I am looking at cars tomorrow - 2012 Honda Civics. I can’t negotiate my way out of a paper bag and my husband can’t either. The dealer has one that we want; it’s the right model and right color. We have a 12 year old car with >115,000 miles on it as a trade. How much, if any, under the list price would seem like a fair price? We will not need financing. I hate buying cars.
List price for a vehicle can be found on numerous websites such as Autobytel.com. You can figure the dealer’s markup to be roughly 15-20 % of the base MSRP (forget about invoice, as no dealer actually pays the full invoice amount) with a higher markup for option packages (depends on the manufacturer). Depending on the dealer, they’re going to want to carry at least a 10% profit, though if you catch them at the end of a reporting quarter they may be willing to go with less in order to get inventory off the books, as they are incentivized to move inventory i.e. they receive special selections and better bulk-rate discounts for greater volume of sales. So, say for a 2012 Honda Civic, starting at $15605 with a $750 destination charge and $2000 option package for a total list cost of $18355, you should be looking at a negotiating position of about $15800 and go no higher than $16600, not including state and local taxes. You may be able to start lower, but I wouldn’t expect to get a positive response below the $15800 figure.
As for negotiation, if you already know what you want, walk into the dealer with a figure in hand written on the back of a business card, find the youngest/most inexperienced salesperson you can find, and tell him exactly what you want and what you care to pay for it (after the mandatory test drive, of course). He’ll scurry off to his manager, and either come back with a “yes” (probably, if the manager wants to give the kid a sale) or a counteroffer. Smile and stand firm on your number (or edge up to the appropriate range if you’ve lowballed), and if you can’t come to a resolution, tell the salesperson that you’d love to buy the car but only at the price you’ve specified, and that if he can make the numbers work to give you a call. Then walk out. The trick of successful negotation, of course, is never to have so much invested that you can’t walk away, which is exactly what you should be prepared to do, without regret. If your price was really in a reasonable range such that it give the dealer a ~10% profit, they’ll call.
The real trick is not to get screwed after the agreement. You don’t need the coded security etching on the window, the extended warranty plan, the special undercoat protection, or any of the other bag of tricks that dealers throw in to nick a few more pennies from your wallet. Nor should you be paying anything extra for things that were already in the car when you test drove it, such as floor mats, cargo nets, et cetera; these are assumed to be part of the deal if they were in the car as presented, and if the dealer tries to charge extra, be prepared to pick up your checkbook and walk away. You shouldn’t be paying for any special detailing or handling beyond what is on the invoice.
This all applies to Japanese, Korean, and American low to mid-range cars (in the $50k and under range). I understand some German autodealers feel that their prices are above negotiation. These are the same cars that end up costing two or three times the amount in parts and labor to repair compared to similar cars from Asia and the United States, and so I suppose, in a sense, you get what you pay for, though perhaps, not in terms of transporation value.
If you really wish to avoid the agony of negotiation, there are a number of reputable services that can be dealt with on-line which will take your desired model and features and provide non-negotiable quotes. The cost for these services are relatively inexpensive–2-3% of the total purchase cost of the vehicle–and they will allow you to find the exact specifications that you want without having to confer with or travel to different dealers; often, they can have the vehicle you desire transferred to a dealer local to you, and thus, saves you the equivalent in time and fuel. In fact, if you aren’t trying to save every last dime in the process they can actually be the smart way to go.
Good luck to you however you go.
Stranger
Oh, and your 12 year old 115k trade-in is worth dick to the dealer. He may offer you a token value–say, $800–for the car, and then up the price of the car you are purchasing by the same amount. He’ll sell it at auction or scrap for some small price, as it is of no value on his lot. If you have any use for it as a second car then you are better off keeping it, selling it privately, or donating it to a charity and take the tax break. If you are like me, and just don’t have room for or need for a second car, trading in can be an easy way to get rid of the car, but you aren’t going to make anything from it.
Stranger
First thing, you can’t go wrong with a Civic. Well worth what I paid for mine circa 2002 (traded down to a Fit last year. I have no friends so no longer require the 4 doors, LOL!)
That having been said #1: test things. Last year I went looking to buy an Insight. (“ECO” and all that), but it turned out to be…creepy…but also I test drove the current season’s Mustang. Fantastic car…WAY MORE car than I’d ever need. It literally scared me.
#2. Whenever you see anyone driving something you’re considering buying ask how they like it. Also, sink a whole $10 in the annual Consumer Reports car guide. When I was shopping for my Fit there was online a few years of experience to glean from, but if you’ll see the civic is a a no-brainer.
#3 Relent when there is no wiggle room. I knew from research that the Fit was priced barely over profit for Honda. I didn’t begrudge them that. What I did take task with was their attempt to offer me $ $1000 trade in on a car with a KBB swag!) value of $5,500. (Luckily I ended up selling it to my husband’s nephew for $3,850
Regarding the Civic. Try my approach. I told them: “I have this much to spend on a car: ‘x’ and that’s what I’m what I’m willing to cut a check for today.” Depending on how desperate the seller is to make his quotas (and as someone who has done this crap, I feel for ya man.) When I bought my Civic I did this. He said something like “Do you you know how much I will lose by agreeing to this?” I replied “Do you you realize what you will LOSE by my not buying this car?” My husband actually jumped up and ran out of the room to throw up.
I know buying used cars isn’t like buying new cars, but we walked in with cash and saw prices suddenly plummet by 40%. Seriously. Salesman told us outright: “Take $5000 off any price you see.”
(Which, the more I think of it, the more it makes me mad. So you’ll sell me this car for $8000 and make a profit, but if I needed to finance, you’d charge me $13000 PLUS financing fees and interest? Man, it’s expensive being poor!)
But the point is, dealers like cash. Leverage that during your negotiations.
Do you belong to AAA or a credit union that offers pre-negotiated deals? Or have you looked at truecar dot com? If I understand correctly, you can print out a bottom-line price that certain dealers will accept. My daughter got her new car using a credit union deal, and it did save her some cash, plus there were no negotiation games. We plan to get a new car in the next few months and that’s the route we’re going. Anyway, it can’t hurt to have a look at such sites.
The last couple of cars I bought, I used www.edmonds.com. I found the car I wanted then clicked a box that let dealers contact me via email with their offers. Since they know that other dealers are also sending you their bids, you get competitive prices. When I found the car I wanted at the price I liked, I wrote the guy and said we’ll pick it up tomorrow. There was no BS and not games. I’ve taken longer to buy a pair of shoes.
I’m confused. The last time I looked, the Honda Fit had four doors.
Using a car buying service like the one at Edmunds.com is a good idea, and there are similar car buying services at other websites, like Consumer Reports, Cars.com, etc. as well as through AAA and Costco. In my experience a particular dealer may be associated with one car buying service but not another one. The only requirement is that you need to be fairly certain of the model and trim level you wish to purchase.
Japanese cars are fetching a premium at the moment, and most dealers won’t negotiate on the price. They’re milking the tsunami for all it’s worth. If the dealer won’t negotiate with you, just walk away and go back next year. If you’re determined to buy this year, use the suggested websites, print out the information, and bring it with you in a folder when you go to the dealer. That way, you can say: this car should be selling for this much, and that’s what I’m willing to pay. Your trade-in isn’t even worth entering into the discussion, since the dealer will have to wholesale it, probably to a junk dealer.
Thanks! My husband will be driving it and he has narrowed it down to a Civiv and a Ford Fusion. The Honda salesman was nice, and the price quoted is pretty much the MSRP. We will see what the Ford dealer says.
Go to edmunds.com
Find out what people have been paying for what you want (you need to be specific though)
Use that as your goal. Don’t expect to get lower than that but try. If you can get that or relatively near it, then don’t sweat it…you did fine.
As for your used car, there are many pricers out there for it…so just look them up.
Car negotiating really isn’t that hard anymore because you have hard facts that are easily looked up.
Just be firm…say what you expect to pay (maybe a little bit lower but not that much). When the salesperson says that is unreasonable, tell him that is what your research says is reasonable.
He will then ask you about your research…do not tell him. The reason is that he will then attack the integretity of your research and he will be full of shit. You are doing both of you a favor just not telling him.
If he insists that your price is unreasonable and will not meet you near it, well…maybe he is right. Just tell him you will check out a few more dealers to find out.
He will then most likely cave…or he will ask you to come back one last time after you decide on a dealer in order to give him one more chance to beat you. This is where you look at him in frustration and say…you mean the last price you quoted me isn’t your best price? What is your best price? If he won’t say, then do not agree to come back to him…basically asking him for his best offer now.
I have bought 5 cars using this method and I have gotten around the edmunds price every time. Quick, easy and it works. The downside is you need to know exactly what you want…so get that out of the way first.
If you have multiple dealerships from the same company in the area don’t be afraid to pit them against each other. I did that when I got my current car and ended up getting a great deal, in part because I told them that if they lying about the quoted price, I’d get a Toyota (I was buying a Ford).
We do a bit of a 1-2 punch when we buy cars for our business, but both my dad and I are pretty strong negotiators.
First, I go in. I’m 25, kind of a stereotypical looking prissy girl-- teased hair, makeup, big hoop earrings, high heels. I tell them we have top tier credit and are willing to put whatever is necessary down. I suppose what I’m trying to say is that I’m an easy looking mark for a sales guy. So, when I get there, I let them assume I’m stupid, do their little sales schpeel (quoting me some astronomical price with terrible terms).
Then out of my designer purse I pull a file with various papers— this last time, I had a good time printing things off of TrueCar.com. True car gives you the invoice, the average sales price, the MSRP, and let’s you know what’s a good deal vs a bad deal. From there on out, every number he quotes me, I just very calmly open the folder, look at what I’ve got in there, and tell him whether or not it’s acceptable to me.
There will come a point where they’ll get tired of it and just flat out ask you what you’re willing to pay. That’s where you quote the lowest price on them thar sheets you’ve got :). Their eyes will probably bug out for a second, they’ll nervously tell you that they just can’t do it- their boss’ll kill 'em, you see. Smile and calmly say, “Well, that’s what I want to pay. If you agree to it, I’ll buy today.” He’ll scuttle off to talk to the sales manager-- who may or may not come and try to tell you that it’s going to kill their bottom line. You can take solace in the fact that you know that you aren’t killing the dealership— car dealerships have quotas they must meet each month in sales. It’s imperative that they meet those numbers or they don’t get their advertising money from the parent company. So, a good number of cars are sold at a loss to the dealership, since it’s made up to them in company incentives (my uncle is the GM of an Acura dealership— has worked at Honda for years as well, so this is the best thing he’s taught me). Whenever a car dealer tells me they are “losing money” on the sale, I just laugh and say, “Well, you don’t have to sell it to me then, do you? And c’mon, we both know that’s not true.” Usually I’ll point over into the sales office, where they often have a poster up with sales goals for the day/week/month.
After I go through this whole song and dance with them and get them to a reasonable price, we have my dad come in. Now the guard is down on the dealer, because they think they have an easy sale. At the last minute, my dad will come in and request they throw in extra stuff or the deal is out— in the case of our last car, we got the $800 Audi care and the $600 “Luxe Care” from Audi free. Not a ton of money, considering the price of the car, but hell- free stuff! On my Toyota Highlander, we got them to add 5000 more miles a year to the lease at zero cost to us (even I’m impressed we pulled that off).
The key thing is information. Do your research. Do you have a smart phone? Take it with you. When I went to Audi this last time, the guy tried to tell me that they had the only Q5 in the entire state of California. As he was giving his speech about how I can’t let this opportunity pass me up, I was quietly Googling on my phone. Then, without saying a word, I handed my iPhone to him— showing about 10 statewide Audi dealers with multiple Q5s for sale. He handed me my phone back and we moved forward without him trying any more silly tactics like that on me.
Part of what helps is that we are sales people ourselves-- we go to the sales conferences that teach you all these dirty tricks. On more than one occasion I’ve said to a car salesman, “Dude, stop. Stop with the sales tricks. I’m in sales too and these are not going to work on me. You’re wasting your time.”
I definitely agree about getting prices on-line. What I did, in addition, was to test drive the car I was interested in at two different dealers (make sure they are owned by different people.) I then could play them off against each other, and got the price down rather significantly. In fact I beat all the on-line prices I found. I hate to negotiate also (I have bought lots of Saturns) and felt like a rat, but it worked.
I don’t know if this would work, and it may be too late, but here is an idea. I used to work for a group which negotiated expensive software licenses. Our policy was that we got a price from the seller before we let any engineers do an evaluation, the reason being is that if the salesmen heard engineers extol the virtue of the software, we’d lose bargaining power. We also kept the engineers away from the salesmen as much as possible. We tried to give the impression that the software was just barely usable. I wonder how it would be to get a price before the test drive. Might work the same way.
Also, be aware of the concept of Anchoring in which hearing a very high or very low number makes you go high or low when setting a price or estimating something. Start off by saying something like “I’d really like to be able to buy a car for $1,00, but know I can’t” or “I remember the first car my parents owned cost only $1,000.” The effect is amazingly powerful - we did an anchoring experiment in the behavioral economics tutorial my daughter and I teach, and got significant results with only 20 people.
Oh, one last thing: depending on your metropolitan area, call dealers in other cities. We’ve bought cars from dealerships 3 hours away because the pricing was better— and they drove it to us at no cost.
Well, sure. They’re always going to quote you MSRP. You need to come up with a price yourself and tell them that you’ll buy for that price.
Then spend a few hours getting them to agree to it. There’s really no way to do this without spending a few hours proving that you’re not going to budge. At the end of it, they’ll either sell it to you at that price, or they’ll let you walk away (which means you went too low, and they actually can’t sell at that price).
Consumer Reports disagrees with you.
I learned a valuable lesson years ago by accident. My husband had gone to a dealer without me and found a car he wanted. I manage our finances, so he couldn’t go beyond that till I got there. When the salesguy figured we were hooked, he suddenly threw out a number that was higher than before. I said “We can’t do that” because we couldn’t - it was out of our budget - and I stood up to leave.
*Allllllllllll *of a sudden, the number came back down where it was supposed to be. Maybe I can’t play the negotiation game, but I know what my limits are and we never needed a car so badly that we had to get it right then and there.
Frankly, I think all the negotiating is so much crap. Just post the price and be done with it. That’s how I got my Scion - easy peasy.
One of the tricks I learned a few years ago is to find a salesperson and then only deal with that salesperson. And spend lots and lots of time with that person. Take the car for a spin. Ask questions. Make your offer. If the offer isn’t quite right, leave and come back in a week.
After 3 or 4 visits, you’re sales rep will have invested so much time into you that he’s financially tied to making that sale – time is money, after all. You should find the rep gets more and more pliable and the negotiations work more and more into your favour.
Once you’ve settled on a price, that’s when to start asking about extras – rust proofing, mud flaps, etc… Not for extra money, mind you – you’ve settled on price – but to lock down the sale. By this time, the salesperson should be so desperate to close the deal that he’ll throw any number of extras in for free.
As noted upthread, it’s a good idea to not become too tied to any one vehicle. Once the salesperson knows you’re in to buy one car only, he’s got you. You need to always be prepared to walk away, knowing that there’s probably 500 more cars available out there that are exactly like that one.
Best of luck! 
Huh, I just read that and was going to mention it. The Civic scores in the low 60s depending on model, whereas the 2012 Hyundai Elantra (there’s a thread around here about it, I think) is at the top of the class with an 80. I’d check it out before making a final decision.