Under-Allowance Or Not?

It’s a fact that more and more dealers are moving away from negotiating toward one price selling, whether they want to or not.

The stress of posting prices on the Internet for both new and used is putting pressure on the sales team to stand firm on the price once the customer shows up.

No doubt the best business model is to sell your car for your asking price and you give the customer wholesale value for their trade-in.

For those who aren’t quite there yet, I’d like to suggest that you consider serving up an under-allowance on every trade. I didn’t say to do it just with those customers who look drunk or stupid. I said with every trade.

I’ve often referred to this technique as “taking the customer’s temperature.”

If you do so, one of three things will happen:

1. They say yes and you make some extra gross.
2. The customer will quickly adjust their thinking as to the value of their vehicle.
3. You just put yourself in a much better bargaining position.

There are a few customers you might have to peel off the ceiling. That’s ok. That’s why you’re paid the big bucks.

As long as you’re going to negotiate, you may as well put yourself in the best position to win the game. It’s a shame we have to play the game this way.

I predict that one day we will look back and ask, “Why didn’t we change sooner?” That’s all I’m gonna say,Tommy Gibbs