I hope you don’t mean you just pay whatever they put on the sticker?!
-FrL-
In the past, if I thought the dealer was being “unfair” (whatever that means), I would walk out and go elsewhere. Recently I’ve had my office manager go out and deal for a car, then I give her a % of the savings.
Sometimes you can get a bit off, one thing a lady friend of mine told me and I didn’t know but it works EVERYTIME, in EVERY STORE, I tried. If you noticed a button is missing or cracked on a sweater or a spot, you go up to the sales person and says “I like this sweater but I noticed the button’s cracked, can you give me a discount.”
Since she told me everytime I tried this it’s worked. It even worked for me at Bloomindales. I got 10% off for mishapen button on a cashmere sweater.
when I bought my last Honda… I told the guy. There are two honda dealerships in this city. I can get the same car from either of them. I am not going to haggle, but who ever comes in with the lowest price gets the sale.
the first guy came back with a price of $15450 (CDN, 1995)
the second guy came back with a orice of $15400…
I phoned the first guy and told him his price was $50 higher, so, sorry.
he responded by taking another $300 off… I told hime that I promised first price only to both dealers
He actually got mad at me and said I wasn;t being fair…
Too bad… even though it cost me $250, i gave the deal to the second guy. Why.? becaue that dealership respected my original statement, and ethically I owed it to them to take the deal as offered.
Regards
FML
What do you mean by saying the second dealer respected your original statement? It looks to me as though he charged you at least $200 more than he could have.
The two dealers played chicken, and the first one lost.
-FrL-
I agree. The Dealer B didn’t necessarily respect FML’s terms any more than Dealer A did. He set up a deal whereby one dealer would automatically “win” and be presumed to “accord [so to speak] his offer the respect it deserved”. If only respect were that easy. If Dealer A was willing to go down $300, then why was Dealer B’s offer $250 more? Respect? I doubt it.
In fact, given that the bids were that close, I actually suspect that the dealers may have colluded. As the only two dealers in town, it’s likely that they know each other well, and often collaborate on everything from parts to model availability (Hey Jim, do you have red Humonga with the sports package on your lot? I have a hot prospect on the hook) Such arrangements would save them both a lot of time and hassle, and would allow each to better satisfy their customers, which is as important as outright cash when running a business.
If one sales manager called the other one and they colluded on the price, they’d both win (on average). Let’s say that Dealer A’s initla offer was $20K. Each might have been willing to go down to, say $19K, negotiating with a particularly tough customer, but they could agree that neither would offer FML less than $19.5K This “punishes” FML for trying to “strongarm” or "put one over on them "(which is in line with the reaction many dealers would have – it’s an interesting social culture). If FML’s deal turned out to be just an opening gambit in a negotiation, then (oddly) they would respect that more and would punish him less, by giving him the car for less (but still more than they might otherwise have)
I won’t try and convince you of the attitude most dealers have towards people who try to cut their margins by (e.g.) coming in with printouts of dealers invoices and terms of dealers incentives – the publishers of the Edmunds Blue Book (one of the two pre-eminent guides to new and used car prices, and therefore fairly impartial) sent a reporter undercover at some car dealerships to see how the industry worked. Read what he said. My personal information is that he was, if anything, soft-pedaling it (he bluntly concedes that he felt mixed loyalties as he wrote his report).
For the sake of others who might consider such a plan, I offer the following observation: from a games theory perspective, FML actually reduced his bargaining leverage! We know that as a cold hard fact, because he got a lower offer on the spot (and Dealer B would likely have had an even lower counteroffer of his own), but from a games theory perspective, ordinary buyers have third fourth and fifth options --options that both dealers fear more than just losing a sale to the guy across town: he might decide to buy a non-Honda; he might go online; he might hold off and buy next year; he might buy a used car; any number of things might happen that would cost the two dealers (viewed collectively (*) that nice fat new-car commission, but almost nothing could happen that would be likely to make them more profit. But FML gave those potent options away! He committed to make a purchase, price unseen. It’s hard to see how a “guaranteed sale” (for one dealer) isn’t a better prospect for the dealers than a “potential sale if the price is right”
(*) It is proper to consider the two dealers collectively because Dealers A and B must exist in rough equilibrium for both to remain in business: B can’t always lose sales to A, or he’d go broke, so they must offer terms that give each roughly similar chances of losing any individual sale to the other.
Is my collusion scenario implausible? Consider the psychology of FML’s decision. He knows he could have gotten a better deal, by saying yes to the counteroffer. He could probably have gotten a still better deal by saying “if I let you make a counteroffer, I have to give the other guy a chance to make one too” – but FML didn’t, and he is happy, because he got to play the game your way. (or thinks he did) Similarly, a dealer --or a haggling vendor in a marketplace-- may be willing to forego some potential profit to try to increase their sense of satisfaction, their feeling of control, or just have a shot at finagling more profits through their professional sales skills (e.g. upselling) in a conventional negotiation
Why wouldn’t they collaborate? Especially if they get a few offers like this a year and agree to alternate initial low bids. It would not only be more profitable (if they trust each other), but it would be kind of fun to see how things go. Either way, FML walked in as a guaranteed sale (unless he turned out to be a lame looky-lou) when he could have been only a potential sale that they’d have had to work for.
Put another way: if you and a friend go into a bar, and a girl says she’ll sleep with one of you, you might agree to a coin flip, and consider yourself lucky (all risks of disease aside) that you got the “sure thing” offer. The “loser” doesn’t really lose anything, because they can work on the next girl, as they would have anyway.
But I think what you’re missing is the American valuation of time over price. He may have not gotten the best possible price…but he got the merchandise he wanted at the time he wanted it without wasting valuable time. In a wealthy society like the United States (and, to me, many others) time is far more valuable than price.
The last few times I purchased cars I did it these ways:
First: Kia Sportage (I was desperate). Ordered Consumer Reports fact sheet including their suggested pay-price. Called all local Kia dealers and told them they had until COB to get me a price. Low one won.
Second: Jeep Wrangler. Used Congressional Federal Credit Unions ‘Finder’ service. Told them exactly what I wanted and they bought it for me at fleet price.
Third: Pontiac Minivan. Toured a few lots over lunch break. Pointed at one and said ‘I’ll take that one. But you have to take my beat up Ford Explorer in trade and the payment must be no more than X over Y months. Here’s my card. Call me if you can make it work.’ They called at 4:30 or so that day.
Convenience is paramount, not price. I’ve always felt haggling as a recreational sport is for people who aren’t busy. And, honestly, if I spent 10 minutes trying to get $2 off some item I’d probably regret it. My time, to me, is worth far more than that. Money I’ll earn every day. Time I’ll never get back.
OK, this is not a personal attack, but rather a comment on your actions in this story.
That was just stupid. You said:
Then:
That was “coming in with the lowest price”.
Sorry, but whatever principle you think you were upholding was as pointless (and costly) as it gets.
I offered that to a classmate when we were in Greece but he didn’t see why I was getting ulcers over his paying first price… “I have the money!” Well, yes, so you can give 1/3 of what she’s asked to her and another 1/3 to me, eh, being a 50% cut on what I’m saving you and since I don’t have anywhere near as much money as you do and I just bought a better piece than yours (mine doesn’t have rips, yours has several) for 1/3 the price you paid. AAAAARGHHHH!!! You don’t pay full price from street vendors in Greece!
I’m not used to haggling, but that trip showed me that my foreparents’ horse-market genes are alive and well.
Many now now modern cities are fairly recent, and the huge chain stores haven’t knocked the haggle out of the people yet. The people are used to dealing with persons that can make a decission on the price of goods. Once the ability to cut a deal becomes wide spread, most people catch on that they’re wasting everybody’s time.
If you’ve got the money, sure, pay for the convenience. I can understand that. In fact, I identify with it: There are four ATM machines outside my place of work. Anyone could use any machine with any card. But most people insist on waiting in their own bank’s machine’s line, to avoid the “convenience fee.” Myself, I just go to whichever one’s not being used at the time, avoiding the ten minute wait.
Of course, that’s a buck fifty or so. When it comes to cars, we are talking several hundred or even a few thousand dollars. But if you find that to be worth foregoing a day’s research and work, then go for it.
-FrL-
Almost forgot. Much of Brazil (outside the big 5 cities) is set up with huge open air markets. They’ve become used to popping down there and bargaining.
My wife, oh my wife, she actually will try to haggle on just about EVERYTHING. Shoes in the mall? Haggle. Dress on 75% clearance already? Haggle. Restaurants and grocery stores? Not so much. Strange.
My MIL, though, will figure out a way to pull off a deal like noone else. I have a complete terra cotta bake set that we got for… $8! The original price on just one piece was $20. She is the master, and I have to stand around the corner to prevent the Gringo Discount.