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I was the general Sales manager for the first Lexus dealership in Canada back in 1996. Once my "hobby" of flipping autos was found out ( I am licensed to sell as a dealer principle in California, so I am legal and stand by their laws).

I was asked to write a short article called 'Buyoligy". For the case of this post, most may find one or more tips but I present it to you because it gives everyone a few tips on how to determine who you are really dealing with.


[align=center]NOTE: Do not read while operating heavy
machinery for fear of drowsiness
.
[/align][align=center]Buyoligy 101[/align]

It’s that time of year, got the bug for a new ride? Buying a bike? Well here’s some inside info that may help. Why me? In my younger years, I sold cars to support my family as I went through school. I then made it to used car manager, working through sales manager to general manger and then got tired and finished the last year of my schooling full time.

I still hold my auto sales license in CA and Ontario, Canada. So, here is how I buy a vehicle. I have paid too much for some of my purchases, and I have gotten great deals on some of my purchases; but generally, I have targeted the OK-OK deal.

The OK-OK deal is where the dealership (or person if a private deal) who sold you the bike is happy, and you got what you want.

The following are some tips from the inside.

Dealerships: Ok, it is fair and only proper that a dealership makes a profit. They need to stay in business to be there when you need them, and assuming you did the OK-OK deal, they will welcome you back with open arms.


There are several grades of dealerships, based on two things, the manufacturer's consideration of the operation and the CSI ( the customer satisfaction index). Both have lots to do with the price and selection you might find at any given dealership.

So, a class A dealership is one where the CSI is high and the manufacturer recognizes that and gives them this grade ( and first choice of inventory). Also, the sales volume has a lot to do with this grading system.

When you have a class A dealership, you will find that they have a better selection and access to product, in some cases they might even have a sought after bike, on the floor, that you thought might have to be special ordered. They will also have excellent facilities, service and parts.

So, how do you know the class of a dealership? Well clearly the stock they keep and the selection they have on hand. A dealership is given a certain amount of stock based on financials, they must pay a percentage of the bike's wholesale value each month to their underwriter, usually a bank, but sometimes the manufacturer.

They turn high volumes to keep their costs down and often are where you can buy with the least margin. All things considered, the manufacturer loves this, the bank loves this and so should you.

Here are the pros and the cons:

Pro: you can probably get exactly what you are after and get a good price, the con is you are simply a number on their monthlies. A mom and pop shop will maybe charge a little more, have a hard time getting you exactly what you want (but they will get it) but they will know you by name. So, you get what you pay for.

The sales person:
Some are paid on commission only, and that is usually a percentage of the gross ( the profit of the purchase). Others are paid by the unit, a flat fee for every bike they sell.


Which is better? The answer is really not to do with how they get paid, but rather what they know about the product and what they are willing to do for you. You want to get the right information when you ask a question, you also want to make sure this sales person is going to live up to his or her promises.

If you don’t feel comfortable with a sales rep, get a different one, chances are they have a split deal plan so both will benefit from selling you a bike. So, be choosy, the customer is always right and buyers remorse is a leading cause of stress in today’s world (outside of work and marriage).

The purchase:
Here is the hard part. First, do your homework. Once you have selected a model, call up the dealership and ask how much and under what terms they sell extended warranties for, this is a good idea of the expected life cycle of that model. All the specs on most bikes are available on the web, you can even get reviews and impressions of a bike on the web.

Also, and very importantly, is the invoice price.
Invoices, especially with cars, are a sticky wicket. There are several invoices and what you get on the web is the official invoice for a bike to the dealership from the maker( the one they would show you if you called their hand)

However, class A dealerships pay much less than that because of their status with the maker. NO DEALERSHIP PAYS MORE THAN THAT INVOICE PRICE regardless of grade.

So knowing that figure is a great tool to have in your buying kit. Emotion is the number one profit maker for a dealership. Someone falls in love with a bike and MUST have it. You must remember that if dealer A has it, there is a dealer B that has it or can get it.

So one must detach the emotion from the purchase in order to establish both a good price, and a future working relationship with the dealer.

Lets assume that a good dealer knows that the profit made from the purchase of the bike is about 10% of the money they will make off you if you patronize them for service and parts( over an average ownership period.).

Trade In-
Also with respect to trade ins . I always suggest you do two separate deals. The figures get all fudged up when combined. So, negotiate the price of the new bike with the assumption of no trade, that way you know what you are really paying for that bike, then negotiate the trade-in price ( yup, trades-in can be negotiated) that way you know how much you are being paid for your bike.

Lastly, in places where there is no tax benefit to a trade-in, you will always do better selling the bike privately.

The ART of the deal:
( sorry Donald, I stole that from you).
Your buying tool kit must comprise of a few things.

First, you have done the research therefore can tell bullshit from fact when you first meet your sales rep.

Next, you know the average price the dealer is paying for the product and you can probably tell their class rating just by looking around the show room.

Then, you have figured out the financing. You know how much you can and will spend and where it is coming from.

And last, you have your Devils Advocate.
Devils advocate you say? Yup, that is the person you bring with you who is reputably your better half, and therefore has a say in that decision. However in this case, they don’t like something about the bike: the color, the option, even the idea of you having a bike.

This is most unnerving for sales folk.

The run down; you enter the dealership, you are spied by a sales rep and soon contact is made. Your interest is established and you quickly inform them that you don’t have time to play “the game”.

Next, you show them exactly what you want, new or used. You ask a few probing questions that you know the answer to in order to check their state of mind ( do they know what they are talking about and can you trust them).

During this time, you should have taken note of how many of what you want are sitting in their inventory.

The more they have, the better a deal you will get. Some dealers will hide some inventory for this very reason so be prepared to walk the lot before you go in.

Ok, you are there, the bike is chosen and now comes the deal. Make sure you leave some meat on the bone or the rep will go in the opposite direction and try his hardest to go full pop ( the highest price he can get from you).

Once you have picked out a bike and told him you don’t want to play the game ( where he goes back to his sales manager many times eventually nickel and diming you to his price), you hit him with a check for what you are willing to pay for the bike.

“Certify it or rip it up” you say .

He will then take your offer to the sales manager and if they don’t like it, be prepared to walk out right there and right then ( you can always come back)

A sales rep hates to see a walk out, it means a gross waste of his time. More than likely they will counter offer and that’s when your devil's advocate comes in. They then state their objection to the purchase: I hate the color and the one we saw elsewhere was nicer”, I still don’t want you to get a bike.

If all goes well, they will meet you at what you consider a reasonable price and that’s what counts, that is the Ok-OK deal.

Choices :
F&I, extended warranties and service charges.:
It is now that you have bought the bike and you are off to the business manger, the facilitator or F&I person ( finance and insurance), call it what they will. This person makes their money off of selling you financing for the bike ( no probs, you have that worked out at a much better rate then they would ever offer you), extended warranties and one payment service plans (yet they will still charge you a paperwork charge, which is where they get paid from if you don’t buy the F or I).

On a new bike, you have until the end of the factory warranty to buy the extended warranty at the same price, so best to say no now and give it a go, if the bike looks like is going to give you problems, buy the warranty, it may save some sleepless night’s and most are unlimited mileage ( they count on you doing very little mileage on a “recreational vehicle”).

Bring a Calculator to F&I, these guys tend to be thieves. I have seen them add thousands to the price negotiated with the salesman and then try to pawn it off as interest or even seen them add the service contract you just rejected into the deal anyway.

Bring a calculator and make sure the finance guy discloses the term of the loan and calculate up your payment by the term and see how much interest you are paying first hand.

F&I is where most of the thieving can take place.The dealerships make X$ from a finance deal, whether it is bank or manufacturer financing. They must hold that contract for 90 days before they get paid, SO MAKE SURE when you do this, there is not a clause that states you can not buy out the deal within that time or you may be subject to penalties.

I buy my used bikes on my credit card and ride them hard from day one. This way, if I decide I have bought a dud, I can go back to the dealer and contest the charge with the credit card company ( beware that this will only work on a used bike and more than likely only with in 50 miles of the purchase mileage.)

The “no cooling off period” does not cut cheese with credit card companies. The dealerships know this and will do what they can to get paid, be it make you a deal on another bike, or fix what is wrong with the one you bought.

PDI: The pre delivery inspection:
this is it folks, this is where you sign off saying I take full responsibility for the machine.

Usually, they have a form that covers some steps they must take, showing you things like where to put the gas in, where to put the key in, etc...

Once you sign that form, you own the bike regardless. Therefore, it is here that you take the proverbial microscope to the bike. You check every inch of paint, every mile of rubber and every nook and cranny you can think of. Having a camera with you can help later on.

See something you don’t like, have it written on this form or don’t take delivery until it is fixed. On my recent VT1100 purchase, it took four minutes for the sales rep to find the key hole ( ah, maybe he doesn’t know anything about Hondas and I should beware of anything he has told me).

Turns out I didn’t take my own advice and bought on emotion. Bad Dragoon.

Seasons: for those of you who live in a part of the world where there is a distinct riding/driving season, you might note two things:
First, the deals on bikes get better as the snow begins to fly and second, they probably sell snowmobiles too. Either way, this time is a hungry time for both the sales rep and the dealership.

Their mortgage and payroll does not decrease as their volume does, so if you have good restraint, now is the time to buy the bike you have drooled over all summer.

PMA : Past model allowance.
This refers to both allocation of stock AND incentives given to the dealer to move last years model off the floor.

So, if what you are after is sitting there in last year's model, you can bet they have dressed it up a bit and have a huge margin. Look at most dealers this time of year and the “red tags” tend to be on well dressed 06’s.

This is a great way to make a deal and the warranty doesn’t start until it is registered in your name so it is a NEW bike.

Also, and for most of us who ride so much that the year model won't matter, having an extra year to spread the mileage over is a good thing.

I bought an 05 in 06 and have 15k on it now, but as far as the next buyer is concerned, if I sell it today, that’s only 7500 miles a year.

Only here, in the land of year round driving, that is far from unheard of. I am always amazed to see three and four year old bikes on the show room floor with only 5-6k miles on it. I wonder if this previous owner really had time to ride, and alternately, took as good care of the bike as we diehards might.

Used now!!!!
And last.
If a dealer has a used bike, he has made some coin off selling a new bike. Most will tell you that they have high standards and look over the machine with a fine tooth comb. This may well be true, especially in those parts of the world that have strong PI laws ( personal injury).

I got a $1000 decrease in the selling price of a used bike that was only $7000 to begin with. This tells me that they shoot for the moon in their used ( previously enjoyed models) pricing. The best way to determine the right price to pay for a used bike is to call your bank and ask how much of the principal they would finance. Most will finance the whole purchase price minus the taxes and dealer charges.

So if they tell you that you can borrow 7,000 on a used bike, make sure you don’t pay a penny more. In fact, start by offering 15% off the asking or at least 1k (which ever is most, they can only say no), depending on model and asking price.

With today’s technology, you can find out an amazing amount of info on that machine just by getting the VIN (vehicle identification number). So, as a rule, never buy a used bike before checking its history out as best you can. If you are in love with it and afraid someone will walk through the door and buy it in the mean time, make a deal “subject to reasonable financing”. Make sure you use that exact term. If you say just subject to financing, they will find a way to finance it, and it will cost you.

Conversion tactic.
This is a tactic that every auto sales rep is very well trained on.

Let me give you an example of how I used it, only in reverse. I was buying a car for a customer ( I offer my services to negotiate car deals stating clearly that I will save my customer much more then the mere $200 I ask).

You would be surprised at how many folks are scared to death of a car sales person. So, we had the car picked but and had chiseled for about an hour, my customers wife, right on cue, took a tiff and headed for their car stating she didn’t want the damn thing anyway ( remember the “devils advocate”).

I felt we could get another $500 off the car and the sales guy was adamant that this was as low as the car could ever be bought for. Yeh right.

I asked him to tell me how much that would be a month over 60 months. He came back from the F&I guy telling me it was $310 and change. I told him to go back to the sale manager ( not the F&I guy he just spoke to) and tell him we would stroke a check for that car if the payment was $300.00 even.

In his mind, that was going back for a simple $10.00, something he was willing to do to make the deal right there and then. The sales manager looked at it the same way and signed off on the deal.

Great! So, over 60 months, the $10 figure alone was $600, not to mention the $40-$50 in interest I had just saved my customer.

Thus, instead of the $500 I wanted off, I got $650. This may not work well today on your side because most sales folks are so well trained now, but I mention it because you will see them change from the cost price to the monthly cost if they need to bump you and don’t think you are thinking that way. After all, they have you sitting there looking at a $10 grand bike you love and what’s another $10 to make the dream come true, so be careful.

Remember, this should be one of the most exciting things you do; buying that new ( to you at least ) toy. As long as this post has been, I hope it helps someone. If I have left any questions unanswered, please e-mail me for more info. Happy shopping.

-Dragoon

 

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I like the the title "Buyology 101". Good stuff.

I'd bet there are many willing to sell the BIG engines and vehicles as well as the mediums......since we all know what the gas prices will be by spring 2009.

Now would sure be a good time to ditch one.

I'd guess gas will be $5./gal+ by June 2009.
 

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Popeye wrote:
I like the the title "Buyology 101". Good stuff.

I'd bet there are many willing to sell the BIG engines and vehicles as well as the mediums......since we all know what the gas prices will be by spring 2009.

Now would sure be a good time to ditch one.

I'd guess gas will be $5./gal+ by June 2009.
Do not be saying such things!!:doh: I sure hope not. Kit
 

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Kit Carson wrote:
Popeye wrote:
I like the the title "Buyology 101". Good stuff.

I'd bet there are many willing to sell the BIG engines and vehicles as well as the mediums......since we all know what the gas prices will be by spring 2009.

Now would sure be a good time to ditch one.

I'd guess gas will be $5./gal+ by June 2009.
Do not be saying such things!!:doh: I sure hope not. Kit
I have two F6’s to feed, and at 2.29, I can finally let them play. Please prey that gas goes down, not up. At $60+ a barrel, I see it settling in at $1.75+ for reg. Finger crossed.
 

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Best I can find is 2.25, but we have cali gas (what ever that really means) so we always pay a little more. It getting encourangingJ
 

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I shall be devils advocate here..
Don't get used to cheap gas, unless we stay in perpetual depression, it will return to $4.00 per gallon as soon as this depression or call it what you will is over.
 

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I saw on the network news tonight that SUV sales were beginning to pick up due to lower gas prices. Do these people really believe that gas is going to stay below $2? They must be stoned.
 

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BC wrote:
I saw on the network news tonight that SUV sales were beginning to pick up due to lower gas prices. Do these people really believe that gas is going to stay below $2? They must be stoned.
You are absolutely correct, BC.

A total lack of appreciation for "the economic factors".

If anyone thinks that Next Year, or even maybe Two Years from now, fuel is going to be less than $4.00 per gallon, they just don't "have it together".

EDIT:

Once this thread finally slows and drifts onto Page Two, it will be moved to the Reference and FAQ forum.
 

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Maybe that's what they could get financed. Dealer's will get these these vehicles financd to get them off the lot. And the prices have really dropped so if someone really needs one of these gas users, now ain't a bad time time to buy.

Just think- if all the Calhoun riders that rode the dragon on saturday, what they spend on gas ( about 30 bikes x $15.00 gas was about 4.99 that day= $450.00) they could have rented a limo bus that would have included a sack lunch or at least snacks. And still used less fuel.

Some folks need trucks and people haulers.
Heck our local dealer was offering New Nissan Titan trucks for 1/2 the msrp at 0%.

Nope, didn't buy 1, cuz I don't need 1:goofygrin:
 

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Interestig post Dragoon, thanks. What does "flipping autos" mean?
 

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wingnut wrote:
Interestig post Dragoon, thanks. What does "flipping autos" mean?
Like flipping houses, I buy cars in sad shape, fix them up and make them look great, then sell them. Its all for shits and giggles and by no means a way to make a living. I have a great, low mileage Camry if anybody needs a car:cheeky1:
 

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Yes I remember those terms from selling cars for a guy named Art Grindell, here in Houston in the 60's ..I also remember that if I couldn't make the final deal jell, I was to page "Mr. Turner" ....That was any one of the high pressure salesmen...to close that deal for me..If we did I lost 60% of my commission on that car....Didn't take me long to realize that Art Grindell was a crook and I got out of car sales....OH yeah I was promised a new car to drive home at nights.....yeah sure the newest car I got was a 1956 Buick convertible, which I bought before I left for $50.00 bucks...A story for another time.....

But you are totally spot on about Buyoligy 101.....

Claude.....
 
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