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					THE ULTIMATE CAR BUSINESS DICTIONARY




           Copyright 2003 by Simon Blake
                All Rights Reserved
The Ultimate Car Business Dictionary



                                         COPYRIGHT NOTICE
Copyright 2003 Simon Blake
All Rights Reserved
Any unauthorized use, sharing, reproduction or distribution of these materials by any
means, electronic, mechanical, or otherwise is strictly prohibited. No portion of these
materials may be reproduced in any manner whatsoever, without the express written
consent of the publisher.
Published under the Copyright Laws of the Library of Congress Of The United States Of
America, by:
Simon Blake
P.O. Box 91914
Austin, TX 78709


                                                  LEGAL NOTICE
While all attempts have been made to verify information provided in this publication,
neither the author nor the publisher assumes any responsibility for errors, omissions
or contradictory interpretation of the subject matter herein.
This publication is not intended to be used as a source of legal or accounting advice.
Please remember that the information contained may be subject to varying state
and/or local laws or regulations that may apply to the user’s particular practice.
The purchaser or reader of this publication assumes responsibility for the use of these
materials and information. Adherence to all applicable laws and regulations, both
federal, state, and local, governing professional licensing, business practices,
advertising and any other aspects of doing business in the US or any other jurisdiction
is the sole responsibility of the purchaser or reader.
Simon Blake assumes no responsibility or liability whatsoever on behalf of any
purchaser or reader of these materials.
Any perceived slights of specific people or organizations is unintentional.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary



                                        TABLE OF CONTENTS

The Ultimate Car Business Dictionary........................................................... 1
Copyright Notice.................................................................................... 2
Table of Contents .................................................................................. 3
   1     Lot Lingo.................................................................................... 11
       1.1      Be Back, or BB ....................................................................... 11
       1.2      Bird Dogs .............................................................................. 11
       1.3      Buried ................................................................................. 11
       1.4      Buyer's Remorse...................................................................... 11
       1.5      Chained ............................................................................... 11
       1.6      Clocking, Clocker, and Clocked ................................................... 11
       1.7      Creme puff............................................................................ 11
       1.8      Curbing ................................................................................ 11
       1.9      Demonstrator, Demo, or Loaner Vehicle ........................................ 11
       1.10     Down Dip, or Dipping................................................................ 12
       1.11     Down Stroke, Down Dump, Lump, or Put Down ................................ 12
       1.12     Hard Dollars .......................................................................... 12
       1.13     Lemon ................................................................................. 12
       1.14     Looky-Loo ............................................................................. 12
       1.15     Off Lease, or Off Lease Vehicle ................................................... 12
       1.16     Repossession Vehicle, or Repo .................................................... 12
       1.17     Sled .................................................................................... 12
       1.18     Soft Dollars, or Show Dollars....................................................... 12
       1.19     Spiff.................................................................................... 13
       1.20     Unit .................................................................................... 13
       1.21     Up ...................................................................................... 13
       1.22     Upside Down.......................................................................... 13
   2     Vehicle Categories ........................................................................ 14
       2.1      Classic ................................................................................. 14
       2.2      Convertible, or Rag Top ............................................................ 14



Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


       2.3      Coupe.................................................................................. 14
       2.4      Custom, or Customized ............................................................. 14
       2.5      Family Sedan or Station Wagon ................................................... 14
       2.6      Full-Size Van or Conversion Van................................................... 14
       2.7      Historical.............................................................................. 14
       2.8      Kit Car, or Replica................................................................... 14
       2.9      Luxury Sedan ......................................................................... 14
       2.10     Minivan ................................................................................ 14
       2.11     Muscle Car, or Pony Car ............................................................ 15
       2.12     Pickup Truck.......................................................................... 15
       2.13     Roadster............................................................................... 15
       2.14     Sedan .................................................................................. 15
       2.15     Small Lot Production ................................................................ 15
       2.16     Sport Utility Vehicle, Sport Ute, or SUV ......................................... 15
       2.17     Sports Car, Sedan/Coupe/Convertible ........................................... 15
       2.18     Stock................................................................................... 15
       2.19     Sub/Compact ......................................................................... 16
   3     Vehicle Terms and Car Tech ............................................................ 17
       3.1      All-Wheel Drive ...................................................................... 17
       3.2      Anti-Lock Brakes (ABS).............................................................. 17
       3.3      Clutch ................................................................................. 17
       3.4      Detailing .............................................................................. 17
       3.5      Drive Shaft ............................................................................ 17
       3.6      Engine ................................................................................. 17
       3.7      Front Wheel Drive ................................................................... 17
       3.8      Fuel System........................................................................... 18
       3.9      Odometer ............................................................................. 18
       3.10     Rear Axle Assembly.................................................................. 18
       3.11     Rear Wheel Drive .................................................................... 18
       3.12     Service Documentation or Books .................................................. 18
       3.13     Title.................................................................................... 18
       3.14     Transaxle.............................................................................. 18


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


       3.15     Transmission, Tranny, or Trans ................................................... 19
       3.16     Unibody, or Unitized Construction................................................ 19
       3.17     VIN, VIN #, or Vehicle Identification Number ................................... 19
   4     General Industry Terms .................................................................. 20
       4.1      After-market ......................................................................... 20
       4.2      Auctions ............................................................................... 20
       4.3      Brokers ................................................................................ 20
       4.4      Buff Books ............................................................................ 20
       4.5      Buying Services....................................................................... 20
       4.6      CAFE, or Corporate Average Fuel Economy ..................................... 20
       4.7      Consumer Rags ....................................................................... 20
       4.8      Domestic, Big 3, or Domestic Automaker........................................ 21
       4.9      European Delivery Program, (EDP)................................................ 21
       4.10     Fleet Seller ........................................................................... 21
       4.11     Gray Market .......................................................................... 21
       4.12     Imports ................................................................................ 21
       4.13     Joint Venture......................................................................... 21
       4.14     Make ................................................................................... 22
       4.15     Manufacture Date.................................................................... 22
       4.16     Manufacturer-Installed Options ................................................... 22
       4.17     Model .................................................................................. 22
       4.18     Original Equipment Manufacturer, or OEM ...................................... 22
       4.19     Regional Sales Manager ............................................................. 22
       4.20     Sales Regions ......................................................................... 22
       4.21     Suppliers .............................................................................. 22
       4.22     Transplant ............................................................................ 22
       4.23     Trim Levels ........................................................................... 22
       4.24     Twins, Cousins, and Platform Family Members ................................. 22
   5     Pricing Definitions ........................................................................ 23
       5.1      Asking Price........................................................................... 23
       5.2      Auto Maker Costs, or Manufacturer's Cost ....................................... 23
       5.3      Book, or Book Value................................................................. 23


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


       5.4      Carryover Allowance ................................................................ 23
       5.5      Churn & Earn ......................................................................... 23
       5.6      Commission, or Sales Cut........................................................... 23
       5.7      Front Wheel Drive ................................................................... 23
       5.8      Customer Incentive, Factory to Customer Incentive, or Rebate............. 23
       5.9      Dealer Allocation, Allocation, or Allotment..................................... 24
       5.10 Dealer Incentive, Factory to Dealer Incentive, or Manufacturer to Dealer
       Incentive ...................................................................................... 24
       5.11     Dealer Invoice Price, Invoice, or Tissue.......................................... 24
       5.12     Destination Charge, or Delivery Charge.......................................... 24
       5.13     Holdback, Giveback, or Dealer Holdback ........................................ 24
       5.14     Incentives ............................................................................. 24
       5.15     Market Prices ......................................................................... 24
       5.16     Minimum Deal ........................................................................ 25
       5.17     Non-Commissioned Sales ........................................................... 25
       5.18     Option Packages ..................................................................... 25
       5.19     Retail .................................................................................. 25
       5.20     Special Circumstances Dealer Incentives ........................................ 25
       5.21     Sticker, Monroney, MSRP, List Price, or Retail Price .......................... 25
       5.22     Wholesale, Wholesale Value, or Actual Cash Value ............................ 25
   6     Leasing Terms ............................................................................. 26
       6.1      Acquisition Fee....................................................................... 26
       6.2      Adjusted Capitalization Cost, or Adj. Cap. Cost, or Net Capitalization Cost
                26
       6.3      Capitalization Cost, Cap Cost...................................................... 26
       6.4      Captive Finance Company, or Captive Finance Arm ........................... 26
       6.5      Closed End Lease .................................................................... 26
       6.6      Disposition Fee ....................................................................... 26
       6.7      Early Termination Charges ......................................................... 26
       6.8      Excess Mileage Charge .............................................................. 26
       6.9      Fees (Bank - Dealer - Lease Company) ........................................... 27
       6.10     Gap, or Gap Insurance .............................................................. 27
       6.11     Lease Term ........................................................................... 27


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


       6.12     Lemon Laws (lease specific) ....................................................... 27
       6.13     Lessee ................................................................................. 27
       6.14     Lessor.................................................................................. 27
       6.15     Mileage Cap, Mileage Limit ........................................................ 27
       6.16     Money Factor ......................................................................... 27
       6.17     Monthly Depreciation Fee, or Depreciation Fee ................................ 27
       6.18     Monthly Finance Fee, Finance Fee, Rental Charge, Lease Charge .......... 28
       6.19     Open End Lease ...................................................................... 28
       6.20     Purchase Option Price, Purchase Option Value................................. 28
       6.21     Residual ............................................................................... 28
       6.22     Subsidized Lease..................................................................... 28
       6.23     Taxes (leasing specific) ............................................................. 28
   7     Financing Terms ........................................................................... 29
       7.1      Amortize .............................................................................. 29
       7.2      Appreciation.......................................................................... 29
       7.3      APR, Annual Percentage Rate, Interest Rate, or Loan Rate .................. 29
       7.4      Assets .................................................................................. 29
       7.5      Collateral ............................................................................. 29
       7.6      Credit Line ............................................................................ 29
       7.7      Depreciation.......................................................................... 29
       7.8      Equity, or Vehicle Equity ........................................................... 29
       7.9      Interest................................................................................ 29
       7.10     Liabilities ............................................................................. 30
       7.11     Lien .................................................................................... 30
       7.12     Loan Term ............................................................................ 30
       7.13     Monthly Payment .................................................................... 30
       7.14     Negative Equity ...................................................................... 30
       7.15     Net Worth............................................................................. 30
       7.16     Principal............................................................................... 30
       7.17     Term Loan ............................................................................ 30
   8     Dealership Terms.......................................................................... 31
       8.1      Allowance Buyer ..................................................................... 31


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


      8.2       Back End, Back End Gross, Backroom, or Back ................................. 31
      8.3       Bump, or Bump and Grind.......................................................... 31
      8.4       Closer .................................................................................. 31
      8.5       Corporate Cities ..................................................................... 31
      8.6       Dealer Option, Dealer Installed Options, or Dealer Add-Ons ................. 31
      8.7       Dealership Principal, Franchisee, or The Dealer ............................... 31
      8.8       Dealership, Dealer Franchise, Dealer, or Store................................. 32
      8.9       Difference Buyer..................................................................... 32
      8.10      Finance & Insurance Manager, F&I, or Business Manager ..................... 32
      8.11      Fleet Manager ........................................................................ 32
      8.12      Floor Plan, Dealer's Floor Plan .................................................... 32
      8.13      Front End, Front End Gross, or Front............................................. 32
      8.14      General Manager..................................................................... 32
      8.15      House Sale ............................................................................ 32
      8.16      Leaser ................................................................................. 32
      8.17      Low Ball Offer, Low Balled, or LB ................................................ 32
      8.18      Mega Dealer .......................................................................... 33
      8.19      Mom & Pop Shop ..................................................................... 33
      8.20      NADA................................................................................... 33
      8.21      Negotiating Room, Cube, Bargaining Cubicle, or Vertical Coffin ............ 33
      8.22      No Dicker Sticker, Haggle Free, or No Haggling ................................ 33
      8.23      Pack, Payment Packing ............................................................. 33
      8.24      Payment Buyer ....................................................................... 33
      8.25      Qualify, Qualifying .................................................................. 34
      8.26      Sales Manager ........................................................................ 34
      8.27      Salesperson ........................................................................... 34
      8.28      Service Manager ..................................................................... 34
      8.29      Spot Delivery ......................................................................... 34
      8.30      Straight Sell System, or Direct Selling ........................................... 34
      8.31      Super Mega Dealer, Dealer Groups: .............................................. 34
      8.32      Superstore ............................................................................ 34
      8.33      Switch, Switched, or Bait & Switch............................................... 34


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


       8.34     Tough Nut ............................................................................. 35
       8.35     Tower.................................................................................. 35
       8.36     Turn Over, or T.O.................................................................... 35
       8.37     Used Car Manager ................................................................... 35
   9     Used Car Terms............................................................................ 36
       9.1      Consignment Sales................................................................... 36
       9.2      Paper Men............................................................................. 36
       9.3      Split, Split Deal, or Commission Split ............................................ 36
       9.4      Curbstoner or Curbstoning ......................................................... 36
       9.5      Private sales, Person-to-Person, or Private ..................................... 36
       9.6      Public lots, or Public sales ......................................................... 36
       9.7      Odometer Statement................................................................ 36
       9.8      Bill of Sale, and/or Sales Agreement............................................. 36
       9.9      Pre-owned Vehicle .................................................................. 36
       9.10     Pre-Driven Vehicle................................................................... 36
       9.11     Mechanic, ASE Master, ASE Certified, Service Mechanic, or "Gear Head" .. 37
       9.12     Executive, or Company Vehicles .................................................. 37
       9.13     Program Vehicles .................................................................... 37
       9.14     Mileage check, MPG Check, or Mileage Calculation............................ 37
       9.15     Cabriolet .............................................................................. 37
       9.16     Auto Mall .............................................................................. 37
       9.17     Gundecking ........................................................................... 37
       9.18     Chopped, Chopper................................................................... 38
   10         Auction Terms and Abbreviations.................................................... 39
       10.1     Absolute Auction..................................................................... 39
       10.2     Candle Sale Auction ................................................................. 39
       10.3     Pre Set Auction ...................................................................... 39
       10.4     Public Auction........................................................................ 39
       10.5     Reserve Auctions..................................................................... 39
       10.6     Sealed Bid............................................................................. 39
       10.7     Sealed Bid Auction .................................................................. 39
       10.8     Spot Bid Auction ..................................................................... 40


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


      10.9      Red Light .............................................................................. 40
      10.10        Yellow Light ....................................................................... 40
      10.11        Green Light ........................................................................ 40
      10.12        Blue Light .......................................................................... 40
   11        Auction Windshield Markings ......................................................... 41
      11.1      9-137................................................................................... 41
      11.2      92 ...................................................................................... 41
      11.3      As Is .................................................................................... 41
      11.4      Hail Damage .......................................................................... 41
      11.5      Flood Damage ........................................................................ 41
      11.6      Frame Damage or Frame ........................................................... 41
      11.7      Guaranteed ........................................................................... 41
      11.8      Lemon Buy Back ..................................................................... 41
      11.9 A vehicle with major problems which as been repurchased by or had its
      price renegotiated with the manufacturer. ............................................. 41
      11.10        Miles Over or Over 100 ........................................................... 41
      11.11        Miles Over Over or Over 200 .................................................... 41
      11.12        NR ................................................................................... 42
      11.13        Prior Police Car ................................................................... 42
      11.14        Prior Rental ........................................................................ 42
      11.15        Prior Taxi........................................................................... 42
      11.16        Salvage ............................................................................. 42
      11.17        TMU ................................................................................. 42




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    1 Lot Lingo
         1.1       Be Back, or BB
This is a term used between salespeople. When a customer leaves without buying a
car and says that they’ll “be back” – they’re called a Be Back.

         1.2       Bird Dogs
A person that works for a car salesperson (new and/or used) who sends customers to
them in exchange for cash or discounts on his own vehicle.

         1.3       Buried
"You're buried in that sled!" means that you're deeply in debt for a vehicle in which
you have little or no equity. Buried is the extreme of upside down.

         1.4       Buyer's Remorse
A physiological state in which the buyer feels that he or she has just made a big
mistake in signing the purchase agreement. Generally, the feeling is, "I've just spent
way too much."

         1.5       Chained
A car dealership hands out a lowball offer in an attempt to get you to stay. If you do
get up and walk, they've still got you chained, because you're never going to find that
low of a price. The truth of the matter is that you'll never get the vehicle at that
offer. And even if you do, the dealer has got you some other way you haven't figured
out yet.

         1.6       Clocking, Clocker, and Clocked
The illegal practice of tampering with a vehicle's odometer. Clocking is the practice,
clocker is the individual, and clocked is the vehicle that has undergone such
treatment.

         1.7       Creme puff
A trade-in which is in good shape and on which it should be easy for the dealership to
make a killing when they resell it. See also sled and unit.

         1.8       Curbing
The practice of selling used vehicles out of a car salesperson's own driveway via the
classifieds. Often, the seller presents himself to potential buyers as an average Joe
just selling a secondhand car.

         1.9       Demonstrator, Demo, or Loaner Vehicle
The vehicles that dealerships use to service test-drive requirements and generally
show off. Often the dealership's principal, sales manager, and better salespeople will
drive these vehicles as their own transportation. Some dealerships will use these


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


vehicles as loaners for customers that have cars in for service. If you intend to
purchase one of these vehicles, make sure you're getting a significant discount, as
they are more like a low-mileage used vehicle than a new one.

         1.10 Down Dip, or Dipping
A way of loaning a customer a down payment.

         1.11 Down Stroke, Down Dump, Lump, or Put Down
How much (cash and trade value) a buyer can place into a deal as a down payment.

         1.12 Hard Dollars
The amount that the dealership feels that it is actually investing in a trade-in. See
soft dollars.

         1.13 Lemon
A lousy car. Each state has a "lemon law" to protect consumers from such vehicles.
The lemon laws apply when the problem is fairly serious, and when the car is under
warranty and is unfixable in a certain number of attempts over a given mileage and
time period. If you have a lot of problems with your vehicle, consider discussing the
matter with your State's Attorney General's Office.

         1.14 Looky-Loo
A person on the lot who isn’t interested in buying right now. If you say, "I'm just
looking," then you're a looky-loo.

         1.15 Off Lease, or Off Lease Vehicle
Vehicles which were originally leased and have now entered the used market. Some
buyers put a premium on leased vehicles because they tend to be low-mileage, late-
model vehicles which have been kept up well.

         1.16 Repossession Vehicle, or Repo
Vehicles that a finance company has had to take back from a client who could not
make the payments.

         1.17 Sled
The term that car salespeople use to describe your current vehicle. As with many
other terms, this bit of auto lingo has a multitude of variations, both regionally and
with regard to your trade-in's condition. They include: rat, pig, roach, cow, pinky (as
in elephant), s&$@box, hotbox, creme puff, lamb, pet, daisy, and stopper (as in the
traffic it will draw to the used lot) -- just to name a few.

         1.18 Soft Dollars, or Show Dollars
In combination with hard dollars, this is the amount that the dealer is "discounting"
your trade-in from the price on your new vehicle. The dealership is inflating your
trade-in price by this soft amount in an effort to make you take the entire package.

Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         1.19 Spiff
A motivational sales incentive for car salespeople.

         1.20 Unit
The vehicle that the dealership will be delivering to you.

         1.21 Up
In the majority of car dealerships, the sales force works on a commission basis. Thus,
the order in which the salespeople can have at you is extremely important; if you are
"up" you have been assigned a particular sales agent. The term originates from the
comment made between two salespeople before they talk to the customer, "You're
up!" It has now been extended to mean the customer as well: one salesperson may say
to another, "They are my up!"

         1.22 Upside Down
Normally used between two salespeople, it means that more money is owed on a
vehicle than the vehicle is worth in wholesale dollars.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    2 Vehicle Categories
         2.1       Classic
A vehicle over 25 years old. Generally speaking, classics are those cars made between
25 and 50 years ago. See also historical.

         2.2       Convertible, or Rag Top
Vehicles with a top (roof) that can be removed or retracted. "Rag Top" comes from
the fabric material of the roof.

         2.3       Coupe
A two-door vehicle with a hard top. You might hear the expression "sports coupe."
This vehicle probably has a convertible version and a hardtop version.

         2.4       Custom, or Customized
In general, a stock vehicle modified with after-market products.

         2.5       Family Sedan or Station Wagon
Family sedans have four doors.

         2.6       Full-Size Van or Conversion Van
These are designed for hauling people. The domestic manufacturers pretty much own
this segment.

         2.7       Historical
A vehicle over 25 years old. Generally speaking, historical vehicles are more than 50
years old. See also classic.

         2.8       Kit Car, or Replica
These are vehicles you can purchase to have assembled, as a kit. Generally they have
fiberglass body work that is fitted to a new or used frame. Some kits are replicas, in
that they reproduce the look of a classic or historical vehicle; others are custom, i.e.
not meant to look like any other vehicle in the past.

         2.9       Luxury Sedan
Some people call them "land yachts". Generally speaking, a vehicle in the Luxury
Sedan market sells for over $35,000 at retail. There is really no top end.

         2.10 Minivan
Chrysler Corporation invented this market in 1984 with the introduction of the
Plymouth Voyager and Dodge Caravan. This design and marketing triumph literally
saved the corporation from death by bankruptcy. The vehicles that have become a hit
with consumers in the market are almost exclusively front wheel drive, short-hooded,
have separate front seats styled like captain's chairs, one or more sliding side doors, a


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


rear liftgate, and back seats that can be moved into multiple configurations.
Versatility and ease-of-use have been two of their strongest selling features.

         2.11 Muscle Car, or Pony Car
A concept started in the '50s and popularized in the '60s by adding big block engines
and other factory-installed packages to regular stock vehicles, giving them extra
horsepower and a marketing appeal to the younger generation. Vehicles such as the
442 (4 barrel carb., 4 on the floor, dual exhaust), GTO, Super Bee, Mustang Mach 1,
and Challenger are all examples.

         2.12 Pickup Truck
Just as with the sport utility vehicle, these trucks have become increasingly popular
in the last 20 years. In fact, they are so popular that several makers will produce over
1 million of these vehicles in a year, and they grab several spots in the list of the ten
top-selling vehicles North America.

         2.13 Roadster
An open-top, open-air vehicle, usually for two people (with no back seat). These days,
some roadsters come with add-on hard-top attachments.

         2.14 Sedan
A hardtop vehicle with two or four doors, and with front and back seats. Sedans
subsume large classes of vehicles and market segments. For instance, a "sports sedan"
generally has just two doors, but not always. A "family sedan" is for families, and thus
usually has four doors.

         2.15 Small Lot Production
Vehicles which are made in relatively small volume. Some are created in custom
shops using a drive train and spaceframe body skeleton from a full production source.

         2.16 Sport Utility Vehicle, Sport Ute, or SUV
SUV’s are one of the hottest segments in the North American retail sales market.
Because of the unprecedented sales and profitability, nearly every auto maker has
entered the sport utility fray.

         2.17 Sports Car, Sedan/Coupe/Convertible
Like the family sedan, sports cars come in almost every shape and size, not to
mention every price category. A few of these vehicles are marketed strictly for the
sports car market. Most however, are family sedans or compacts which the
manufacturer has altered to create a sporty look and feel. Generally, this means a
bigger engine, giving the car more power, and a stiffer steering and suspension
system. There may also be various body enhancements, to create a styling look.

         2.18 Stock
A mass-produced, factory-built vehicle.

Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         2.19 Sub/Compact
Small cars, usually in the low end of the manufacturer's pricing scheme. Most have a
high fuel efficiency, high revolution, 4-cylinder engine, and a front-wheel drive power
train. They come in two- and four-doors, and may come in hatchback or station wagon
versions.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    3 Vehicle Terms and Car Tech
         3.1       All-Wheel Drive
Some industry insiders will refer to this as "full-time four-wheel drive." All four wheels
propel the vehicle.

         3.2       Anti-Lock Brakes (ABS)
These are braking systems which sense wheel rotation and automatically "pump" the
brakes for the driver in emergency braking conditions. The pumping and the
prevention of wheel lockup allow the driver to retain steering capabilities during the
braking emergency.

         3.3       Clutch
This drivetrain component is found between the engine and the transmission. It acts
as a coupling device which is used to engage and disengage the transmission from the
engine when shifting gears. It is necessary to do this joining and detaching because
the engine is turning at a relatively high rate (thousands of revolutions per minute),
and attempting to alter a gear ratio at this point could cause serious damage if the
clutch wasn’t working.

         3.4       Detailing
Cleaning, plain and simple. Detailing involves cleaning everything, including the
engine compartment.

         3.5       Drive Shaft
A long metal cylinder located between the transmission and the rear axle, in front-
engine rear-wheel drive vehicles. The shaft is connected to the components on each
end with a universal joint, which allows for movement up and down without bending
the shaft.

         3.6       Engine
The basic job of an engine is to take fuel and convert its energy to some usable
mechanical form (burn gasoline to spin a shaft and, ultimately, the wheels). Most
vehicles today are fitted with what is known as a 4-cycle internal combustion engine.
The four cycles are: INTAKE, COMPRESSION, POWER, EXHAUST.

         3.7       Front Wheel Drive
The front wheels are the ones that are being powered by the engine/transmission,
and the rear wheels just follow along. Generally speaking, these cars are more fuel-
efficient than their rear-wheel drive counterparts, and they operate more easily in
snow, but they are more expensive to build and maintain.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         3.8       Fuel System
Today's basic systems divide into two fundamental groups: carburetor systems and
fuel Injection systems. Carburetor systems work by allowing the vacuum created by
the engine in the intake stroke to pull fuel and air into the engine. Fuel Injection
systems are more common these days. Sensors and computer controls monitor various
engine speeds, air flows and throttle positions, and then tell the system what to do. A
fuel pump is used to transfer the gasoline from the fuel tank to the injector (which is
kind of like a spray nozzle).

         3.9       Odometer
This device gives a driver a readout of car’s mileage.

         3.10 Rear Axle Assembly
The drive shaft turns (spins) a set of gears within the rear axle assembly known as the
differential, or rear differential. The differential changes the direction of power from
the driveshaft out to the rear wheels via the rear axle.

         3.11 Rear Wheel Drive
In this drivetrain setup, the engine powers the rear wheels, while the front wheels
come along for the ride.

         3.12 Service Documentation or Books
Documentation of repairs and maintenance performed on your car. At a minimum,
each service record should have a description of the repair; total costs for the repair,
with a breakdown of labor and parts; a detailed listing of all parts used; the make,
model and mileage of the vehicle; and the owner's name. Keeping a folder of all the
service records of your vehicle can be a very good idea. Whenever possible, keep the
original service record, and insist on documentation on every repair made to your
vehicle, from a headlight bulb to a transmission rebuild. This includes the routine
maintenance (oil changes) that you have performed.

         3.13 Title
The piece of paper that states the name of the owner and the Vehicle Identification
Number (VIN) given by the state. In general, titles list the model year, make, model,
VIN, body style, weight class, date of issue, title number, owner's name and address,
secured party information, release of lien information, and transfer of title
information. A title should also include an odometer reading.

         3.14 Transaxle
A transmission and differential housed together in the same enclosure. This setup is
most commonly found in today's front-wheel-drive-dominated car (not truck) market.
The transmission and differential are married together because no drive shaft is
required in front-wheel drive (front engine) vehicles.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         3.15 Transmission, Tranny, or Trans
The transmission is used to take the high-speed (thousands of revolutions per minute),
low-torque power of the engine and convert it to a lower-speed, higher-torque
output, which ultimately turns the drive wheels. Transmissions come in a wide variety
of choices, but they basically divide into three categories: Manual, Automatic, and
Manumatic (a term Car & Driver has recently coined). Lower gears allow fast
acceleration, higher gears provide better gas mileage. Manual transmission uses a
system of gears to create the high torque output required from the engine's high
speed input. A clutch is used to disengage the transmission from the engine when
shifting gears. Manual transmissions have some sort of "shifter" (like a "stick") so the
driver can change the gears, and a clutch, normally operated via a third pedal, set to
the driver's left side. Automatic transmissions do the shifting for the driver. No clutch
is required. The shifting is accomplished by a hydraulic oil (transmission fluid --
usually red) system. Today's automatic transmissions have a lot of electronic
technology built in to provide an endless stream of gear ratios.
Manumatic transmissions are a hybrid of manual and automatic transmissions. In most
cases they require no manually operated clutch, but they allow for the driver to shift
gears manually when desired. These types of transmissions are being offered more
frequently as an option package on higher-end sports sedans.

         3.16 Unibody, or Unitized Construction
A couple of decades ago, cars were built almost exclusively from frames. In other
words, underneath everything was a basic rectangular steel assembly. Everything else
on the car attached to the frame in one way or another. Today, nearly every car and
many trucks are built on the "unibody" concept, for reasons of weight and cost.
Unibody construction uses the body assembly itself to create the infrastructure of the
vehicle and is constructed in most cases by spot welding together hundreds of smaller
metal assemblies. On a modern assembly line you may see automated spot welders
sparking away on hunks of sheet metal, eventually forming a car body. That is
unibody.

         3.17 VIN, VIN #, or Vehicle Identification Number
With vehicles in the US you'll find this number stamped on a strip of metal. Normally
it’s secured on the top left side of the dashboard, in a spot that is difficult to reach
with your hands but that can be read through the windshield. Each car has a unique
VIN.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    4 General Industry Terms
         4.1       After-market
If you buy a CD player for your car from a electronics store you're buying from the
"after-market." The term is usually used in reference to the maintenance and repair
sectors, but can extend to include electronic components.

         4.2       Auctions
Auctions are a wholesale clearing house for cars. Some auctions are public and some
can only be attended by licensed dealers. Generally, no warranty is given. In fact,
most auction houses won't let you drive the car. If you get there during viewing hours
you may be allowed to start the vehicle and look under the hood, but that's about it.

         4.3       Brokers
Working on a commission or fee basis, they find a vehicle for you and are paid when
you purchase the car. Some states don't allow auto brokers, while other states require
that they be licensed. Find out what your state laws are before dealing with any
brokers.

         4.4       Buff Books
Magazines published by enthusiast-minded editors who cater to a readership that is
predisposed to horsepower, technology and a "sportier" ride. These are magazines
such as Car & Driver, Road & Track, and Automobile.

         4.5       Buying Services
Companies which help you buy a car. Some, such as AutoVantage, charge a flat fee
and offer exclusive services to their customers. You pick the vehicle, they find a
dealer in your area with the lowest possible price. Some other buying services, such
as Auto-by-tel, don't charge you a thing: you give them your particulars and they send
you a quote from a dealer near you. Others offer additional products such as
insurance. These services often have specific dealers signed up to provide this service
for their customer base.

         4.6       CAFE, or Corporate Average Fuel Economy
All car companies have to post average fuel economies for the fleet of vehicles they
sell during the year, and they face fines from the federal government if that average
is too low. To avoid the fine, car makers are more willing to sell fuel-efficient
vehicles at a price closer to the manufacturing costs than they are the large big-profit
cars that don't get nearly the same gas mileage.

         4.7       Consumer Rags
Publications such as Consumer Reports and Consumer's Digest, which shoot for an
unemotional, bare-bones analysis of vehicles. They leave out all the sex appeal that



Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


the buff books trumpet; they're more concerned with the number of cubic feet in the
interior space than the styling that surrounds that space.

         4.8       Domestic, Big 3, or Domestic Automaker
Three high volume auto makers that are US-based corporations. Astonishingly enough,
there have been hundreds of domestic auto makers over the 100 years of the
automobile in North America. After a multitude of bankruptcies, acquisitions, and
mergers, today only three remain: Chrysler, Ford and General Motors.

         4.9       European Delivery Program, (EDP)
A program by which you can go to Europe, to the country which manufactures the car
you buy, and have it delivered to you at the point of assembly. The manufacturer will
arrange proper documentation and help you to arrange shipment of your fully US law-
compliant vehicle. Visit your local dealer to find out more details on this program,
offered by most of the European manufacturers; such deals are only offered on
vehicles ordered/purchased from North American shores. Your local dealer does stand
to profit by this transaction. He gets credit (allotment numbers) based on this being a
sale by him, and he has neither carrying costs nor floor planning, since the vehicle
never hits his floor.

         4.10 Fleet Seller
The fleet seller works directly for the manufacturer and is responsible for bulk sales
to fleet customers throughout the world. This term is not to be confused with fleet
manager.

         4.11 Gray Market
This refers to cars that have been imported via other-than-normal distribution
channels. A buyer purchases vehicles (usually several at a time) in a foreign market,
generally from a dealership willing to give one discount for volume and another for
slow selling. The buyer then ships the vehicle to North America, where the vehicle is
equipped to US standards. The importers then sell the vehicles to US consumers at
reduced rates. The problem for buyers of gray market vehicles is getting them
warranted or repaired. Many of the makers simply refuse to provide any warranty, or
even to conduct repair work on these vehicles. In addition, trying to sell a used gray
market vehicle may become a problem.

         4.12 Imports
All the companies that manufacture vehicles for sale in North America, but which are
not incorporated in the United States. These companies include makes from Europe,
Japan, and Korea: Mercedes, BMW, Volvo, Saab, Audi, VW, Isuzu, Mazda, Mitsubishi,
Nissan, Toyota, Honda, Hyundai, and Kia.

         4.13 Joint Venture
The common business practice of two or more companies joining forces to create a
product or service. In the automobile business this corporate trend became quite


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


popular in the 1980s. US auto makers contributed distribution and marketing know-
how, and the Japanese companies lent design and manufacturing expertise.

         4.14 Make
The term for the name of the manufacturer of a line of vehicles.

         4.15 Manufacture Date
The date the vehicle was made.

         4.16 Manufacturer-Installed Options
Options the manufacturer installs at the assembly plant (or even at a special prep
facility).

         4.17 Model
A specific line of vehicle within a make.

         4.18 Original Equipment Manufacturer, or OEM
The company that makes the vehicle.

         4.19 Regional Sales Manager
This person is employed by the manufacturer. Each region gets a sales manager, who
is given a regional allotment of vehicles. This manager then doles out the vehicles in
the allotment to the franchise dealerships in the region.

         4.20 Sales Regions
Most vehicle manufacturers divide up the countryside into sales regions.

         4.21 Suppliers
The companies that supply the OEMs with everything from engines to rivets, screws,
transmissions, and windows. Vehicles are assembled from thousands of parts, most of
which are contracted out.

         4.22 Transplant
A vehicle built by a company that is headquartered in another country.

         4.23 Trim Levels
A level of option packages within a specific model.

         4.24 Twins, Cousins, and Platform Family Members
Aspects of a vehicle's genealogy. Twins are cars sold by the same corporation but
marketed as a different make. Both are made on the same assembly lines, by the
same corporate parent, with the same basic design, but are marketed to the public in
different ways. The cousin car is just like the twin, only the cousin is marketed by a
different parent company.


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    5 Pricing Definitions
         5.1       Asking Price
Usually associated with a classified ad for a used car. It simply states what the seller
is anticipating receiving in cash for the vehicle.

         5.2       Auto Maker Costs, or Manufacturer's Cost
Assembly plants cost millions of dollars to build and operate. A state-of-the-art paint
system alone these days can cost well over $250 million. Because of the scale and
number of costs, it is extremely difficult to determine how much a car costs the auto
makers to build. We do know that in today's market the sport utility and truck market
has several entrants that reportedly make the manufacturers over $10,000 per
vehicle.

         5.3       Book, or Book Value
A term associated with the used vehicle market. It generally means the wholesale
value of a used car listed in one of the pricing books, The Kelly Blue Book or NADA.

         5.4       Carryover Allowance
The domestic auto makers used to offer these special year-end allowances to clear
out the previous model year's inventory. While no longer as frequent, these
allowances still exist. They do not take effect until a dealer has the next model year's
vehicles on the lot.

         5.5       Churn & Earn
Franchise dealers sell on an allotment system, so to get more of the best selling (high
demand), large margin vehicles, the dealer must take from the manufacturer and
ultimately sell at least a few of the slower movers each month.

         5.6       Commission, or Sales Cut
The amount of money a salesperson gets for selling a vehicle. Often a salesperson's
commission is based on volume of sales -- in other words, the salesperson gets X% for
selling 10 units in a month, X Y% for selling 25 units, and X Y Z% for selling 40 vehicles
in a month.

         5.7       Front Wheel Drive
The front wheels are the ones that are being powered by the engine/transmission,
and the rear wheels just follow along. Generally speaking, these cars are more fuel-
efficient than their rear-wheel drive counterparts, and they operate more easily in
snow, but they are more expensive to build and maintain.

         5.8       Customer Incentive, Factory to Customer Incentive, or Rebate
This is the one that the car manufacturers are always going on about in television
commercials and print ads. They're primarily given on slow sellers and often used


Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


regionally, where an oversupply condition may exist. Lee Iacocca has been credited
with starting them.

         5.9       Dealer Allocation, Allocation, or Allotment
The system by which vehicle manufacturers dole out cars and trucks to their franchise
dealerships.

         5.10 Dealer Incentive, Factory to Dealer Incentive, or Manufacturer to
             Dealer Incentive
Manufacturers build vehicles. Sometimes they miscalculate what the consumer wants,
so inventories. When the manufacturer has too many of a particular new car model
sitting at the factory, port or dealership, they will offer incentives to the dealers to
move them a little faster. There are a number of different programs and they change
regularly. Not all new car models in a product line will have dealer incentives. Usually
the more popular models will not have incentives or lower incentives in that they do
not need the extra help to sell them.

         5.11 Dealer Invoice Price, Invoice, or Tissue
Invoice refers to the actual invoice that the manufacture sends to the dealer with the
vehicle. Each vehicle has a unique invoice. The invoice price does not reflect true
dealer cost due to holdback and factory to dealer incentives.

         5.12 Destination Charge, or Delivery Charge
Manufacturers all use some method of equalizing the delivery charge from the factory
to the dealer. They all charge a flat fee for each vehicle, no matter where you take
delivery.

         5.13 Holdback, Giveback, or Dealer Holdback
Dealer hold is usually around 1.75% of the invoice price. It is what the manufacture
rebates back to the dealer. This is one of the reasons why the invoice price does not
equal the amount the dealer actually paid for the vehicle. While the dealer does not
get a check from the manufacturer for the hold back amount the dealer does receive
a credit (equaling the holdback) towards the dealer's next car purchase. Not all
product lines have dealer holdbacks and the percentage does very a little.

         5.14 Incentives
A price reduction given to entice consumers to buy a product, or to stimulate the
selling department (dealerships) to push more product onto the public.

         5.15 Market Prices
Prices which represent the supply-and-demand economics of a marketplace. Often
buyers will find this "market price" to be someplace between dealer invoice and list
price, but exceptions exist on each end of the spectrum.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         5.16 Minimum Deal
A sale that has so little profit in it that instead of paying the salesperson a standard
commission, it pays a flat sales fee of, say, $100.

         5.17 Non-Commissioned Sales
Some dealerships pay the salespeople a straight salary.

         5.18 Option Packages
Often a manufacturer will package certain options together and offer them at a
"reduced" price. An example would be an "Air and Power Package," which might
include air conditioning, power steering, power brakes, power door locks, power front
driver seat, and power antenna. Buy each option individually and you have one price,
buy them in a package and the price is less. (See also trim levels.)

         5.19 Retail
The price for which a vehicle sells to the general public. You may hear the expression,
"That car retails for $19,995." This usually refers to the list price of the vehicle.

         5.20 Special Circumstances Dealer Incentives
Sometimes a new dealership will get a special deal from the manufacturer to
establish a selling base.

         5.21 Sticker, Monroney, MSRP, List Price, or Retail Price
The price the dealership is asking on a vehicle; the price the manufacturer has
"suggested" be charged for a particular model vehicle. The term "sticker" comes from
the fact that it appears on a sticker on a window. The term "Monroney" comes from
the name of the US Senator who introduced legislation requiring that all new cars be
labeled with a manufacturer suggested retail price (MSRP) and making it illegal for a
dealership to remove, tamper with or even change a sticker. When manufacturers
increase prices, the dealership must still list their current inventory under the old
pricing plan. Manufactures and dealers have, though, found ways to increase sticker
values along with offering larger dealer incentives, and holdbacks.

         5.22 Wholesale, Wholesale Value, or Actual Cash Value
This is the amount at which a used car can be sold at auction. These values are
changing continuously, and are based on previous sales of similar vehicles of the same
make, model, and mileage. A new car dealership never wants to pay more than
wholesale on a vehicle; that is, the hard dollars in a trade-in deal need to be
wholesale or less.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    6 Leasing Terms
         6.1       Acquisition Fee
I don't know what you get when you pay an acquisition fee! You should also be aware
that this fee is from time to time folded into the cap cost of the vehicle, so you pay it
as part of your monthly rental.

         6.2     Adjusted Capitalization Cost, or Adj. Cap. Cost, or Net
                Capitalization Cost
The Cap Cost minus the Cap Cost Reduction. This is the value that should be used to
figure your monthly payments.

         6.3       Capitalization Cost, Cap Cost
The price at which the vehicle would be sold if the deal were for cash. A
finance/leasing company purchases the car from the dealer for this price.

         6.4       Captive Finance Company, or Captive Finance Arm
The auto makers' financing companies. Among the domestics, they are GMAC (General
Motors Acceptance Company), Ford Credit, and Chrysler Credit. These companies are
involved in financial transactions that go well beyond just setting up new car loans.
They aid their dealer networks in used car loans, dealer floor planning, vehicle leasing
(see subsidized lease), and they offer other financial services such as home
mortgages. A number of the foreign manufacturers also operate captive finance
companies.

         6.5       Closed End Lease
This type of lease establishes the residual up front, and if the vehicle's value falls
below that at the end of the lease, it is the lease company that eats the excess
depreciation. (See also Open End Lease.)

         6.6       Disposition Fee
Just like the acquisition fee, I really don’t know what this fee is for either. When you
pay a disposition fee of say, $300, you're paying the dealer to take your lease car
away from you and "dispose" of it.

         6.7       Early Termination Charges
This is a fee charged if you ever decide to turn in a lease vehicle early, that is, before
the lease term is up.

         6.8       Excess Mileage Charge
The rate you pay for any miles above what your lease agreement allows. Today this
price ranges from 12-20 cents per extra mile. (See also mileage cap)




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         6.9       Fees (Bank - Dealer - Lease Company)
Charges that are often shared between the dealership and the financing company that
is buying the lease.

         6.10 Gap, or Gap Insurance
It is a specific insurance that pays off the lease company in the event that the car is
totaled or stolen during the lease term. It is smart to insure against this "gap" because
when a car is totaled or stolen, the lease becomes an early termination, and the
charges for terminating a lease can be significant.

         6.11 Lease Term
The length of the lease contract between the lessor and the lessee.

         6.12 Lemon Laws (lease specific)
Laws dealing with cars that don't run well. Although all 50 states have lemon laws,
some states don't cover leasing. (See also lemon law (new cars))

         6.13 Lessee
That’s the person signing up for the lease.

         6.14 Lessor
This is the finance company that purchases the vehicle and then agrees to "rent" it to
the lessee for a stipulated length of time, under a contract agreement known as a
lease.

         6.15 Mileage Cap, Mileage Limit
As part of the lease agreement, the lessee (the person entering into the lease) agrees
to restrict the mileage on the vehicle to a predetermined number.

         6.16 Money Factor
A number that determines the monthly finance cost of a lease. In other words, it
determines how much you pay for the "right" to lease this vehicle. You can calculate it
by dividing the lease's annual percentage rate by 24. If a finance company quotes you
a money factor, you can multiply it by 24 to find out the lease’s annual percentage
rate.

         6.17 Monthly Depreciation Fee, or Depreciation Fee
This is how you figure how much in depreciation costs you are paying as a consumer.
Monthly depreciation fee = (Net Cap Cost - Residual Value)/(lease term in months)
This is only the depreciation portion of the monthly payment. (See also finance fee,
taxes and our sample lease calculations for the full picture.)




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         6.18 Monthly Finance Fee, Finance Fee, Rental Charge, Lease
             Charge
The amount that the lease company is charging you to rent the vehicle to you.

         6.19 Open End Lease
The residual value is not calculated until the end of the lease term. Many states have
made this type of lease illegal.

         6.20 Purchase Option Price, Purchase Option Value
Normally, the same price as the residual value.

         6.21 Residual
A predetermined value of the lease vehicle at the end of the lease term. This isn’t
always the same for different lease companies and it can often be negotiated.

         6.22 Subsidized Lease
From time to time manufacturers will use their captive finance arms to offer leases
that are below market value. In other words, they will raise the residual value on a
particular model, or they will lower the interest rate (money factor), thus offering
lower prices to the consumer. This can increase volume sales among the slow sellers.

         6.23 Taxes (leasing specific)
Taxes vary from state to state and so do their application to lease agreements. You're
best off consulting your accountant, or talking with several independent sources from
the dealership or lease company. That said, you may have to pay taxes on the portion
of the vehicle that you are using -- the depreciated amount (some states call this "use
tax"). Know what your state tax laws are, and if they are being applied correctly to
your particular lease agreement.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    7 Financing Terms
         7.1       Amortize
To pay off in regular installments (monthly) over a loan term. The payments
(installments) are generally the same amount. (Amortized loans differ from term
loans in this way.)

         7.2       Appreciation
The value that an asset gains over a period of time.

         7.3       APR, Annual Percentage Rate, Interest Rate, or Loan Rate
The rate being charged to a consumer for the ability to use the finance company's
money. Truth in lending laws dictate how this figure is expressed, and prevent the
quoting of a figure which is secretly different because of added costs such as loan
origination fees. A bank may charge you 8% for a loan, but the APR may be higher
because they have also charged you $25 per $1,000 to get a loan at 8%. Thus you
really are borrowing $975. The listed APR is to help the consumer better understand
how much the loan is actually costing.

         7.4       Assets
The items you own. You don't have to own something "free and clear" for it to be
considered an asset. Say you have a house, on which you owe money to a bank or
mortgage company. The amount you owe is considered a liability; the amount you've
already paid off is an asset.

         7.5       Collateral
Assets that can be used to back up a loan which you obtain with a finance company.

         7.6       Credit Line
A loan approved by a financial institution and available for the lender to draw on that
is unused, or not used to the maximum allowable amount.

         7.7       Depreciation
The value that an asset loses over a period of time.

         7.8       Equity, or Vehicle Equity
Think of this as your current vehicle's net worth: the value of the vehicle at the
wholesale level (asset) minus any loan amount (liability).

         7.9       Interest
The amount the finance company charges for the use of the capital or principal in a
loan.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         7.10 Liabilities
Your debts. The amounts you owe on your mortgage, car payments, and even taxes
are all liabilities.

         7.11 Lien
A legal claim on ownership stemming from a debt. A lien will often be held on the
vehicle's title until the debt is paid off, at which point the title is transferred and the
lien is cleared. Liens can also be recorded in writing, in state or county documents.

         7.12 Loan Term
The length of time a loan is given, usually measured in months.

         7.13 Monthly Payment
The combined principal and interest owed on a loan, paid on a monthly basis over the
loan term.

         7.14 Negative Equity
This exists when the liability portion (what you owe on a vehicle) of the equity
equation is larger than the asset portion (what the vehicle is worth wholesale). (See
also buried, upside down.)

         7.15 Net Worth
The sum of all your assets minus the sum of all your liabilities. Net Worth = (Total
Assets) - (Total Liabilities)

         7.16 Principal
The amount borrowed. If you borrow $10,000 for a new car, you must pay back the
$10,000, which is the principal, as well as interest.

         7.17 Term Loan
A loan which is paid back as a lump sum (principal and interest) at the end of a loan
term.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    8 Dealership Terms
         8.1       Allowance Buyer
These are buyers who only care about how much they are getting for the current
trade-in.

         8.2       Back End, Back End Gross, Backroom, or Back
All the dealership's revenue streams that are not part of vehicle sales. These include
anything the finance manager sells you (financing, insurance, fabric protection,
extended warranty, etc.) and any revenue the service department makes on repairs
and maintenance.

         8.3       Bump, or Bump and Grind
First comes the bump. The salesperson looks to move your offering price up, no
matter how slightly, whether it's $50 or $500. The sooner in the negotiation this
occurs, the better it is for the dealership. If you raise your offer once, you are more
likely to raise it again. If you bump before your first offer reaches the sales manager,
you're an excellent candidate for the grind. The grind is a series of bumps. The
"bump" is world-renowned as a sales technique.

         8.4       Closer
The salesperson who finishes off the deal. Sometimes the sales manager is the closer;
sometimes it is the most experienced seller in the dealership.

         8.5       Corporate Cities
Arrangements in which the manufacturer takes at least part ownership of the
dealership, along with some of the responsibility for managing it. The basic plan, still
unfolding today, is to have all the dealerships of a particular make in a population
segment (a city with surrounding suburbs) combine themselves into one corporation.
The previous franchisees will take various buyout plans -- some will take cash, some
will take stock in the newly formed corporation, and some will take over daily
management of the new corporation, along with the manufacturer. The benefit is, of
course, consolidation of operations.

         8.6       Dealer Option, Dealer Installed Options, or Dealer Add-Ons
The expensive add-ons installed by the dealer; not to be confused with factory-
installed options. They include, but are not limited to, such items as special painting,
gold-plating, advanced sound systems, and a host of other after-market items.

         8.7       Dealership Principal, Franchisee, or The Dealer
The person who owns the franchise -- the store proprietor.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         8.8       Dealership, Dealer Franchise, Dealer, or Store
To get a dealership, the proprietor signs a franchise agreement with the
manufacturer. This allows him to sell products under the manufacturer's name.

         8.9       Difference Buyer
One who cares about the differences between the current ride and the new car.

         8.10 Finance & Insurance Manager, F&I, or Business Manager
The person to whom you are generally turned over in order to complete the
paperwork on a vehicle deal.

         8.11 Fleet Manager
The individual who handles fleet sales for a particular dealership. This term should
not be confused with the Fleet Seller at the manufacturing corporation level. Some
dealerships don't have these individuals. This person may work on commission or a
straight salary.

         8.12 Floor Plan, Dealer's Floor Plan
The carrying costs of the dealership's inventory. Most dealerships do not use their own
cash to pay the manufacturers for delivery of cars to their lot. Instead, they have a
line of credit from a variety of sources, including the financing arms of the
manufacturers, local banks, and other financing companies.

         8.13 Front End, Front End Gross, or Front
The amount of profit a dealer makes on vehicle sales (new & used).

         8.14 General Manager
The person at the dealership directly below the dealer principal. This person manages
all operations at the dealership, on both the front end and the back end. Sometimes
the Dealer Principal takes on this responsibility (particularly at the Mom & Pop shops).

         8.15 House Sale
A non-commissioned sale.

         8.16 Leaser
A buyer who prefers to rent.

         8.17 Low Ball Offer, Low Balled, or LB
A low offer on a vehicle that the salesperson uses to keep you chained to the store, to
ensure you'll be back, or to get you to come to the dealership in the first place
("phone low ball").




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         8.18 Mega Dealer
When the franchise car dealership system was dreamed up, dealerships were sold to
what are now known as the local Mom & Pop shops. That system worked well during
the first 70 or so years that automobiles were sold in volume in the United States. As
the population shifted away from the city to the suburbs, some of the Mom & Pop
dealers purchased additional franchises and aggressively expanded. Many ended up
owning 3 and 4 dealerships across several makes.

         8.19 Mom & Pop Shop
The first dealer franchisees; the dealer principal was a local and generally worked
each and every day from an office housed within the single dealership which he or she
owned. The client base covered a relatively small area but was highly populated.
Dealerships were sold to people who had money or land in areas in which a
manufacturer didn't already have a dealer.

         8.20 NADA
The National Automobile Dealers Association. This industry group possesses a powerful
lobby in Washington, DC, and in most states for the purpose of protecting automotive
dealers' best interests. It has been instrumental in making the automotive franchise
agreement what it is today. Contrary to popular opinion, this group does not work for
the manufacturers; in fact, they are often pitted against the manufacturers as their
constituency is the franchisee (the dealer) not the franchiser (the maker). NADA also
publishes all kinds of automotive-related materials, such as the "#1 Selling Guide
Book" of used car prices.

         8.21 Negotiating Room, Cube, Bargaining Cubicle, or Vertical Coffin
A lot of dealerships are set up as a vast open showroom with salespeople's desks
surrounding the showroom floor. Most newly renovated dealerships are using the
movable five-foot office wall system. The negotiating room is the place where they do
the final negotiating with the consumer.

         8.22 No Dicker Sticker, Haggle Free, or No Haggling
GM's Saturn carried the torch for this marketing push. When you buy a Saturn, you buy
it as if it were any other product that you buy in a store. Everyone gets charged the
same at checkout.

         8.23 Pack, Payment Packing
A sales method in which a consumer is quoted an attractive monthly payment amount
that fails to give an accurate picture of the total costs involved in the purchase.
Salespeople often use this method of selling to "payment buyers" (people who are only
concerned with how much they will need to pay each month on a loan).

         8.24 Payment Buyer
This kind of buyer is only concerned with the amount of the monthly payment.
Salespeople love these buyers!

Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         8.25 Qualify, Qualifying
The process by which a salesperson tries to find out 1) if you're a serious buyer, and 2)
what type of buyer you are.

         8.26 Sales Manager
The person who manages the sales department. Some dealerships allow a deal to be
approved by this individual only. Because dealerships are open for business more than
40 hours a week, they may have more than one sales manager. Sales managers
generally concentrate on vehicle selling and don't involve themselves with back end
operations.

         8.27 Salesperson
The person whose job it is to sell you the vehicle.

         8.28 Service Manager
The person in charge of anything to do with repair and maintenance of the
automobiles, including the people that perform all the various functions: service
writers, mechanics, porters, and even the parts department manager.

         8.29 Spot Delivery
The immediate delivery of a car from the dealer's inventory once the necessary
paperwork is signed on the deal.

         8.30 Straight Sell System, or Direct Selling
A selling process used by a few dealerships in which the customer is not turned over
until the deal is done and the customer is ready for the F&I Manager. The straight sell
salesperson often must get the deal approved by upper management, but the
customer doesn't have to deal with anybody else from test drive to signed
negotiations. Few dealerships operate strictly on the straight sell system.

         8.31 Super Mega Dealer, Dealer Groups:
The franchise system of Mom & Pop and Mega Dealers has recently come under
pressure from this new classification. Many dealerships have combined, forming
corporations, some of which are even publicly traded. Some of these have used cash
from stock deals to finance acquisition binges, buying up smaller dealerships by the
truckload.

         8.32 Superstore
The no haggling used car lots that have recently sprung up across the nation. Stores
like AutoNation and CarMax are attempting to expand this concept nationwide.

         8.33 Switch, Switched, or Bait & Switch
Changing the customer over to a more expensive car.



Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         8.34 Tough Nut
The buyer who tells the salesperson that he will indeed buy, but that he wants to
learn the product first, then talk price, then the trade, and then financing.

         8.35 Tower
In some dealerships this is what salespeople call the sales manager's office.

         8.36 Turn Over, or T.O.
The process by which you are handed off from one salesperson to another. The
opposite of the turn over system of selling is the straight sell system.

         8.37 Used Car Manager
The person who manages the used car lot. Some dealers have them, some don't. This
person works a lot like the Sales Manager.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    9 Used Car Terms
         9.1       Consignment Sales
A selling technique in which a private seller offers a vehicle for sale through a public
used car lot. The seller works out a deal with the lot, normally based on a percentage
split of a sale over a minimum figure.

         9.2       Paper Men
The people of a used car lot who handle their own financing. Often they specialize in
hard-to-finance customers who are willing to pay higher annual percentage rates.

         9.3       Split, Split Deal, or Commission Split
Sometimes salespeople will agree to split the commission on a customer/buyer. Often
this occurs because of a deal they work out which doesn't actually involve you.

         9.4       Curbstoner or Curbstoning
A person selling multiple cars a year must be licensed as a car dealer in most States. A
curbstoner purchases vehicles at auction without a license and poses as a private
seller to sell these vehicles to unsuspecting buyers for a large profit. This is illegal in
most States.

         9.5       Private sales, Person-to-Person, or Private
A sale between two or more individuals not connected to the automotive retail sales
world. You might sometimes see this term abbreviated in the newspaper classifieds as
"PP."

         9.6       Public lots, or Public sales
A sale between a private individual and a state-registered dealership, new or used.

         9.7       Odometer Statement
A document signed by the seller which clearly states the vehicle's mileage at the time
of sale and certifies that the odometer has not been tampered with. Often this
statement is part of the title, or the bill of sale. See also clocker.

         9.8       Bill of Sale, and/or Sales Agreement
A document which describes the particulars of a sale.

         9.9       Pre-owned Vehicle
Pre-owned is a fancy term for used car.

         9.10 Pre-Driven Vehicle
Another fancy term for used car.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         9.11 Mechanic, ASE Master, ASE Certified, Service Mechanic, or
             "Gear Head"
Someone who performs maintenance, troubleshoots, and/or fixes a car. ASE stands
for Automotive Service Excellence and is divided into eight technical categories. A
mechanic can earn accreditation in one or more of these disciplines. To become a
"Master Technician" the individual must pass all eight sub-categories. Re-tests are
required at regular intervals in order to maintain the accreditation.

         9.12 Executive, or Company Vehicles
These are vehicles which employees of the manufacturer drive on company business.
Generally they are low-mileage and only a few months old when they are sold as used
vehicles.

         9.13 Program Vehicles
Another fancy name for a used vehicle. These cars are normally named as such
because they are in a lease program and are in reality off-lease vehicles.

         9.14 Mileage check, MPG Check, or Mileage Calculation
Fill your gas tank to the full. Record your mileage reading or zero the trip odometer.
Then drive normally until until it's time for your next fill-up. Now, record the mileage
and the amount of fuel in gallons added. Take the mileage figure and divide it by the
total number of gallons added to the tank. (Total Miles / gallons added = Miles Per
Gallon) City MPG is almost always lower than highway MPG.

         9.15 Cabriolet
Another name for a convertible coupe.

         9.16 Auto Mall
Some dealerships have banded together to form the now oft-seen auto malls in large
population areas. The idea here is to bring a large assortment of makes together to
attract more customers because of the one-stop shopping and comparison abilities.
Several varieties of this concept exist in the marketplace today. In some locations,
Mom & Pop shops have combined in one general geographic region to offer the auto
mall shopping experience. In other areas, mega dealers have combined their entire
stable of dealerships under one big roof, or at least one big parking lot. Still other
dealerships which are close together are calling themselves auto malls, but in fact
they are only combining forces to advertise -- closer to the strip-mall concept of
retailing.

         9.17 Gundecking
A method of sizing up a vehicle by looking down the car's body-lines from a distant
point. A keen eye will catch body panel droop, misalignments, and various other
manufacturing and rebuilding flaws -- flaws which the untrained eye might miss.



Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         9.18 Chopped, Chopper
Putting together of one or more vehicles to create one that is sellable to the public.
Say two GMC pick-ups are in separate wrecks and are both classified as totaled by the
insurance companies. The vehicles are sold to a salvage yard to be scrapped (melted
down) at scrap value. The salvage yard cuts the good portion from each vehicle and
welds the two good pieces together.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    10 Auction Terms and Abbreviations
         10.1 Absolute Auction
This auction is considered to be the best auction to attend. An Absolute auction has
no reserve prices.

         10.2 Candle Sale Auction
A candle sale auction is an auction that uses phone or mail as the method of bidding.
A minimum bid or asking price will be established for a property and prospective
bidders will be required to place a deposit with the State in order to participate.

         10.3 Pre Set Auction
At a pre set auction the auctioneer must accept all bids. If there is only one bid of
one dollar on an item, the auctioneer must sell to that bidder for that price.

         10.4 Public Auction
At public auctions traditional auction procedures are followed. All prospective buyers
are given a description of the property to be auctioned, along with bidding
instructions before the auction. The auctioneer conducting the sale offers the
property item-by-item and awards the item to the highest bidder. When buying
through an auction, the buyer must be present to bid, unlike the sealed bid method,
which is conducted by mail.

         10.5 Reserve Auctions
A reserve auction is generally open to the public. The auctioneer offers items for bids
with a minimum price. If that price is not reached in the bidding, that item is not
sold. If the owner of the item is present at the auction, the auctioneer will ask him if
he will accept the lower bid.

         10.6 Sealed Bid
The Federal agency prepares an "Invitation for Bid," an informational sheet that
describes the property being offered for sale and includes the terms and conditions of
sale. It contains all the information you need to bid on the item. If interested, submit
your bid to the agency, usually by mail. On the bid-opening date, the bids are read
publicly and the award is made to the highest bidder who has correctly followed the
required procedures.

         10.7 Sealed Bid Auction
These auctions are most often conducted by mail. On your request the government
will send you an "Invitation to Bid" form. You must fill out the form and mail it to the
auction along with a deposit (set by the auction) by a preset cut off date. All bids will
be opened at the same time, and the highest bidder wins. If you do not win the bid.
Your deposit will be returned along with the results of the auction.



Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         10.8 Spot Bid Auction
A spot bid is similar to a sealed bid auction, but all bidders must be present at the
auction site in order to bid. As each item comes up for sale, prospective buyers write
down their bids along with bid numbers, insert them into envelopes, and submit the
envelopes to the auctioneer. The auctioneer then opens all bids, and the highest
bidder is awarded the item.

         10.9 Red Light
This means “AS-IS”. In other words, there is no arbitration and there are no
guarantees on the car. If you buy it, you own it without recourse. Most of these cars
have title issues, they’ve been rebuilt, or the true mileage is unknown (TMU). If you
are bidding on a car that’s “AS-IS”, make sure you know what’s wrong with it. If you
get surprised – it’s too bad. Also, all antique and collectible cars will be sold “AS-IS”.

         10.10 Yellow Light
This means “special announcements”. You need to listen carefully to the prebidding
announcements on these. A typical special announcement would be “lemon buy
back”, “prior rental car” or “miles over”. If you didn’t hear the special
announcements, you probably shouldn’t be bidding on the car.

         10.11 Green Light
This indicates “arbitration” or “guaranteed”. These cars have a guarantee on the
driveline (transmission, drive shafts, and differentials) and on the engine. This
guarantee usually only lasts for the day of the sale! You have until the end of the day
to make sure that the car has no engine or driveline damage. The auction arbitration
rules will tell you exactly how long the guarantee lasts.

         10.12 Blue Light
These usually indicate that there is no title included with the car. You can bid on
these cars, but be aware that you will not get the title until sometime later. In most
cases, the auction rules state that if you don’t receive the title within 20 days, you
can return the car. Get a copy of the auction rules for the specifics of the auction
you attend. In most states, you can’t sell a car without the title, so you shouldn’t
drive a car excessively or do extensive work on a car or sell it until you get the title.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


    11 Auction Windshield Markings
You will see and hear some things at an auction that may not be obvious to you at
first glance. You’ll hear some of these phrases and sometimes you’ll see them written
on the windshield of the car being auctioned.

         11.1 9-137
Numbers like this on the windshield of a car indicate the lane and run number. This
car will be in lane 9 and will be the 137th car to run through that lane.

         11.2 92
This is the year model of the car. In this example the car is a 1992 model.

         11.3 As Is
There is no arbitration and there are no guarantees on the car. If you buy it, you own
it without recourse.

         11.4 Hail Damage
Vehicle has been damaged by hail.

         11.5 Flood Damage
Vehicle has been in a flood or has received extensive water damage. The full extent
of the damage may not be easily visible.

         11.6 Frame Damage or Frame
The frame has been bent or damaged on this car. This tells you that the car has been
in a major accident.

         11.7 Guaranteed
Vehicle has a sale-day guarantee on internal engine damage and the driveline. The
guarantee is usually good for the day of the sale only. This varies by auction, so see
auction policies for specific coverages.

         11.8 Lemon Buy Back
         11.9     A vehicle with major problems which as been repurchased by or had its
                price renegotiated with the manufacturer.

         11.10 Miles Over or Over 100
Vehicle has over 100,000 miles on it.

         11.11 Miles Over Over or Over 200
Vehicle has over 200,000 miles on it.




Copyright 2003 Simon Blake, All Rights Reserved
The Ultimate Car Business Dictionary


         11.12 NR
Vehicle has no radio.

         11.13 Prior Police Car
This means the car used to be a police car. Watch out – these cars take some abuse.

         11.14 Prior Rental
Vehicle was registered by a rental agency. Watch out – these cars can take some
abuse.

         11.15 Prior Taxi
Vehicle has been registered as a taxi or "for hire" vehicle. Watch out – these cars can
take some abuse.

         11.16 Salvage
States issue salvage titles when an insurance company takes possession of a vehicle as
a result of a claim. This generally occurs after a vehicle has been declared a total
loss. The title generally has the word SALVAGE printed on it. You will find it nearly
impossible to sell a car with a salvage title. The following eight States also use
Salvage titles to identify stolen vehicles - AZ, IL, MN, NM, OK, OR, GA and FL.

         11.17 TMU
This means true miles unknown. The real mileage on this car is unknown, the
odometer doesn’t work or it’s been replaced.




Copyright 2003 Simon Blake, All Rights Reserved

				
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