Automobile selling, a manual for dealers

Preface

This is a book that every automobile dealer should read. It matters not whether the dealer's business is large or small, whether it is located in a large city or a small town, he will find in this work practical suggestions that can be put to profitable use. A glance at the Table of Contents will show its scope.

The book outlines the essentials of successful management in the automobile business. It presents workable plans, not theories. At the same time it presents the reasons why. It not only aims to show the dealer how to do the various things that need to be done in the best and most up-to-date way in an automobile dealer's business, it aims to stimulate the dealer to do his work intelligently. It is, therefore, not only a manual on automobile dealing, it is also a text book, a means of education.

There are a great many suggestions offered in the volume. There are workable ideas presented on every page. To get the greatest number of good things into the smallest space, all narratives or stories and long explanations how the plans were discovered or first applied have been eliminated. The statements are made in a straight-from-theshoulder fashion.

This book is not fiction. It is not written in fiction style. Every idea presented has been drawn from successful practice. Every plan outlined is now in use among dealers

PREFACE

scattered all over the country. It has been elaborately prepared for the busy man whose time is money and who wants to learn what successful dealers are doing elsewhere.

The author of the book, Paul H. Nystrom, has had an extraordinary training for preparing this book. For nearly two years he conducted intensive investigations on the best ways of selling employed by automobile dealers, garages, accessory and tire stores all over America. Several hundred places were visited and studied. Reports were obtained from many more. He has, himself, had experience as a retailer. In addition to these practical lines of observation he has had another field of experience with retailers that has proved of value in preparing this work. For a number of years he was in charge of dealers' short courses, merchants* institutes, and extension classes for retailers in the Universities of Wisconsin and Minnesota. Nearly three thousand dealers were students in his courses. For the last two years Dr. Nystrom has been in charge of the Bureau of Merchandising Research of the International Magazine Company. In this capacity he has continued his studies of the automobile selling field up to the time of writing this book. In this book are presented the carefully compiled observations of the author's rich experience.

"Automobile Selling" is presented to the public with the assurance that it will contribute towards putting the automobile business upon a more certain basis and that it will help those who study it to greater progress and success.

The Publishers.

VI

PAGE

PREFACE v

CHAPTER

I. OPPORTUNITY IN THE AUTOMOBILE BUSI- NESS i

The Growth of the Industry . . i

Present Demand for Cars 3

The Uses of the Automobile 5

Why the Industry will Continue to Grow 6

Greater Skill in Selling will Command Premium 7

II. A PLACE OF BUSINESS THAT WILL HELP. ... 9

Locality 9

What Car 10

Location in Community 12

How the Location Helps 13

III. BUYING A BUSINESS VERSUS STARTING A

NEW ONE 15

How to Analyze an Old Business 15

The Inventory 16

Good Will 17

IV. FITTING YOUR PLACE OF BUSINESS TO HELP

MAKE SALES 19

Building 19

Architecture 20

Windows 21

Window Displays 21

Principles of Effective Display 22

Store Arrangement 24

Furniture 25

vii

CHAPTER PAGE

Planning for Displays 26

Bargain Department 27

Ventilation 27

Order 28

Cleanliness 28

Care of Cars 28

Conveniences 29

V. WHO YOUR PROSPECTS ARE AND HOW TO

FIND THEM 30

Automobiles, Like Other Goods, Must be Sold , 30

Nearly Everybody is at Some Time a Prospect 31

Special Classes of Prospects 31

Why Concentrate on the Bankers and Merchants . . 33

Present Car Owners 34

Special Methods of Securing Names 35

The Prospect Record 36

Preliminary Information About Prospects 36

VI. MANAGEMENT OF EMPLOYEES 38

Good Employees Needed 38

Analysis of Job 38

Study of Applicant 38

A Check-list Needed 39

A Model Application Blank 39

Salaries 42

Commissions 42

Quotas and Bonuses 42

Profit Sharing .. 44

Stock Ownership 46

Other Incentives 47

Training Employees 47

VII. SOME DESIRABLE QUALITIES AUTOMOBILE

SALESMEN SHOULD HAVE 49

Health 49

Personality 49

Honesty 49

viii

CHAPTER PAGE

Industry 49

Tact 50

Knowledge Concerning Merchandise and of Business

Methods 50

Confidence in His Own Ability to Sell Cars 51

Enthusiasm 51

VIII. WHAT THE AUTOMOBILE SALESMAN SHOULD

KNOW ABOUT HIS CAR 53

Salesmen Can Not be Technically Trained 53

Knowledge Needed by Salesmen 54

How to Secure the Knowledge Needed 54

What Salesman Should Know About His Car 56

Exclusive Features 57

Cost of Operation 58

Knowledge About the Car Makers 58

Inspections and Tests 59

IX. HIGH LIGHTS ON AUTOMOBILE SALESMAN- SHIP - 61

Steps of the Sale 61

Time Your Calls 61

Attitude of Salesman Towards Prospect 62

Courtesy 63

Get On a Common Plane with Prospect 63

Introductory Remark 64

Get Prospect to Say "Yes" 64

Manner of Sales Talk 64

Watch Prospect's Expression 65

Making Appointments 65

Stating the Proposition 66

Study the Methods of Successful Attorneys 66

Be Sure the Prospect Understands 66

Appeal to All of the Senses 67

Appeal to "You" 67

Interruptions 68

How to Close the Sale 6S

Courage 68

ix

TABLE OE CONTENTS

CHAPTER PA6B

Persistence 69

Salesmen Must Inspire Confidence 69

Selling Women 70

X. DEMONSTRATING THE CAR 72

The Sales Points of the Car 72

Service of Car 72

Ease of Operation 73

Comfortableness 73

Safety 73

Durability 73

Not Easily Damaged 74

Easily Kept in Condition 74

Beauty and Style 74

Cost of Operation 75

Not All Customers Alike 75

Car Saves Time 75

Precautions 76

Demonstration During Stormy Weather 78

Make the Most of Mishaps 78

When to Talk Price 79

How to Prove Sales Points 79

XL OBJECTIONS AND HOW TO MEET THEM. ... 81

Sizing Up the Objection 81

Meet in Advance 81

Don't Contradict 82

Too Busy 82

Price Too High 82

Can't Afford It 83

Objections to Technical Details 84

XII. ADVERTISING TO SECURE BUSINESS 85

Why Advertise 85

What is Advertising 86

How Much to Spend 86

The Plan 86

CHAPTER PAGE

When to Advertise 87

Mediums to Use 88

Co-operation of all Departments 88

Who Should Write Copy 90

Letters 90

Road Signs 91

Manufacturers' Aids 91

How to Cash In on National Advertising 93

Free Publicity 94

Automobile Shows 94

XIII. MAKING MONEY FROM ACCESSORIES 99

Automobile Dealer Logical Outlet for Accessories . . 99

Accessory Business Pays 101

Turn-over in Accessory Department 101

Conditions of Success 102

Good Buying 102

Small Lots 103

Few Houses 103

Put Someone in Charge 103

Display 104

Capital Required 104

Budget for Accessories 105

What to Handle 105

Overbuying 105

Handle Good Merchandise 106

Have Salesman Learn Merchandise 106

Value of Reputation for Knowing "Oils" or "Tires" 107

Illustration of Sales Knowledge on Oils 108

Illustration of Sales Knowledge on Tires 109

The Tire Without a Name 109

Sales Points of Tires no

Mileage in

Care of Tires 112

XIV. POLICIES 116

Courtesy 116

The Customer is Always Right 116

xi

CHAPTER PAGE

Maintain Prices 117

Cash or Credit 117

Handling Used Cars 120

Service 124

Instruction for Car Owners 126

XV. LEAKS AND WASTES IN THE AUTOMOBILE

BUSINESS 128

Water 128

Soap 128

Gasoline 128

Oils 129

Depreciation in Merchandise 129

Accumulation of "Stickers" 129

Electricity 130

Forgetting to Charge Sales 130

Too Much Desk Work 130

Sales that Don't Stick 131

XVI. AN ACCOUNTING SYSTEM THAT ACCOUNTS. 132

Standard Accounting Systems 132

More Information Needed 132

Balance Sheet 132

Profits and Expenses 134

Department Record 134

Stock Record 134

Explanation of Terms 137

Summary 143

Chapter I Opportunity In The Automobile Business

The Growth of the industry. — The wonderful story of the growth of the automobile business is known in some part at least by every American. Within the memory of the young men of the present the automobile has come into use and from nothing has become one of the greatest and commonest conveniences in use by the American people.

In twenty years the production of automobiles has gone up from a few hundred cars per year to a normal rate at present close to 2,000,000 cars a year.

The accompanying table and diagram (see Figure 1) present the essential facts concerning this growth in a clear way both as to the total number of cars made and also as to the number of commercial vehicles.

The total number of cars in use twenty years ago was only about 10,000; now there are over 6,000,000.

We now can see that the automobile came into use at a very opportune time. The country, business, and the people were ready for it. It was a contrivance that needed only to be invented and demonstrated to secure for it an immediate market.

The main trunk railway lines of the country had been built for a number of years. Transcontinental systems had been provided and lines between all important immediate points had been constructed where needed. Water trans-

(Figure i) AUTOMOBILE PRODUCTION IN U. S.

Total

No. of

No. of

Total

Cars

Passenger

Commercial

Cars in

Made

Cars

Vehicles

Use

3,700

10,000

11,000

10,620

21,692

20,261

85,000

25,000

24,400

34,000

32,900

1,100

44,000

42,300

1,700

65,000

61,900

3,100

126,593

121,861

4,725

400,000

187,000

174,000

13,000

600,000

210,000

185,000

25,000

677,000

378,000

348,000

30,000

1.013,975

485,000

1,258,062

569,054

543,679

25,375

892,618

818,618

74,000

2,445,644

1,485,617

90,000

3.541.738

1,878,000

1,718,000

160,000

4,941.276

1,157,252

974,606

182,646

1,900,000

1,650,000

250,000

2,200,000

1,800,000

400,000 i

|mm

. a

L«M~

I i.kso.ooo.

1 f r

OPPORTUNITY IN AUTOMOBILE BUSINESS

portation had come to a stand-still. It may be that water carriage may be developed as the need for transporting" heavy goods grows, but the fact remains that water transportation had been diminishing rather than increasing for a number of years before the time of the automobile. Horse transportation had remained the same for hundreds of years with very little improvement. The good roads building movement had begun in this country some years before the invention of the automobile and was growing very rapidly in the 'cjo's when the first automobiles were built. This movement for good roads has been accelerated by the invention and development of automobiles but without fair roads to begin with the use of the automobile would have been practically an impossibility.

If automobiles had been developed before railways, as has been stated by several who have studied this subject, it seems probable that the railways would not have been built to any such great extent as they were. There would certainly be less railway mileage and a much greater volume of transportation by road and automobile. Since the coming of the automobile into common use there has grown up a competition between it and the railways that the railways themselves admit has hurt them. Though each has a definite field in which it can perform the most economical service, the railway for long hauls, the automobile for short quick serviceable transportation, it seems quite certain that railways have been built and used in some places where automobiles can more readily render the service needed and these railroads may therefore yet be driven out of business by the automobile. It is well known that railroad companies have taken steps to counteract the competition of automobiles both for passenger and freight purposes. This is a condition that will no doubt grow continuously.

Present demand for cars. — What the ultimate number of automobiles in this country will be there is no present means of telling. It can only be stated that the automobile will eventually go into use wherever it can be used more effectively than railway transportation or a horse vehicle.

In discussions concerning the possible number of automobiles for which there may be a market in this country, it is customary to refer to the number of people, the average wealth of the people, number of persons having stated incomes above $3,000 per year and so on. All of such bases for computing the possible market for automobiles are fallacious.

Demand for automobiles no more arises from the number of people who receive incomes above a certain point than the demand for box cars, for telephone poles, for turbine engines, or for dictating machines. No one thinks of stating the demand for these goods in per capita terms as automobile statistics are quoted. All of these items, including automobiles, are bought where needed and where their services will repay the purchaser above a similar expenditure made for other goods.

What determines the demand for an automobile is the earnings to be derived from its use after it has been purchased. It is not what the automobile costs but what it will earn in money or service in proportion to what it costs that sells it to a consumer. If an automobile costs $1,000 and will bring better results than a similar expenditure of $1,000 made in some other way, then the automobile will be bought and should be bought.

The "saturation point" for automobiles depends, therefore, not at all upon the present earnings of the masses of people, but rather upon what the earnings will be of those who have need for this form of transportation. The "saturation point", and there is undoubtedly some such point, at any given time, will not be reached until every

OPPORTUNITY IN AUTOMOBILE BUSINESS

place where the automobile can be profitably used will be filled.

The uses of the automobile. — Ever since the automobile came into use there has been a strong mis-conception concerning its principal uses for which the automobile manufacturers, their sales organizations and automobile dealers are mainly responsible. The automobile has been and still is being sold to the public as a means of pleasure and as a luxury instead of as an economic means of transportation for people and for goods.

The pleasure uses are obvious. The winning sales-point to secure the order has in many cases been the appeal to the human instinctive love of the outdoors, the fun of riding and driving, the freedom of the open, and the fashionableness and exclusiveness of a car and so on. The advertising of the automobile companies has pushed these arguments even farther than the salesmen have.

As a matter of fact, judging from every bit of evidence available, only a very small proportion of the total number of automobiles in use are in a direct sense "pleasure cars."

Inquiries made by automobile companies, advertising agencies, periodicals and by the National Automobile Chamber of Commerce, all tell the same story, namely, that less than 30% of the total number of cars are used for pleasure purposes only. A great many passenger cars are, of course, used more or less for pleasure and for recreational purposes. But available evidence on the subject, while not sufficiently conclusive to serve more than as an indication, shows the surprisingly large number of cars serving economic uses, and the relatively small number devoted to pleasure uses.

The term, "pleasure car," is a misnomer. Most automobile manufacturers, as well as automobile associations have recognized this fact now and are trying to have the word "passenger car" substituted for "pleasure car."

Why the industry will continue to grow. — Opportunity in the automobile business, the same as in every other well established line, depends upon the basic business conditions of the country, and of the community in which the business is to be located. If the production of raw materials is forging ahead, if the volume of trade is high, if labor conditions are sound, it is certain that there will be need for automobiles.

Agriculture, mining and lumbering is growing year by year in an almost uninterrupted upward direction. The population of this country and of the world is increasing continuously and their wants must be satisfied. Not only that but their standards of wants are rising steadily. They must have the products of the soil, the mines and the forests on which to live. Production must continue. This is the trend of evolution. It is evolution itself.

The volume of business transacted in this country has grown in a remarkable way during the entire period in which the automobile business has shown such remarkable growth. In fact there is probably a closer connection between the number of automobiles in use and the volume of business than there is between the number of automobiles and the population. In 1898 the volume of business was less than $10,000,000,000; in 1916 it passed $20,000,000,- 000; in 1910 it passed $30,000,000,000; by 1916 it reached $50,000,000,000 and in 191 8 it passed $70,000,000,000.

This growth in business, stated in dollars, represents back of it tremendous activity of all kinds. But in all business there is need for transportation service. The greater the business the greater the need for transportation of all kinds. It is this demand for transportation growing out of business that has made the market for the millions of automobiles.

The prospect for the future of the automobile industry

OPPORTUNITY IN AUTOMOBILE BUSINESS

is bright. Business volume will grow and with it will grow the demand for motor transportation. When business ceases to grow we shall have reached the point when the demand for automobiles will remain stationary.

Whatever this large general public demand for automobiles may amount to in millions of cars per year, it must be borne in mind that this demand is made up of small demands, a demand in each locality in the country. If 2,000,000 cars are wanted by the United States, this means that a certain number of cars will be wanted in every county in the United States, and the only point in presenting general statistics is to indicate that there is an opportunity for the automobile dealer in his own community proportional to the large opportunity of the entire country.

Greater skill in selling will command premium. — The automobile business is not now an unworked field. Automobiles have been sold by dealers for twenty years or more. The automobile is no longer a new device, unknown to the people. It is a staple product, comparable to food, clothing, hardware, building materials, and so on. Henceforth it must take its place among these necessities in the national system of distribution.

In the early days of automobile selling, automobile dealers were largely recruited from such classes as bicycle men, sportsmen, rich men's sons who had nothing else to do, speculators, and so on. With few exceptions, good business management among automobile dealers was a rarity. But the market for automobiles was so intense that a large number of fortunes were made even with the poorest methods. It is not now possible to embark in the automobile business with such certainty of success that all principles of good business may be thrown to the wind. Competition has grown keener but in comparisons with other and older lines of business this competition has not become such a set and fixed thing yet. Formerly nearly all men who went into the automobile business who used any judgment at all in their business stood a fair chance of winning. Success has now moved up several notches and the more reckless and poorer types of business men have fewer chances of succeeding than formerly.

There is a wide open door to success in the automobile business to concerns with good management but not to others. The old days are forever gone. Success is now possible only for those who know.

In the automobile business, as in every other, experience is the basis of practical knowledge, and from practical knowledge progress can be planned. There are dealers who do not profit from their own experience. They soon drop out. There are others who learn lessons from their own experience but fail to profit from the experience of others. These hold their places in the business, but their struggle is constantly hard. Finally there is the class of dealer who learns from others as well as from their own business. The future of the business belongs to this group. It is to this group that this book is presented.

Observation of the methods of good and poor dealers shows that the reasons for the difference lie largely in the methods. There is the widest variation. By change in methods many concerns have changed from failure or mediocre success to positive progress.

This book is a compilation of the methods actually used by successful automobile dealers. It is presented with the view of helping those dealers who will help themselves.

Chapter II A Place Of Business That Will Help

Locality. — Let us now assume that the reader of this book has decided to go into the automobile business. The next point for consideration will be the selection of a location. There is one measure only governing the selection of a business location, and that is its help in producing a profitable business. Acessibility to people, nearness to prospective customers is what counts. The number of people in a community have something to do with the possibility of making sales, but, as we saw in the first chapter, not nearly so much as the existing needs for motor transportation — backed by the capital or credit to pay for this transportation.

The fundamental questions that must be answered with reference to the value of any location are therefore those that have to do with the possible number of prospects, those who do not have cars but who should have them. If there are a number of families in the community of ample means but without cars, that indicates a prospective field of business. If there are business men who might profitably use cars in their business, if there are farmers, gardeners, contractors, or mechanics in the community whose businesses would be aided by the use of cars, these will constitute excellent prospects for the automobile business.

In a later chapter we shall consider in detail who the prospects for automobiles are. It need only be pointed out here that good business judgment must be used on this point before establishing an automobile business in any community.

There are places so small that every prospect can be fully canvassed and sold within a limited time. If a man goes into the automobile business with the idea of establishing a permanent business he must consider not only what his outlook for returns will be during the first year, but also in the years following. Due regard must be given to the amount of business there is likely to be in replacing old cars as well as the possibility of making new sales to new people. There is danger in having too limited a territory.

On the other hand one of the commonest mistakes made by those going into the automobile business is to attempt to cover too much territory. For a dealer trying to cover too much territory there is greater danger of overlooking prospects than there is of over-estimating the number. There are many profitable automobile businesses located in very small communities and as the use for the automobile develops it seems highly probable that the time will come when automobiles will be sold in just as many small places as wagons and buggies were formerly sold in.

What car. — The next step in establishing an automobile business is deciding on what automobile to handle. Here local demand must govern fully. The man who proposes to go into the business must decide in advance what car or cars should be owned by the people of the community. That is to say, he must sell himself fully on the car that should be used by a large number of the people.

There is no car that can be sold to everybody. If only one car is to be handled great care should be exercised in selecting a car that can be sold to the greatest number of people within the community. It may be advantageous in many cases for the dealer to act as agent for two or three cars. Experience has shown, however, that a dealer makes

A PLACE OF BUSINESS THAT WILL HELP

most money on selling and pushing some one or two most popular cars. Too many cars complicate the business and confuse customers and make it more difficult to sell, and actually results in losing business rather than gaining it.

If more than one car is to be handled, each should be selected with reference to specific groups of people in the community. For example, if a medium priced car is selected with which to try to reach the largest group of people in the community who want cars, then it may be advisable to select a high priced car to meet the needs of the people of greater wealth or who desire to obtain a car of greater excellence than the first. Or, it may be desirable to combine with the medium priced car one of low price. It is rarely ever desirable to combine a high priced car with a low priced car in the same establishment. It is better to work from medium priced cars up or down than to try to work on both extremes.

A good car salesman is one who doesn't know that there is any prospect for a car that he can't sell. It isn't a good thing for a dealer to advertise this fact to his salesmen, but it is probably impossible to sell all prospective car owners in the community any one car no matter what kind of a car it is. The important thing is to have the agency for the car that will fit the needs of the most people in the community. If the dealer can satisfy himself upon this point in advance, he has gone far towards insuring his success in selling after the business has been started.

Having determined the car or class of cars suitable for his community the dealer may next turn his study to the manufacturers of such cars. His special attention needs to be directed to such points as: their reputation, financial stability, treatment of distributors and dealers, treatment of customers who use their cars, service policies, advertising plans for the future, and assistance given in the sale of cars by dealers. It is highly advisable to visit the factories and talk with the officials of the company whose cars are under consideration. It is likewise advisable to see some of their dealers in their places of business, and to get from them their feeling towards the companies.

As the selection of the car to be handled is a highly important thing, it is undesirable to change from handling one car to another. Such changes mean considerable loss to the dealer in prestige, good-will, and in experience. Therefore determining whether to take a certain car agency or not is extremely important.

Location in community. — Having decided on a community in which to establish an automobile business, and the car which is to be handled in that community, the next step is to select a suitable location within that community. Here, as in determining the community in which to establish the business, the first thought must be of what the possibilities will be of the location helping to secure business. The value of a retail location is based entirely upon its convenience to prospective consumers. This is as true for automobiles as it is for cigars. If there were a chain store system in the automobile selling business as there is in the tobacco line, we should find the automobile chain store system using precisely the same methods of determining suitable location as the tobacco chains do. It would count the number of passers by and consider the character of those passers by, as to possible purchasing power, and so on.

It may be urged that those who have made up their minds to buy automobiles will as readily go to a side street as to the most prominent location in town. This is true for those who have already made up their minds. But the automobile business grows by making sales to those who have not yet made up their minds, and whose education comes from seeing automobiles in use, seeing them offered for sale, reading advertising about them, and by solicita-

A PLACE OF BUSINESS THAT WILL HELP

tion. The exhibition of automobiles for sale acts as a constant suggestion to people who pass, a suggestion which may finally grow into a desire and decision to buy. Location on a side street minimizes the chances of furthering this education of prospects for the automobile market. An automobile business devoted entirely to selling automobiles and not including a garage, repair shop, or service station can use and should have as good a location as a cigar store, drug store, dry goods store, or even a bank. Rentals come high in such locations but the extra volume of business that can usually be secured in such locations more than makes up the difference in rental. There is no location in the average town too good for the automobile business.

How the location helps. — If a place of business is solely for the sale of automobiles, then the better the location, all things considered, the more sales will be made. It may not be profitable to run a garage on the most expensive corner in the city, but experience has shown that it does pay to have just such a location for the automobile sales room. The dealer must decide for himself which is to be his more important business, that of running a garage and repair shop, or selling automobiles.