Cash for Clunkers – Part 2

Posted on September 17, 2009 | Filed Under Leverage | Leave a Comment

In our recent “Cash for Clunkers” post, we discussed leverage in government car purchase incentive programs.  One question we posed was: “who has more leverage – the salesperson or the buyer?”  We thought the buyer had more leverage, feeling that it was easier for them to walk away given how long they had already owned a clunker. (You just get used to some things.)  We used this example in a recent K&R Negotiations Workshop, and heard a different view from someone who had experience with the program as a buyer.  He told us that at the car dealership he used, they were so busy that if you didn’t get “in the queue” early (days early!) you weren’t going to get processed before the program expired.  He told us that he waited over 3 hours to see the financing manager.  (As a side note – this is our least favorite, most time-wasting part of any car purchase.)

What do we learn from this?

First, guidelines are guidelines.  One key difference between successful sales and unsuccessful ones is that the people who succeed take guidance and determine if the general rule applies to their specific case.  For our clunkers program buyer, the rule did not apply.  (Or, not to go out on a limb here, the rule was wrong.)

Second, rather than being wrong, we suspect that the rule is just too complex to simplify as much as we did.  Many buyers could walk away – in those cases, they had the power of leverage.  But if the flood of buyers was strong at a particular dealership, their power was significantly reduced.  Leverage can shift during a negotiation.

Third, understand the concept of leverage, and know your situation.  We often say in workshops that we teach methods, not judgment.  Methods applied blindly don’t get it done.  If you are selling, you have to know the method, know your client, and know yourself.  Using the K&R Negotiation Method™ will improve your negotiation results. (td)

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