Dealership Employee Treatment and MSRP: An Insider's Perspective

As someone with first-hand experience working at two General Motors dealerships between 2010 to 2011, I can offer insights into the treatment of employees, the pricing strategy, and the nuances of the car selling process.

Employee Treatment and Management

When starting as a new salesperson, often the youngest and most inexperienced, the situation can be quite challenging. Employees are referred to as 'green peas,' highlighting their inexperience. This moniker immediately sets expectations for customers and management alike. Local buyers tend to have a preferred salesperson, often those with more experience and a track record of successful sales. This can create a significant barrier for newcomers, as they need to establish trust and credibility with both customers and their superiors.

Management, keen on maintaining high sales figures, actively works to help new recruits but also sees them as a liability. This is because new employees have yet to 'earn their stripes.' They are expected to navigate numerous challenging situations, including dealing with customers’ skepticism and resistance to comply with seemingly strict sales processes. While training is provided, the reliance on experienced salespeople can lead to a lack of clear guidance and support, adding stress to the new team members.

Customer Price Negotiations and MSRP

The pricing strategy at car dealerships is another critical aspect that affects both the customer and the salesperson. Contrary to popular belief, cars are not typically sold below the manufacturer’s suggested retail price (MSRP). In fact, the pricing can vary between MSRP and the actual cost of the vehicle, depending on several factors.

If the car is new, the pricing is often based solely on the sticker price. However, if the car is older and has been sitting on the lot for some time, it might be priced above MSRP. The length of time a vehicle remains on the lot has a significant impact on its pricing. New cars, despite being a 'money machine' laden with parts, often see the highest prices due to their condition and potential resale value.

The pricing strategy is heavily negotiated, and dealerships often compete for business, driving down margins. If a customer is willing to pay a few dollars over invoice price, they can secure a deal. Additionally, dealerships may offer employees manufacturing specials, commonly known as Z or X plans, which can save employees up to $1,000 on their purchase.

Differences in Department Treatment

Within the dealership, the sales department operates quite differently from the parts or service departments. Parts and service employees typically enjoy a more traditional 8-to-5 work schedule, with good benefits and a variety of paid holidays. Contrastingly, the sales department is more akin to a boot camp environment, where employees must work long hours, often into the evenings, studying and mastering the products to become certified sales professionals.

In the sales department, there is a strict hierarchy similar to military ranks. For example, General Managers (GMs) and Lieutenants (GMs) are the command structure, followed by Desks, Closers, and Team Leaders. Everyone must adhere to the instructions given by their superiors, with little room for deviation. The desk serves as both the central command and the ultimate source of all deal-related information, effectively transforming salespeople into mere messengers for the sales desk.

Role of Salespeople and Authority

Despite the significant role of salespeople in the dealership, they possess very little direct authority. They must comply with the directives given by the desk and are not allowed to deviate from the established processes. This can be frustrating for new employees who may find themselves working long hours, such as from 7:30 AM to 7:00 PM (bell to bell) to meet quotas, especially during slow sales periods.

Some salespeople are even considered independent contractors (1099 employees), while the majority are regular W2 employees. The pay structure can be volatile, with top performers earning substantial income, while most employees struggle to make ends meet month to month.

Conclusion

While the car dealership environment presents unique challenges for employees, a combination of dedicated training, perseverance, and customer negotiation skills can lead to successful careers. Understanding the dealership's pricing strategies and the roles of different departments can also provide valuable insights for both employees and customers.