After 10 years of service at San Diego Gas & Electric, I retired from my “day job” to pursue other interests. As you might imagine, over the decade I worked for SDG&E, I got to know hundreds of other employees. Through daily chitchat, it didn’t take long for them to find out that I spent 18+ years in the retail automotive business and that I wrote, How to Buy the Most Car for the Least Money. They also discovered that I truly enjoyed offering suggestions, answering questions, and giving friends and colleagues some basic guidelines when buying a car. In some cases, I actually shopped with them and negotiated the deal.
I’ve offered advice and helpful hints to blue collar workers, accountants, engineers and even high level managers and directors. The one thing that always intrigued me was the fact that many highly educated and intelligent people knew less about the car buying process—and bought into more misconceptions—than everyday people. It seems that there is little, if any, relationship between education and car-buying savvy. Some of the most intelligent people made the biggest mistakes.
Here’s an example: I had lunch with an ex-colleague the other day. She’s a very bright woman, extremely streetwise, and she doesn’t let anybody push her around. As I’m sitting in the parking lot outside the restaurant waiting for her to show up, I turn my head and see her sitting in a late model Mustang GT. I asked her where her Honda Civic was.
“Bought this car on Sunday. Isn’t it a beauty?”
I asked, “Why didn’t you let me know you were interested in buying a vehicle. I might have saved you some money?”
“Oh, I appreciate that, but I did really well.”
When we sat down for lunch, my curiosity got the best of me so I asked her some questions about the transaction. Without getting into the nitty-gritty financial details, I estimate that the dealer made about $4,000 profit on the sale of the car, $1,500 on the extended warranty they sold her, and probably another $400 on the alarm system she bought. In addition to this, they gave her below wholesale for her low mileage, trade-in, and will likely make another $2,500 to $3,000 when they sell it.
So, you do the math. Here’s an intelligent, streetwise woman who just walked out of a dealership happy as a recent lottery winner and she probably paid $5,000 more for her new wheels than she should have.
I, of course, never even hinted that the dealer scored a “homerun”. While struggling to choke down my lunch, I congratulated her and told her that I hoped the new car served her well. The sad thing is that in a couple of years when she tires of her sports car, she’ll probably waltz into another dealership and once again get taken to the cleaners. It’s an American pastime.