Is selling coins like selling used cars?
RYK
Posts: 35,800 ✭✭✭✭✭
I purchased a used vehicle today and had a lengthy discussion with the dealer/shop owner, who operates an independent European used car shop and repair shop less than a mile from my home. As we were doing the paperwork, I asked a few questions about his business, and we discussed the used car business extensively. It occurred to me that there are a lot of parallels between the two:
1. The internet has made it such that the whole country is now easily accessible to sell cars/coins.
2. The barrier to entry to becoming a dealer has vanished--anyone can become one with little or no investment.
3. Inexperienced people are paying stupid money for nice used cars/coins.
4. Profit margins have become much slimmer.
5. Despite the avalanche of available information, people are still getting taken for a ride in used cars/coins.
6. The good dealers prefer to cultivate an ongoing relationship with a person rather than go for one big score.
These were some nuggets from our conversation. Any others?
1. The internet has made it such that the whole country is now easily accessible to sell cars/coins.
2. The barrier to entry to becoming a dealer has vanished--anyone can become one with little or no investment.
3. Inexperienced people are paying stupid money for nice used cars/coins.
4. Profit margins have become much slimmer.
5. Despite the avalanche of available information, people are still getting taken for a ride in used cars/coins.
6. The good dealers prefer to cultivate an ongoing relationship with a person rather than go for one big score.
These were some nuggets from our conversation. Any others?
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Comments
4. Profit margins have become much slimmer.
RYK: How does one explain why if people are paying stupid money for nice used cars, the profit margins have become much slimmer?
Who's getting the benefit of the stupid money being paid? The previous owner who allows the dealer to broker the car for a smaller fee?
Just wondering...
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
-Customers of both tend to be quite knowledgeable about what they are buying or completely ignorant... very little middle ground.
-Buying sight unseen is bad Third party inspections are useful but nothing beats personal examination.
I base this upon having done it 25 years ago - and the "game" is still pretty much the same. Yes - some consumers are FAR more sophisticated than they used to be... but for the most part its...
"If you could buy this car for the price you want - would you take it today?"
and "I'm just looking"
and "I want it for less than invoice"
and...
GAG. I hate this car-sales crap.
One thing I HAVE noted though... despite the "car salesman's" reputation for lying -- it's the prospective CUSTOMER that lies like a dog.
Car dealerships - like coin dealers have a right to make a profit. People need to get over it. You can't buy anything at "less than invoice" - if you could... every business owner would have "STUPID" tatooed on his/her forehead.
#1 is correct - but the segment using it is still pretty small.
#2 is a misnomer. To own a dealership with a "factory name" is STILL big bucks - and always will be.
#3 is correct, and always will be.
#4 is correct - with regard to new vehicles.
#5 is hogwash. (or should be) People don't get "taken for a ride" on a car - they buy what they choose to buy, and they negotiate. Some are better at it than others.
#6 - is spot-on. There is no substitue for superior customer service in either venue. I'd FAR rather make a smaller profit many times over than a big score once.
You are absolutely right RYK - there are many similarities between the two. In both cases - honesty and full disclosure should rule the day - but often don't.
Only thing is that I can't drive real slow across the parking lot and have 3 coin dealers chase me.
<< <i>I can't drive real slow across the parking lot and have 3 coin dealers chase me >>
That's one of the things that REALLY drives salesmen NUTS! How can anyone pick out a car while driving around the lot?
They all think it's so amusing too... watching the salespeople try to make contact with them. Those salespeople are just trying to earn a living, and for the most part - trying to assist the buyer in finding the vehicle that is right for him or her.
Yeah... I know. I'm beating a dead horse. When I'm done with this gig - I'm going to law school. That way I'll have experienced every level of derision that can be experienced in a human life.
Don't go ballistic Fratt... it was a bad joke.
Inexperienced dealers are bidding up the prices of wholesale cars ("stupid money") thereby reducing the profit margins for everyone else (and themselves).
DanC,
I agree with you on #5. I think I was getting carried away and perhaps a bit desparate to use the pun.
I disagree on #2. Tomorrow, I could get business cards printed, buy a few cars, place some online ads, and I am in business.
And, unfortunately, I agree with you that the customer is more likely to be a liar than the salesperson.
Thank you for the insights as an insider. I am sorry that you ended up in the car business the way you did but wish you the best of luck in it.
Robert
A car dealer can follow you in a revolving door and come out ahead of you.
I can pay list price anywhere.
A dealership adds only cost to the price of a car and no value.
The car buying public would be better served if all dealerships were owned by the respective factories or corporation that made the vehicle.
Ten minutes on a used car lot will tell you that the worst thing about an American made car is that an American owned it.
Don't get me wrong as I have nothing against car salesmen; its just some things that I have observed over the years.
We're in agreement - except... you didn't look too closely at my #2.
You may be able to print cards, and buy cars - but it won't be a "Chevy" or "Ford" or "whatever" dealership.
THOSE are still very pricey. However... I know a guy that also got whacked in the Dot-bomb crunch who now owns a small used vehicle dealership - and seems to be doing pretty well.
If I were to do it - I'd buy a big name. Of course... I don't have that kind of money. If I did - I wouldn't be selling cars.
Not to worry. I've always been successful at anything I've put effort into. This will be no different, albeit temporary.
Unfortunate, but true.
<< <i>Only thing is that I can't drive real slow across the parking lot and have 3 coin dealers chase me. >>
Dog - when we're in a "slow" coin market, take a slow walk in a near empty coin bourse - you'd be surprised - 'specially if you've got your checkbook out.
Course, we're not in a slow coin market right now.
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” Mark Twain
Newmismatist
A dealership adds only cost to the price of a car and no value
That is basically untrue. The consumer legislation that regulates the auto trade is much more lenient on the individual seller, and much more stringent on the dealer. The dealer is assumed to be an expert, and the individual seller is allowed to play dumb. A selling dealer also has assets against which to file claim. The dealer offers extended warranty, financing, mechanical inspection, reconditioning prior to the sale, the state inspection, and takes trade-ins.
As for the similarities between the two businesses, they include auctions, wholesale transactions, retail, bid and ask, exotic pieces, common stuff, trades, mom and pop stores, ebay sales, etc. I think they are basically the same business. I also believe the eye required to detect paintwork and orange-peel mirrors the eye required to detect hairlines and cleaning.
Lots of commonality.
and it sets us apart from practitioners and consultants. Gregor
I'm not looking to buy a car when I do that. Me & my friends get tired of playing pool sometimes so we go mess with the salesmen in their bad leisure suits. They look like vultures lurking around the front office and they be watching me but acting like they aint and when I stop they start moving in. Each one trying to outrun the others but acting real casual like. When they get close I take off and go to the other end of the lot and stop.
Sometimes I ask them what they want for that car. I always offer them $1,000 less. They say "Let's go in a do a credit app." I say I got a checkbook I don't need credit.
Then he pulls a folded up piece of paper out of his pocket & says "I'm not sposed to show you this but this is how much we paid for this car." I've had coin dealers do the same thing. heehe
You aren't the guy who complains when they won't wait on you are you?
and it sets us apart from practitioners and consultants. Gregor
and it sets us apart from practitioners and consultants. Gregor
<< <i>Inexperienced dealers are bidding up the prices of wholesale cars ("stupid money") thereby reducing the profit margins for everyone else (and themselves). >>
they are not inexperienced for long as they either figure it out quickly or are out of business. One thing that runs up wholesale prices is a dealer taking a retail customer to a wholesale auction- this is forbidden but the retail customer poses as a driver. mike
<< <i>So a dealership pretty much adds mostly cost to the final price >>
All stores that sell any item adds cost to that item. I, for one, would not like to go to the "Green Giant" canned vegetable factory direct outlet for my vegetables, then to the Pillsbury Outlet across town for my cake mix, etc. The added value a salesperson and dealership offers the buying public greatly outweighs the added cost to the item. IMHO
Of course that is true and I understand a business has to make a profit. My point is that the car salesman always seems to conveniently overlook that little fact. If the dealerships were run by the factory the you should be able to buy the same car for the same price anywhere in the country. Also the factory should be able to sell a car for a lower price as the dealership would need to recoup only operating costs and not necessarily generate a profit. IMHO
<< <i>Me & my friends get tired of playing pool sometimes so we go mess with the salesmen in their bad leisure suits >>
Dog - That is SO cliche' that I'm going to assume it's tongue-in-cheek.
Food for thought: The "average" car salesman sells 5 or 6 cars a month, and makes about $3,000 a month. While they're being jerked around for an hour by someone "messing" with them, they may well have lost a "real" sale that would've made the difference between little Bobby getting new shoes, and whether to pay the electric bill. There are sales that the salesman makes only $50 on.
For this - he or she works upwards of 12+ hours, on his or her feet nearly all day non-stop - on pavement, and walks 10 miles or more during that time. Our lot is 5 acres. It adds up to some pretty serious wear-and-tear. One reason you see sales personnel "lurking like vultures" in front - is that if you don't move to help a customer... and QUICKLY - "Mr. Superstar" WILL - and there goes little Bobby's shoes again. It's a cut-throat situation.
He or she works every weekend, and most holidays. It's a great life to be sure.
Of course - on the opposite end of the spectrum is the "superstar" who sneers at anything virtuous, makes over $10,000 a month, and would lie to his own mother for a buck. I won't compromise my principles for money, so it looks like I'm going to be in the first category.
<< So a dealership pretty much adds mostly cost to the final price >>
You can look at that two ways... "adds cost" - or "adds value."
In addition to all the factory requirements, the dealership has a service department with experts on your vehicle. Have you opened the hood of an '04 anything? I sure wouldn't stick a wrench in there.
When your car arrives, it arrives sooty, grimy and dirty. The dealership has it detailed, waxed, buffed, vital fluids checked, etc. There's a full-service parts department, body shop, detail shop, office personnel, lot guys -
All these things come at a cost - but the average factory labeled dealership operates at a 2% margin.
Isn't it amazing how closely the coin business and the car business resemble each other? I have absolutely no idea why I'm "defending" the auto sales industry. I guess it's like being a Lawyer. People love to hate them, and there's no end to the lies about them - and in reality - there are some very decent people who do it for a living.
This must be God's way of getting even with me for all the lawyer-bashing I've done.
I will be heading back to the I.T. industry as soon as practical. On the bright side - there have been two pretty solid opportunities come my way in the last two days.
DannyBoyC!
"Senorita HepKitty"
"I want a real cool Kitty from Hepcat City, to stay in step with me" - Bill Carter
Do you collect classics or moderns (cars, that is)?
R
"Senorita HepKitty"
"I want a real cool Kitty from Hepcat City, to stay in step with me" - Bill Carter
After all how could the owner of the Ford dealership ever afford that $700,000 bungalow with soft sales like that?