Chapter 12 — Quiz: Negotiation
Answer each, then open the <details> block to check yourself and read the explanation. Scoring guide at the end.
Multiple Choice
1. "MSRP" stands for: - A) Maximum Standard Retail Price - B) Manufacturer's Suggested Retail Price - C) Manufacturer's Standard Resale Price - D) Minimum Sale Retail Price
Answer
**B.** Manufacturer's *Suggested* Retail Price — the sticker (Monroney label). The key word is *suggested:* it is not the dealer's cost and not a fixed price.2. Holdback is best described as: - A) Money the dealer holds back from the salesperson's commission - B) A deposit the customer holds until delivery - C) ~2–3% of MSRP built into invoice that the manufacturer pays back to the dealer later - D) The amount a lender holds in reserve on a loan
Answer
**C.** Holdback (commonly ~2–3% of MSRP) is built into the invoice and returned to the dealer later by the manufacturer to help carry inventory. It means a car sold "at invoice" still quietly returns the holdback to the store. (Don't confuse it with dealer *reserve* on financing — that's Ch 22.)3. A manufacturer rebate (customer cash) is: - A) The dealer's money, part of front-end gross - B) The customer's money, funded by the manufacturer - C) A fee added at signing - D) The same thing as holdback
Answer
**B.** A rebate is the *manufacturer's* money intended for the *customer.* It comes off the price/deal and does **not** reduce the dealer's gross (the manufacturer reimburses the dealer). Pocketing it is theft from the buyer.4. The single move that makes the four-square manipulative is: - A) Using paper instead of a screen - B) Separating the four numbers so they can be played against each other (especially hiding margin inside the monthly payment) - C) Showing the customer the trade value - D) Writing the price in pen
Answer
**B.** The abuse is separating the boxes so a high price, a low trade, and a stretched term can all hide inside a monthly payment. The *structure* (four real moving parts) is fine; the manipulation is hiding the numbers from each other.5. In the canonical Okafor deal, the true front-end gross comes out to about: - A) $1,700 - B) $1,500 - C) $200 - D) $3,000
Answer
**C.** Gross in the car ($43,500 − ~$41,800 = $1,700) minus the over-allowance on the trade ($18,000 allowance − $16,500 ACV = $1,500) = **$200** true front-end gross (a mini), plus the ~$900 holdback the store keeps regardless.6. The Okafors' trade equity is: - A) $1,500 - B) $3,000 - C) $16,500 - D) $18,000
Answer
**B.** Equity = allowance − payoff = $18,000 − $15,000 = **$3,000** positive. (Don't confuse with the over-allowance, which is allowance − ACV = $1,500.)7. The most honest reason to say "let me take this to my manager" is that: - A) It's a good way to stall and wear the customer down - B) You genuinely don't set the final number; the desk controls cost, rebates, and structure - C) Customers expect the theater - D) It lets you get a coffee
Answer
**B.** The desk (Big Mike) really does control structure and authority. The honest version tells the customer the trip is real and that you'll bring back a real number — not a runaround.8. An honest salesperson fills the monthly payment box: - A) First, to commit the customer early - B) Last, as the output of an honestly negotiated price, trade, and term - C) Never — payment is irrelevant - D) Only after stretching the term to make it fit
Answer
**B.** Price first, payment last. Payment is the result of honest inputs, not a lever to disguise a high price or a long term.9. "I need to think about it" most often means: - A) A firm, final no - B) The customer is lying about everything - C) Either a genuine need to reflect or a polite cover for one unspoken concern - D) The price is too low
Answer
**C.** Sometimes literally true, often a wrapper around one unvoiced concern. The skill is gently surfacing which it is — without pressure. Deep work on this is Ch 13 (the Hendersons).10. The chapter argues that one-price and traditional-negotiation stores: - A) Can never both be ethical - B) Can both be ethical and profitable — the salesperson, not the model, determines fair treatment - C) Are identical in practice - D) Always favor the dealer
Answer
**B.** The model isn't what determines fairness; behavior is. The transparency the one-price model is known for can be brought *into* a traditional negotiation.11. Compared with Carmen, Rick's grind on a single comparable deal typically produces: - A) Less front-end gross but more referrals - B) More front-end gross on that deal, but lower volume, weaker back-end, worse CSI, and near-zero referrals - C) Identical results - D) More of everything
Answer
**B.** Rick wins the one number he obsesses over (front-end gross on that deal) and loses on volume, back-end, CSI, and referrals — so Carmen out-earns him over the month and the career.12. A be-back is: - A) A customer who returns a defective car - B) A customer who left without buying and comes back - C) A second salesperson backing you up - D) A returned deposit
Answer
**B.** A customer who walked and returns. Transparent salespeople get more be-backs because the customer left without a bad taste and remembers who treated them straight.True / False (one-line justification)
13. Invoice is exactly the dealer's cost.
Answer
**False.** Invoice is *close* to cost but holdback (built into it) returns to the dealer, and dealer cash can lower real cost below invoice. Invoice ≈ cost, not = cost.14. You must proactively disclose holdback to every customer.
Answer
**False — but you must never lie about it.** You don't have to volunteer it; if asked, you tell the truth. ("There's a small holdback to help us carry inventory; it's not really negotiable on this car, but I won't pretend it doesn't exist.")15. Giving more on a trade with no other change always keeps the deal profitable.
Answer
**False.** Allowance and selling price are the same money. Adding to the trade adds over-allowance, which comes straight out of front-end gross — and can push a thin deal underwater (see the Okafor +$1,500 example → −$1,300 front).16. Presenting a fair price that still profits the store is dishonest.
Answer
**False.** The ethics line is "don't lie, don't hide, don't manipulate," not "charge the lowest possible price." A business is allowed to make money (Ch 1, Ch 5).17. Chasing every customer to a money-losing number is good salesmanship.
Answer
**False.** Letting a customer walk when the only deal loses money (with no offsetting reason) isn't failure; *chasing* a money-losing deal is. An honest walk-away plants a be-back.18. Leading with monthly payment is the most transparent way to negotiate.
Answer
**False.** It's the grinder's favorite move precisely because a payment can hide a high price, a low trade, and a long term all at once. Honest order is price first, payment last.Short Answer
19. Explain, in two or three sentences, why "the customer is not the enemy — the gap is."
Answer
A car deal isn't a fight you win against the customer; it's two people trying to find the overlap between what the customer can pay and what the store needs to make. The real obstacle is the *gap* between those two, and both people are on the same side of trying to close it. The grinder wastes energy fighting the customer; the pro spends it closing the gap.20. A customer demands $1,500 more on their trade. Give the honest response that neither lies ("I can't") nor caves silently.
Answer
Something like: "I can move on your trade — but understand the trade and the price are the same money. If I give you more on one, it has to come from the other or from somewhere else in the deal. Let me show you exactly what I *can* do." Then show the connection (over-allowance comes out of gross). You've told the truth and kept the deal in honest territory.21. Name the three things an honest salesperson does when a customer makes a counteroffer (§12.9).
Answer
(1) Acknowledge it as reasonable, not as an attack. (2) Respond with the truth about the gap (show why their number doesn't work, don't claim you "can't" if you mean you "shouldn't"). (3) Move in real, explainable increments — not theatrical "let me go fight for you" followed by a token concession.22. Why does the chapter call the grind "the amateur move"?
Answer
Because the grind optimizes a single deal's front-end gross while costing volume, back-end, CSI, and referrals — so over a month and a career it *underperforms* transparency. The best closers barely "close" at all; they help the right person into the right car at a fair number, fast. Grinding feels like strength and performs like weakness.Applied Scenario
23. A customer on a $40,000-MSRP car says: "I'll do exactly invoice, $38,400, that's your cost and you know it — and don't tell me about holdback, I know you've got 3% coming back." Your desk's thinnest approval today is $39,000. Write your honest response (do not lie, do not grind, do not pretend you can't when you mean you shouldn't).
Answer
A strong answer is honest on all fronts and refuses both the lie and the grind. Example: "You clearly know your stuff, so I'll match that with straight talk. You're right that there's a holdback — it's there to help us carry the car on the lot, and honestly it's not money I can hand over and stay in business. Invoice is a genuinely thin, fair number to *ask* for, and I respect it. The honest truth is the best I can get approved today is $39,000 — that's real, it's a strong deal, and I'm not going to insult you by claiming I can't go lower because of 'cost.' I *could* lose money to win the sale; I just can't do that and be here to take care of you next time. Can we make $39,000 work?" — Note: admits holdback, refuses to claim a false floor, names a real number, leaves it collaborative.24. You present a fair first pencil on the Okafor SUV ($43,500, $18,000 trade). Adaeze says, "We need to think about it." Write what you say next, and identify what you're trying to accomplish.
Answer
Goal: respect the request, apply *zero* pressure, and gently find out whether it's a genuine pause or a cover for one unspoken concern. Example: "Absolutely — this is a big decision, you should be sure. Can I ask one thing so I don't leave anything unanswered: is it the *vehicle,* the *numbers,* or something I haven't explained well? If there's one thing nagging at you, I'd rather solve it now than have you wondering on the drive home." If genuine, believe them and move to follow-up; if a concern surfaces, you've crossed into objection handling (Ch 13).Scoring Guide
- 22–24 correct (≈90%+): Excellent — you've got the numbers literacy and the ethics spine. Proceed to Ch 13.
- 17–21 (≈70–89%): Solid. Re-skim §12.2 (the four numbers) and §12.7 (the Okafor math) for any you missed.
- Below 17 (<70%): Re-read §12.1 (the threshold), §12.2, §12.4, and §12.7 before moving on — these are the load-bearing sections, and the deal math reappears all through Part IV.
70%+ = ready to proceed to Chapter 13 — Objection Handling.