There can be some periods of downtime on the dealership showroom floor and in the F&I office. A good use of that time would be to hone your skills, starting with assessing current market events.
Identify what the current events are and how they are creating potential objections from customers. Next, plan your responses and strategize how you will outrun future objections before they occur.
A side effect of the inflation we are living with is higher interest rates. Since this isn't likely to change soon, we better choose our words wisely.
The days of subvented rates and giant rebates are over. Credit unions — which we used to battle over who could do the loan cheaper — were among the first to react with almost immediate rate increases following the Fed.
I remember the days when customers would walk out the door over 0.15 percentage points or you'd lose a deal because their lender had automatic payment rate reductions (not available if financed at the dealership).
Customers accustomed to getting approved at rates like 1.99 percent (which we could sell with a traditional maximum markup of 2 points on a 72-month loan) are now getting approved at buy rates ranging from the low 5s to the mid-7 percent range.
Translation: An 800 score on a new Yukon with $30,000 cash down is signing close to 8 percent on a typical deal, and the paper is performing without abnormal chargebacks.
Are consumers happy about it? No. Does this make them defensive and confrontational? Potentially.
This could make them draw an arbitrary line in the sand during negotiations that you must outrun or defend forever. This is where they say things such as, "I'm not signing that deal. I have good credit." You can respond with: "As I'm sure you know, these days with what's going on in the world of interest rates …"
