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Commissions were based on the "payable gross" to the dealership and were applied in three tiers. If the payable gross was from $0 to $749, our commission was 20 percent of the profit, from $750 to $1249 the commission was 25 percent of the profit. Above $1250 the commission was 30 percent of the profit. In other words, the higher the profit for the dealership, the higher the commission I would earn. Obviously, this motivated salespeople to build profit into the deal so they could hit that magic mark and get into the 30 percent bracket.

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...If I sold cars I made money. If I didn't sell, I didn't make a penny. Maybe that's why there were so many salespeople working here (about 85 in new and used cars). It didn't cost the dealership extra to have a big staff. ...

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The final box on the 4-square was for the trade-in. This was where the most profit could be made. Buyers are so eager to get out of their old car and into a new one, they overlook the true value of the trade-in. The dealership is well aware of this weakness and exploits it.

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Since I was still a "green pea" the other salesmen tried to push me to wait on undesirable ups — the undesirable customers who the salesmen thought wouldn't or couldn't qualify to buy a car. My manager had, at one point, described the different races and nationalities and what they were like as customers. It would be too inflammatory to repeat what he said here. But the gist of it was that the people of such-and-such nationality were "lie downs" (people who buy without negotiating), while the people of another race were "roaches" (they had bad credit), and people from that country were "mooches" (they tried to buy the car for invoice price).

I'll repeat what Michael, my ASM, told me about Caucasians . He said white people never come into the dealership. "They're all on the Internet trying to find out what our invoice price is. We never even get a shot at them. I hate it. I mean, would they go (to a mall) and say, 'What's your invoice price on that beautiful suit?' No. So why are they doing it here?"

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Somehow, the earlier sales sheet had gotten "lost" and the numbers they had agreed on were "forgotten." The price of the minivan and all the extras shot back up and the price of his trade-in took a serious dive. For the next two hours Mr. Park was hammered by every closer in the dealership. I got to watch a variety of styles: impatience, cajoling, begging, threats. Through all this his wife sat by his side clutching their little baby. Mr. Park began complaining that he had a headache and his manner became increasingly angry. At one point he ominously muttered, "Don't screw with me."

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The rules of the dealership are enforced by threatening to send the offender home. Since we all worked on straight commission, to be sent home meant you eliminated your chances of making any money. The concept of being sent home always reminded me of being in grade school. "If you do that again, we're going to send you home and call your mother."

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Actually, when I got my voucher, I made a $501 commission on a payable gross of $1,689 — almost the $1,700 discount that Edmunds.com advised. Our commissions were paid twice a month. But we received vouchers within a day or two showing how much we had to look forward to. The vouchers were yellow carbon copy slips from the dealership's books. The salesmen kept the vouchers in their wallets and took them out to show each other like scalps.

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Originally posted by DaleB
Yes, nice summary. Several things one can do armed with this knowledge, when it comes down to negotiations. Although, like with the X, just a little dealership-hopping, or even using email or the phone, you can generally land a good deal or at least fair one.

Domestic vehicles are 'more' prone to these tactics. One thing for sure, if you do plan to get rid of your present car, do NOT trade it in, and when you look for a car I would not even park it near the dealership.

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