Dealership Tries to Buy Jeep During State Inspection

[Dryfly24]

Like I’ve said before I’ve got family that works in the car business. I have a much better understanding of the things they deal with, e.g terrible demanding customers, “get me done’s”, feast or famine income, etc than most people and I’m more sympathetic to their interests than most people. I’m not bothered by my dealership trying to buy my truck. There’s two things that bother me here.

First is the contrast between this behavior and overall lack of customer service. Since Covid, and we’re basically out of the pandemic operating environment at this point, it’s become increasingly difficult to get good customer service or sometimes service at all. This is both my observed experience at multiple dealerships and from the insider knowledge I have from people that work in the business. It’s become a fight simply to make an appointment at a car dealership for service. I haven’t been able to get any dealership on the phone and get a call back since 2020. It’s become a fight to get dealerships in Virginia to do timely state inspections required by law. I’ve had to involve Jeep corporate now several times to get a dealership to do the basic required maintenance on a vehicle as defined in the maintenance schedule. It’s in this context, when I’m struggling to get a state mandated inspection completed and I’m being told they may have to keep my vehicle for an indeterminate amount of time, that I am bothered by a sales person, becoming pushy and rude when I’m not willing to sell my truck at a loss to them. A truck that they are effectively holding hostage with with no estimate for completion of work that is required by law to be done on a walk in first priority basis the same day.


But there’s a much bigger issue here. Again, this comes from both my observations, following the industry as a whole and connections to insiders. If you look at the dealership consulting business, trade publications and the kinds of business trends talked about in the car business as a whole, and you can Google this, there’s a important and subtle change that has occurred in the last few years that has big ramifications for customers. Traditionally, service and sales had a fairly rigid line of demarcation separating them. They’re essentially two different businesses. In many cases they were or still are separate business units within a dealership network. But if you look at where the industry is going the big push is to make service part of the new car and used car sales profit generation; In other words for service and sales to work together to sell more cars.

Behavioral economics deals with how incentives drive behavior. It’s one of my interests. A world with no ethics and only incentives driving behavior is a dangerous
place. For example if the only reason people don’t commit crimes is fear of punishment and not some ingrained or learned sense of right and wrong, then we have a systemic and perhaps unsolvable problem. We live in a world driven by an algorithmic requirement to produce excess value. Consolidation, financialization and corporatization of businesses has created this state of affairs. It separates business decisions from the people that implement them. It reduces everything to a numbers game. It obscures accountability, and removes responsibility. It’s in this environment that we end up with a culture driven only by incentives, without any consideration of ethics, deleterious effects, or sustainability. It’s often said that corporations are psychopathic. This isn’t really intended as a judgment but rather as an observation that they operate algorithmically without any sense of positive and negative externalities or ethics. They operate to increase shareholder value. The only constraints on behavior to achieve that goal are regulations and torts. But that leaves a huge opening for unethical behavior. This actually explains a lot when it comes to the behavior of companies, vis-à-vis their customers and employees. We experience the effects in the form of deceptive marketing, low quality products, lack of repairability, the outsourcing of jobs, constant downward pressure on employees to produce more for lower wages, nonexistent or deceptive customer service, scam behavior and rent seeking permeating every market. It’s not enough to sell a product to a customer. You have to continuously sell some product or service to a customer that they will never actually own.

If when I enter the dealership for service and I’m not seen as a paying customer but rather as an opportunity to acquire additional stock, and recycle and resell a previously sold vehicle, what does this mean for the incentives to properly maintain my current vehicle? Market competition? Consolidation and sector wide coordination mean competition is increasingly becoming either nonexistent or a mirage. Almost all of the myriad of beer brands world wide are actually owned by 3 companies. All those different brands of personal products are owned by the same handful of companies. Big pharmaceutical companies also own almost all of the supplement and alternative medicine companies considered by so many people to be an alternative to “Big Pharma.“ More likely than not your so-called mom and Pop car dealership is a wholly-owned subsidiary of a larger dealership conglomeration and they also own the “competition” down the street. In this environment there are innumerable examples of how companies find ways to extract more value from existing customers. Entire business models are built on this.

The traditional business model for car dealerships was pretty simple; to sell cars to customers, and then gain their loyalty through good service. That’s not really the business model anymore. The new model is to extract value from customers in every phase of the relationship which includes a big push to move existing customers out of their current vehicles into new vehicles. Now, this isn’t new, obviously. What IS new is that the service department is expected to be a major player in this process and and it’s employees are now pressured and incentivized to help in this goal. Helping sales acquire your vehicle and get you into “something better” is now part of the their responsibility. They’re expected to funnel customers to the sales department. This represents a fundamental conflict of interest between a service departments stated function and its newly emerging function. What externalities are affected by this? Are service writers pressured to follow a script that downplays availability of warranty or repair options? Do they follow a script that encourages customers to cut their losses and get a new vehicle? Are they pressured to not provide timely information on the state of pending recalls? My dealership continues to state they know nothing about existing recalls. I’ve been directly told that technicians are directed not to perform any TSB on a vehicle unless asked by a customer AND that customer can demonstrate the issue. This is a position increasingly taken by many service departments now, supposedly to reduce their liability. Frequently a TSB deals with issues that a customer is experiencing but is unaware is a known problem or a problem that doesn’t manifest in symptoms until some future failure. The customer doesn’t know to ask. In past years, I have brought my vehicles in for service and had multiple problems fixed that I didn’t know about, or for which I didn’t know there was a known solution. And we’ve all experience the “cannot replicate” line that we get when we think there’s a problem. The obvious effect of this development is that problems on vehicles aren’t getting addressed. Are technicians pressured either indirectly or directly to do less complete, less thorough work beyond no longer automatically applying TSBs when they identify their applicability? It would be naïve to think that this can’t happen when the service department is short staffed, their pay is stagnating, they’re pressured to prioritize trade-ins and are expected to now somehow become a profit center for sales.

This isn’t hypothetical. It’s just recently been revealed that Tesla had a corporate policy to deny and delay any customers attempt to address battery life issues to cover up the fact that they’ve been overstating their ranges. This actually took the form, in many cases, of service departments simply deleting appointments, and then denying that the customer ever made one. This seems like a ludicrous way to operate for a service department; to simply gaslight its customers. But this actually was how they were operating given the pressure they were under by corporate. To see this is unique to Tesla is to not understand human nature, or tonight really believe that Tesla is unique in engaging in unscrupulous behavior. It’s in this context that I saw my interaction with the sales person as the symptom of a larger shift in the dealership industry and corporate behavior generally and this doesn’t bode well for customers.

So anyway, there’s drama in anything if you look for it. when I get those offers I simply ignore them altogether or just say “no thanks” and move on with my life. OTOH…

Sponsored

 

[cranbiz]

I just got an email from the dealer who did the Takata recall on my JK wanting to get me into a 2023 JL and buy my JK. I'm actually surprised it was for the JK and not the WK2 they have been trying to get me to trade for another one for several years now.

Fine print that nobody ever looks at: 2024 Sport 2 Dr, specific model on the lot. Financing $32K at 7.9% over 72 months with $0 down. Vehicle MSRP of $41K including tax and fees. Offer assumes trade is in excellent condition and is paid for.

Yeah, OK. My JK is a trail rig and anything but excellent condition cosmetically and far from stock. The trade offer of $9K certainly wouldn't happen if my JK was in excellent, stock condition. They need to offer a lot more than that to get me to even consider getting rid of it and I'm not going to take on another vehicle payment.

I filed it in and appropriate location.

 

[Wolf Island Diver]

Based on some of the comments I ran my thoughts on this by my sister. My premise was and still is that there’s a conflict of interest in service departments when dealerships try to buy cars off of service customers. Nothing more, nothing less. She’s been in the car business for over 25 years in sales, management and as an executive. She’s worked for tons of dealerships including small local ones, large regional ones, and the largest national chain. I asked her what she thought of this. Am I being melodramatic or is there really an issue here.

The short answer is yes there’s a conflict of interest and yes service writers are incentivized to push you away from getting service work and into a new car. But, I didn’t know the half of it. Service writers actually work on commission. I didn’t know that. I wonder how many people do. They get paid for the cost of repairs they schedule. Service managers and directors get a cut just like GSMs get a cut of their peoples sales. In the last couple of years the sales side which dominates dealerships, have pushed incentives for service writers to push customers into new cars and to trade in their repair vehicles. They get a spiff for this, i.e. a commission. The incentive to do this only increases when they’re already booked full of service work. This has actually caused huge conflicts within dealerships industry-wide because it’s cannibalizing service profits. This is why it’s hard to keep service managers and directors. They lose money when their writers push customers towards sales instead of writing repairs. They lose money on trade in repairs. My sister said undoubtedly when I came in with my 2 year old truck wanting a state inspection and my writer looked at the full board, she kicked me over to sales to get me off their plate. They’re full up on service. They make no money inspections, so why not try and go for a possible spiff on my trade in and my buying a new truck.

Now on something like a state inspection, it’s not a big deal. Obviously I’m not going to trade it in rather than wait on an inspection. The problem is when you have a vehicle that has an issue or you as a customer suspect there’s a problem with it. The service writers are incentivized to use this opportunity to get you out of your vehicle rather than repair it because they will make money themselves. This is completely different than those unsolicited offers you randomly get from the sales people to buy your vehicle. This is the service department pushing you to sales because they’re directed to, incentivized to and because they’re already full.

My sister said this diesel recall is a perfect example of how the incentives get twisted. Dealership service writers will use this to coax owners of the diesel jeeps out of them and into something new. They have no incentive to give you timely information on the status of the recall because you represent a potential spiff. Then they will sell the recalled trucks as used-vehicles or send them to auction.

The upshot is that when talk to your service writer realize that this incentive exists especially when dealing with major problems or pending recalls.

 

[Blade1668]

I haven't experienced this in the year and a half I have owned my Gladiator, but I did have a salesperson at a Kia dealership years ago approach me while I was waiting for an oil change to ask about trading in my car to upgrade. I politely declined.
I would think that the sales staff at most dealerships would use this tactic to generate leads for sales, especially if traffic to the dealership has slowed down.

I wonder how the salesman can keep a straight face saying upgrade..

Oh, you do a much higher ratio than me… we’re currently appraised at $750k, bought 2 years ago at $400k… I tell the vultures $1.4M…. (Totally remodeled over $150k invested)

Had one last year that tried to argue with me about the price, and I told them to find another 4000 sqft 4/4.5 on 4 1/2 acres in our neighborhood for less than $1M…

Dang I do need to stop by your place still too.
The way Huntsville is growing my place will be hitting 100k probably in a few years. Especially if the land barons find out some of the utilities that are in place already. If only..... land around mine could get cleard out then swept up in with it.
One of the "hobby" farms by me of 25 acres sold for 1.26 mil. Only crop that could be grown on it to be able for reasonable profit to recuperate the cost. It has to be a 5 leaf plants.
FYI I guess I still need to swing by to see what is growing there. ?

This is some of the same story of changing insurance companies too. BTW I'm getting offers too, none can cut me a check for enough money for me to justify it for my JT or Wrangler. I did a vehicle insurance check to see if I could get a better rate from other companies. One that is bombing me with mail and emails would be over double what I'm spending now.

 

[Wolf Island Diver]

Spoke to my service writer today. I was in for a CarPlay issue. She confirmed that they get spiffs for pushing people to sales but she said she certainly didn’t do that. She knows I’m heavily modded and it doesn’t make sense. She said they changed the system and as soon as the check someone in or makes an appointment it pings sales. She agreed it cannibalizes service. Sure enough when I made the appointment they reached out. This time I played along and let them appraise it.

They offered me $43k with 34k miles. That’s about right BlueBook for an unmodified Gladiator. With my mods, private sale market is probably significantly higher. The sales guy said they could move all my mods, like the rack, over to the new truck they sell me. I chuckled at that. They get $7k in lift, wheels and tires and I get to start over repurchasing that with an 3.6 truck I don’t want at $10k more than 21’ prices and 2.5x the interest rate. It doesn’t make sense. All said everyone was cool. I told them I was curious mainly with this recall situation but that the math doesn’t really work out. They understood. I’m leaning more and more to sending the truck to AMW for a Demon engine and 40s if the recall turns into a buyback.

Sponsored