was Mr. Lee’s passion for the car.
In my father’s day, being a car salesman was a profession, not a gig, and customers were loyal to them. For good reason. Once my father locked his keys in the car and asked George Davey if he could possibly help him. Davey asked where my dad was parked, and within a half hour arrived with a freshly cut key. When I picked up my Acura, Mr. Lee spent an hour with me walking me through all the features and functions, which were way more advanced than any car I previously owned.
Over the years, car selling became increasingly sleazy, with the “I need to talk to my manager” spiel and the “if you sign right now, I can get you this price.” Then there was the obligatory meeting with the finance person, who tried to sell you dubious products like windshield, key, tire, and fabric protection, paint sealants and an extended warranty. In my lifetime, I’ve only met one person who managed to make a successful extended warranty claim. (I’m talking to you, Jackie!)
Car dealers were slow to adapt to the rise of feminism; I read several articles over the years by women who said they felt invisible when they accompanied their husbands to buy cars. As I know very few married guys who can make a car purchase without their spouses’ blessings, dissing their wives was a very misguided strategy.
Disinterested Salesman
While waiting for an oil change last week at my Subaru dealer, I went into the showroom to look at the latest models. No one approached, so I ventured over to a disinterested salesman sitting at a desk and asked if they were selling cars above sticker price, something I’d never agree to. When he advised the markups were $2,500 or higher, I said thanks and walked away.
George Davey and Mr. Lee would never have allowed me to walk away. They would have taken down my name and number and called me when the supply chain crisis had passed and could offer me a car at close or below sticker price. They were car salesmen for the long haul and knew that it was a boom-and-bust business. A year from now that salesman would appreciate my business, but likely he’ll be gone before my next oil change.
Many people seem to believe that eliminating car dealers will lead to lower prices, as the middleman gets cut out. I’m not sure that’s true. Car dealerships make bupkis from car sales; their profits are derived from service and selling the aforementioned useless products. Meanwhile, Tesla raised prices on its Model Y and Model 3 about a dozen times last year, which the company got away with because it sells directly to consumers.
The benefit of car dealerships is that they make a market much like the New York Stock Exchange once did when it assigned market makers to individual stocks. The NYSE was famed for maintaining an orderly market and ensuring price efficiency, which was why the big Wall Street firms wanted market makers done away with. Technology made it easier for them to game the system.
Airline Ticket Experience
Elon Musk (Photo: Creative Commons)
If all auto manufacturers do away with their dealerships, I fear that when the supply shortage is behind us, buying a car will be like booking an airline ticket, possibly worse. If sales are slow and factories are operating below capacity, the manufacturers will adjust their pricing accordingly. They also will acquire data that will give them considerable knowledge about potential customers’ buying preferences and pricing tolerances; someone who stays at the Four Seasons and frequently eats at five-star restaurants isn’t as price sensitive as I am.
I know of one Tesla customer who wasn’t prepared to eat Elon Musk’s price increases. That would be my cousin Lorn in Hawaii, whose name isn’t uttered in my family without “genius” or “brilliant” also being mentioned. Lorn is a genuine environmentalist and did very well for himself when he worked in technology.
Lorn was among Musk’s earliest customers; he planned to buy a new Model S but cancelled his order after Tesla imposed a second price increase. Losing an early adopter and loyal customer should be pause for concern, but Musk appears to be a tad distracted these days.
Lorn opted for a Kia EV6. If you’re going to buy an electric car, you’d be hard-pressed to find someone more knowledgeable than cousin Lorn. Here’s his recent review.
As for Dean Myers in Toronto and Mike Harvey Acura in Burlingame – I learned today they’re both out of business. A bad omen for the car dealership industry.
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