Thanks for the reviews, folks. They line up with about what I expected. Costco makes it easier to not get a bad price, but doesn’t mean I’d get a cost that is “OMG” better than I can get on my own, with a bit of research and work.
Perhaps. However, I think you need to appreciate that after saying the “games and crapola” no longer exist, you went on with 4 paragraphs of advice, including:
things to never do
how to use your ‘ace in the hole’
how to strategically make the sales manager willing to slash prices,
a reminder to do your homework
the parasitic relationship between seller and lenders
noting that you can’t buy below an amount that is kept scrupulously secret from you
when to buy to get a great deal if you’re willing to be colorblind
It’s an awful lot of work and an awful lot to keep track of, particularly when you are negotiating with someone who negotiates car prices every single day.
I’ve only bought a house in a market where prices were high and climbing. And “negotiating” basically consisted of throwing more money at the current owner before the other bidders could. I’ve never needed to negotiate the price of a house to lower than the asking price (someone, in fact, usually several someones, were willing to pay more.)
So - not the same thing at all as car buying.
My CU apparently uses TrueCar as their provider. So FWIW next time (which may or may not be soon) I may just use that or Costco as tools to make sure my homework is coming close to the right answer when looking outside the partnered dealers.
None of my suggestions are in any way related to “games”. I say “be realistic” (meaning your offer cannot be some stupidly huge discount that you know damn well the dealer will never accept) and “the best deal you’ll get is when you make it clear that you’re ready to buy TODAY” is your ace ini the hole. That’s true.
It’s also true that dealers are more motivated to sell units at the end of the month, so you’ll get a better deal. That’s not a game either.
I explain that due to the nature of the relationship between lenders and dealers, having a wad of cash no longer trumps financing or motivates the dealer to give you a big discount, also not a game.
Most reputable dealers will NOT hide invoice pricing from a customer. I just showed someone a deal today that was $1200 below invoice (meaning the dealer would make $170 selling them the vehicle at that price…and I would make $150…)on my very last 2018 Forester Touring model and they wouldn’t take it, said they had to think about it. It’ll probably be sold to someone else tomorrow, as I made clear to them. They replied “Well, if we decide we want it and it’s gone, I guess it wasn’t our destiny to buy that car”. WTF? What on Earth does “destiny” have to do with anything? You either decide to buy it or you don’t!
Nothing I said or recommended alluded to playing games. I meant it as a means of getting a great deal…and a better one than the Costco discount would get you. The Costco discounted price is non-negotiable, by the way.
It’s very similar when you’re talking about a highly desirable high end car that has a production run of only 250 cars for the planet in a given year. Heck, like Ferrari, they won’t LET you buy one of their hypercars unless you’re part of the “Ferrari family” and have owned a lower end, more widely available model…that’s still $250,000.
Wherever I’ve worked, there’s no lack of transparency in pricing. The MSRP is not a fictitious number. “Manufacturer’s Suggested Retail Price”.
It’s really more like a baseline, a starting point for price negotiation. What you don’t know is how much that car is marked up (MSRP versus what the dealer paid for the car). And frankly, that’s not really anyone’s business. You don’t know how much gross profit Apple makes when they sell you a Mac Pro, whether it’s “on sale” or not. That figure is not advertised nor disclosed.
It seems only in the car business is profit a dirty word. Sure, car dealers have built a sleazy reputation for themselves based on the way business used to be done. I am sure there are still dealers out there that try any number of tricks, but they are dwindling and I have never worked at one (I’ve worked at five dealerships).
But car dealerships are in fact businesses just like any other, and they exist to make profit. Otherwise they close. Salespeople are just like you and I, and they need to make a living too.
If every customer ground me down to nothing on my ten car sales in a month, and I only made $150 a car, I cannot live off that. And I worked 55 hours a week for that $1500!
Well, …
I purchased two new vehicles in the past two years. Same make and model, both from the same dealer. I had my Costco pricing certificate. I also knew exactly what accessories I wanted for each. I scoured the web for weeks. Compared “true prices” via discounts with TrueCar, my insurance company, American Express. When I walked into the dealer each time I had the MSRP, dealer price, dealer incentives, dealer invoice, factory holdback, destination charges, ad budget, not just for each vehicle but each accessory.
My dealer couldn’t believe it. He told me that number and that number were proprietary information. I told him I found it on the web. With my Costco certificate he was obligated to show me his internal pricing list. I was spot on. Yeah, we “negotiated” a bit. We each got a fair price and the dealer a got a fair profit, considering they had no real work to do.
Do your homework, even with Costco, or TrueCar, or whatever, and you can get a really good deal.
This is all I’ve really been saying all along. Sometimes the dealer will get you a better deal than what Costco will get you. Seriously, you’re not supposed to negotiate the Costco price on the car. It’s against “the rules”.
Can we just call it “crapola” then? Buying a car is a pain in the ass. I need to develop a long term strategy for gathering intel and managing the negotiation process or I’m going to get jacked for thousands of dollars.
I don’t know how much profit Apple gets on a Mac Pro, but do know that they are going to give me exactly one price for it. It’s either a price I’m willing to pay or it isn’t, if they haven’t chosen a price I’m willing to pay, they don’t get the sale. The next guy isn’t going to be more clever about negotiating and get a lower price than I was.
I see the car sales industry as in the midst of a transition from a model where customers had little information to where they have an abundance. The end game will be more of a ‘real’ MSRP, one everyone is expected to pay and less negotiation on price.
It may seem from the inside like normal business to you, but to those of us on the outside what you describe seems like games to us. I can’t think of any other purchase that works like this, from buying a bar of soap to buying a house.
But that is a game! You (or someone like you) leads the buyer to think that the dealer is paying invoice price for the car, and that is not the case. In your own example you are still making a profit on a car that is being sold substantially below invoice. That means the invoice price is meaningless. How is that not a game? That is akin to the department stores that get in brand new merchandise tagged at an artificially high price then they immediately mark it down to the real market price to make you think you’re getting a great deal. Game. Works every time, too.
“You have to buy it today or it will be gone!” That’s a game. You might even believe it’s true but why should they believe you? You are trying to do what’s best for you, not what’s best for them. Pretending to act in your buyer’s best interest is a game.
My offer can be whatever I want it to be. You thinking you get to set the rules for my offer is where you are playing games and where I stop playing. In truth, I expect the car dealer to make the first offer. I will not waste time with a dealer that isn’t in the business of offering to sell cars. If the first offer is MSRP or higher, I simply walk out the door. Make a good first impression; it might be your last.
Here is what would make me happy with a car dealer. If I ask the price, tell me what it is. I don’t expect your first offer to be your last but it should be reasonable. If I am interested in buying it, let me test drive it. I’ll show you my driver’s license.
Don’t ask me how I plan to finance it. If your offer depends on how I finance it, you can tell me how much more it will cost if I don’t finance it. I don’t care if you worry about looky-loos wasting your time. Don’t make your problems with shitty customers into my problems. Don’t treat me like I’m wasting your time. If you do so, I promise I will stop wasting your time immediately and I will never waste it again. My grudges last longer than most new car dealerships and I say this knowing that car dealerships are generally in business for decades.
Don’t ask me what I want my monthly payment to be. Don’t ask to run a credit check on me. There is nothing you sell I can’t pay cash for, so if I want to buy it, I will. If you expect an answer to what I want my monthly payment to be, I can expect answers to every question I ask about the dealer’s sales, finances and profits; monthly and annual incentives; holdbacks; progress on sales targets; customer traffic; the salesperson’s commissions; the F&I guy’s incentives; and the gross margin on everything you are pushing on me.
Don’t ask for my phone number or email. I found you the first time and if I want to speak with you again, I know where to find you. If you don’t give me enough reason to come back or call back, I don’t need to hear from you again.
If it’s my first day shopping for a car and you ask me what it would take to get me to buy a car that day, you are likely to get an unacceptable offer. Too bad. You asked and I answered. That’s not my final offer but I won’t be pressured into a deal that I have any chance of regretting. The only deal I am certain that I won’t regret is one that would be ridiculous for you to take.
I would love it if every dealer of every car manufacturer just colluded on pricing and set prices that were non-negotiable. Go back to the Saturn model. Fair pricing, no negotiation. You try to negotiate, you get asked to leave and go buy a motorcycle
Buying a house can be this way, at least to a degree, if a buyer is offering the seller less than the asking price and there’s realtors involved. Buying soap, like getting a gallon of milk, isn’t thousands and thousands of dollars so therefore not even worth negotiating.
In my example, the dealer makes $170. Whoo hooo! On a $34,000 car! Yay! I make $150…maybe I’ll be able to pay my rent this month! The point I made to those customers about here today, gone tomorrow, was NOT a pressure tactic…it’s the END OF THE MONTH AT THE END OF A MODEL YEAR AND IT’S THE LAST TOURING FORESTER IN THE 2018 MODEL YEAR THAT I HAVE AND I AM PRACTICALLY GIVING IT AWAY.
That was my point. And yes, I sold that very same car today, just a couple hours ago. I can’t wait for those other people to call me tomorrow telling me they decided they wanted it because it also carried 0% financing for 48 months. I just saved them a shit ton of money! 0% of $0 at 48 months is…ZERO! They’ll be thrilled that their destiny was fulfilled!
Your offer can be whatever you want it to be. I’ll shake your hand, smile and say “Have a nice day, sir.”
Look guys, I have to ask for the sale. If I don’t I am not doing my job. I guess I just don’t get it. If you find a good car that you’ve researched, you really like it after driving it, you like your salesperson, you can afford it, you’re looking for a new car, you’re offered a fair price…why not just buy it? Why prolong the agony?
Do you think I like the negotiation part of all this? No! I want to go back to being your friend and talking about the car!
Like I said, you may be 100% correct but why should they believe you? What they will believe is that you will say anything you have to to sell that car. I would be thinking, “If it’s such an amazing deal that there is a line around the block for people to buy this car, why he is trying so hard to sell it to me?”
You seem to think that this is some kind of “gotcha”. In fact, all you’re saying is that salesmen add value for the dealership only when they can gouge some ignorant buyers for an extra few thousand profit on a sale somehow. And salesmen add no value for the vast majority of buyers - on the contrary, they are a painful hurdle to overcome in the buying process, since it’s so difficult to cut through their bullshit to figure out the fair price for a car.
How about a system where salesmen don’t exist, the dealership lowers overhead because it doesn’t have to pay them, they are replaced with a few clerks to take orders, and pricing is simple and transparent? You check a dealer’s pricing online or in the showroom from a catalog that allows you to compare pricing and financing across dealers. Price competition among dealers - price competition always works better when pricing is transparent. But no bullshit to deal with. When you’ve looked around for the best price, you order what you want from the catalog at the dealer’s stated price, then go and pick up your car when it’s ready.
Because it’s the end of the month and I’m trying to sell as many cars as I can. There’s no line around the block because there’s too many skeptics. There’s no line around the block because not everyone wants a Subaru. Or because not everyone can afford a new car, or for any number of reasons. Or because we’re only offering this amazing deal to you right now because you’re here right now ready to buy a car?
People have been so traumatized by dealers in the past that they seem to perceive good information as a lie. Like when my pricing beats their TruCar discount, or even when I show them our invoice and give them a price over a thousand dollars below that price, they still won’t pull the trigger because they think something shady is going on.
I hear what you’re saying, I really do. But I still need to make a living too.
I think salesmen do add value for the vast majority of customers. The internet cannot replace certain things.
And dealers paying salespeople? It is to laugh. They don’t actually pay us. We get paid a “draw”, a certain amount of money each week that we have to pay back in it’s entirety at the end of each month when we settle up our commission pay sheets.
Like what? Care to put up a poll?
Oh come on, obviously the term “pay” encompasses commission-based pay.
Sort of brings us full circle. If that’s what you want, buy through Costco. That’s basically the model you are describing. But if everybody wanted that, everybody would do it. They don’t.
I don’t think that follows. You’d have to assume that Costco themselves have figured out how to negotiate the minefield of dealer bullshit and lack of transparency effectively; and why would introducing another middleman be efficient for the consumer?