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Last Car Question: The Art of Negotiation(26 posts)

Last Car Question: The Art of NegotiationKristin
Dec 21, 2001 1:14 PM
Okay. I might be able to swing a new car if I handle the negotiations well. I know how to determine an offer price for a used car based on the cars history, private sales, etc... But I'm lost when it comes to new car stickers.

I know how to look up the invoice and the MSRP on KellyBlue book...but in reality, how does one determine the best price to offer? I want to offer a fair price and yet not finance the salesmans next vacation.
re: Last Car Question: The Art of NegotiationTJeanloz
Dec 21, 2001 1:30 PM
Low-ball the offer, and let him take it back to his manager and counter offer. Keep in mind- he deserves to make some money, selling cars is his livelyhood.
Okay...some specific questionsKristin
Dec 21, 2001 1:34 PM
I need a jumping off point.

What is invoice price? Is this actually the price that the dealership paid for the car?

How is MSRP calculated?
Okay...some specific questionsSpinchick
Dec 21, 2001 1:53 PM
Kristin,

There is a good web site that covers some of this info. I think its Edmunds.com.
Okay...some specific questionszzz
Dec 21, 2001 2:05 PM
Invoice is the price the dealer pays. There are other things to consider though in the dealers profit. There are "holdbacks" that the automaker pays the dealers. Most of the time 3 to 5 percent of the invoice price. Edmunds.com lists these by model of car. MSRP is what they think the market will bear. Your ability to deal is in relation to the availability of the model (how desirable it is at the moment and the number of that model out there) and then your will. The cars you've been talking about all should be able to be purchased for very little over invoice 100 to 300 over. You need to be firm and willing to walk away. There are lots of dealers in the Chicago area for the models your looking for. I would actually go to the first dealer knowing I would only buy for 100 over invoice. See how the negotiations go. Remember all the little tricks they play. There should be many. Give yourself 1 to 2 hours to play your first game with them. It is a game to them. You either get the car for what you want to pay or you'll have learned something about how they play their game and are better informed for the next dealer. You'll also learn how far they will come down. Be prepared to spend some time. If your time is more valuable than the 500 to 2000(depending of model) that you'll save just offer the MSRP and you'll get it done fairly quickly. Remember that they will try to add a number of things to what you think is the final negotiated price. Advertisement costs, undercoating, special waxes, extended warranties and all manner of things. Be firm about saying no to all of this. Set yourself a time limit for each dealer and let them know when your 45 minutes from being ready to leave. Make good on leaving. Be in control of how your deal with them. Good Luck.
alsozzz
Dec 21, 2001 2:25 PM
If you finance the car through the dealer be careful about and check all the figures. There are some good rates from auto makers right now. I don't know about Toyota or Honda at the moment. If you have access to a credit union through work or some other way check out their rates.
NegotiationDog
Dec 21, 2001 1:34 PM
Here is what I do, and the first rule of negotiation:

Rule 1: Always be willing to walk away. If you can't, you will not get the best deal.

Rule 2: Be armed with information. Sounds like you are.

Rule 3: which is a combination: Negotiate with several sources; get on the internet and get bids; they will happily give them to you; then, go to a local dealer armed with the bids; say to them, "can you beat this deal?". That makes it pretty simple. Either than will or not. Pick your best deal. If they can't, maybe say something like, "Well, can you throw in the [pick something, like chrome wheels]? There is a lot of markup and flexibility on that stuff. Or, work with them on the financing. Better to go to your credit union or even on line to obtain some financing, first, though, then similarly, pick the best deal.

Rule 4: Never disclose your bottom line.

Rule 5: Play their game, a couple of ways; Say, after you almost have a deal, "I have to discuss it with my [husband, wife, dad, whatever]." Buys you time and doesn't make you the bad guy. Also, say, "would you accept?" rather than "I'll offer." That doesn't lock you in if they respond yes. A legal technicality, but very real. They do it, so can you.

BE WILLING TO WALK AWAY. BE WILLING TO WALK AWAY.

Dog
For a change, I agree with Doug ;-)mickey-mac
Dec 21, 2001 1:41 PM
Not only be willing to walk away, but actually walk out of the dealer's office once or twice during negotiations. Watch the look of panic on the face of the salesperson and/or finance manager as you pull your keys out of your purse, grab your complimentary cup of coffee, and head for the door. Going in armed with all the necessary information is crucial, but it doesn't do you any good if you fall apart like an Okie suitcase when the going gets tough. Good luck.
:-)Dog
Dec 21, 2001 1:48 PM
MSRP is nothting more than what the manufacucture sticks on the label. It's calculation is marketing/bean counter stuff, having nothing to do with the dealer.

Invoice is tricky, too. Technically, it's what the dealer pays for the car. But it does not consider kickbacks, rebates to the dealer, discounts and all that messy stuff.

Cost is tricky, too. Cost could mean what the dealer wrote a check for, but could also mean the total cost in terms of overhead, commissions, all that garbage. Almost worthless.

Ultimately, the only thing that matters is what you are willing to pay, and what others are willing to sell it to you for.

I may have my head up my butt much of the time, but negotiation and car dealers I know. I have represented them.

Dog
Question Dougharper
Dec 23, 2001 7:15 AM
The newest dealer trend tends to be the no hassle sticker price. Thi is where the dealer sticks a price on the window, and advertises how the price is the price, and how shopping at their store is less of a hassle, less stress, etc., b/c you no longer have to worry about negotiation. Saturn is the largest proponent of this, I think.

From what you know, is this just a gimmick? Recently was on a GM lot that operates this way. My suggested price on a Trailblazer was rebutted with "we do not negotiate, the price you see is our price, and it's final." I left b/c I think this is a scam.
go somewhere elseDog
Dec 23, 2001 11:31 AM
Don't think it's a scam. You are perfectly free to see the price, reject it, as you did, and go somewhere else. We don't think it's a scam at the grocery store, so what's different?

I understand this tactic is targeted at women. Marketers determined that women hate to haggle (a marketing expert told me this), generally, and developed this method of marketing to appeal to them. How could you feel taken advantage of if everyone pays the same price? Saturn does well with it. Mercedes is starting to use it, too, but for another reason. Local dealers don't like internet competition, and pressured the head company to institute fixed price marketing. At least, that's what a Mercedes salesman told me.

The dealer fixing a price (where you can go somewhere else for a better deal) seems better to me than the main manufacturer fixing the price. That latter smacks of vertical monopoly and anti-competitive. Levi jeans got tagged for this years ago.

Now, I'd like to drive in to a dealership and do the same thing with my trade-in. That'll be the day.

Dog
What DO YOU KNOW ABOUT CAR BING?D
Dec 26, 2001 10:15 AM
Quite true.look271
Dec 26, 2001 3:11 PM
Walk out. It works. Sends them scrambling. Doesn't hurt to get pissed-off (or at least look that way).
Negotiationkoala
Dec 26, 2001 3:22 PM
I sell Toyotas and if you come into my store on almost any car I will show you the invoice( and Toyota announces all other moneys such as dealer cash and rebates) and if you offer me edmunds guidelines over my actual invoice(the real one) I will sell you a car and make it very easy. You dont need multiple sources. A trade in is subjective, however.
my last three cars long with details.terry brownell
Dec 21, 2001 1:48 PM
The internet has begun to level the playing field a bit. You can get the invoice, make a deal online or do lots of research for use as ammunition.

I've bought three cars since 1999. Each was deal was different but each one worked out to my satisfaction. It can depend on three simple things - the time of year, how big their inventory is and how much in demand the car of your choice is.

I started all three deals the same way - went to Kelly and Edmunds and collected the invoice price for the model I wanted. Bear in mind though, unless you plan to order one you'll more than likely not find the car with the list of stuff you want sitting on the lot. I tend to be spartan, dealer lot cars tend to be loaded. You will need to be able to think on your feet about the price of the options or take the invoice home and go back for a second round. Here are the details of my three purchases:

GMC Suburban: Shopped the internet in nearby cities. Made contact with a dealer in Phoenix (I live in Albuquerque) and worked out an "invoice + $500" deal. Their price matched my calculations. Went to one dealer in ABQ, offered them $550 plus invoice. Got a run around. Told them I was off to Phoenix. They had a very low inventory. Drove across town, next dealer had 15 units on the lot. Offered $500 over invoice. Deal was done in 10 minutes. Next step is to refuse all the add-ons - sealant, alarm system, etc. I was out of there within an hour. In the case of this car, $500 over was an okay price for me and an okay price for them since I beleive there's another 3% built in by GM.

Toyota Avalon: Went to the dealer offered $500 over invoice. Walked out. Went online and tried to make the same deal with a dealer in state but 300 miles away. He offered to deliver it to my house. Finally got him down to $750 over invoice. The original dealer started calling me. I talked them down to the same deal, but bought it from the online guy simply because he was not a jerk. Ironically, he traded some other unit in his inventory for the Avalon at the local dealer and I ended up with the same actual car for a reasonable price. Difference in this deal - car is more in demand and inventory was lower. Plus, high demand Japanese sedan dealers don't think they need to deal at all.

BMW Z3: High demand, low inventory, sticker minus $1000. Very simple, a car like this will go without any dealing. I got $1000 off because I spent 6 months dropping in developing a personal relationship with the car salesman. He knew I was serious, knew I was paying cash and knew I could get the same deal in Colorado Springs if I was willing to add a 4 hour drive to the equation. Two other friends went in to the same dealer on my recommendation, paid sticker and got free BMW hats.

Number One strategy, know your facts, be a pain in the neck and be willing to walk if you're not getting the deal you want. Do not ever make it sound like you don't care about the price "because you can afford it and haggling is beneath your dignity." It's your money, save as much of it as you can.
ok, i'm sorry, but...dustin73
Dec 23, 2001 12:23 AM
if someone knows you're paying cash for $30,000(??) two-seater, of course they're gonna give you what you want. you've got money, and now they know it. they'd rather have you have you as a repeat customer than a one-timer.
if you want a Subaru...gtx
Dec 21, 2001 3:05 PM
join IMBA and wait 6 months (if you can)

http://www.imba.com/news/news_releases/03_01/03_05_subaru.html

otherwise, yes, Edmunds.com and Dog's advice. Good luck!
My advicepeloton
Dec 21, 2001 5:25 PM
This may sound funny- but why new? Cars lose a lot of value the moment they roll off the lot. I bought a program car this past summer with only 17,000 miles on it for less than half it's sticker price. This car didn't have a scratch on it, and the history was perfect. I sure didn't get half as much car, but it was less than half the price. My old man works for GMAC and he's purchased a lot of program cars for this reason. You know a program car gets taken care of, and the discount is huge. I could get a huge discount on new because of my dad, but it's hard to justify for myself.

I would check out cars in the year old range with under 20,000 miles, and spend the extra money on a new Pinerello with Chorus!

Good luck with whatever you choose to do. Listen to Doug- Don't be afraid to walk away!!!
Thanks PeletonKristin
Dec 21, 2001 6:01 PM
Actually, I'm looking at both. Believe it or not, I can't afford a new Civic w/the options I'd want--and it doesn't even come with a CD player!! The only reason I'm toying with new is because of the incentive programs. If I can get $2000 off the price, that might be better than used. Used certified cars are only about $2-3 discounted from their new sticker prices, so I doubt I'm gonna get the kind of deals you saw. I will most likely end up with a 2000-2001 Civic.
Civicgtx
Dec 21, 2001 6:15 PM
make sure you get at least a 2001 Civic--it was redesigned for 2001 and is superior to the 2000, especially in terms of room and safety. Regarding the CD player, don't pay extra at the dealer, just order one from Crutchfield and pop it in yourself--their directions are very straightforward, they have amazing customer service, and you'll save big bucks off the crummy dealer units. Good luck!

http://www.crutchfield.com/
just some opinions...dustin73
Dec 23, 2001 1:00 AM
i've never installed a head-unit. i tried in my Jeep, but the wires were all funky 'cause it was a bit older. anyway, personally, i'd rather go to a car stereo specialist with installing a head-unit. why? i'd trust experienced hands with my new car/truck over my hands. true, you will pay for the installation, but it's usually backed by a good guarantee. also, some place like a Circuit City would be good 'cause you'd also have the option of a 3-year extended waranty. however, like with cars, you gotta watch out for price. my first head unit was a Pioneer that i paid 289$ for, plus like 40$ for installation at my local audio specialist. could've saved about 50$ had i gone to san antonio (45mi away). my latest head-unit (Active Black Panel Sony) was 450$ here alone, but i paid 400$ with installation in San Antonio.

anywho, to me getting better, more crisp sound is more important than driving a hooptie, so i tend to over-due the sound systems in my vehicles. as a matter of fact, had i not gotten my first roadbike, i'd have a 1700$ system in my truck. priorities priorities priorities...i hope i spelled that right.
re: Last Car Question: The Art of NegotiationLLSmith
Dec 22, 2001 4:39 AM
One other thing to consider when you decide on the type of car you want.The sales person and all the other people involved with the transaction work on commission basis. There are usually different levels of commission based on units sold per month.At a certain number of units(10,15,20)their base commission for all that months transactions increases.You should expect to get your best price the closer you get to the last day of the month. One more unit(even at a loss) can make a big difference in the monthly commission for the people at the dealership.
re: Last Car Question: The Art of NegotiationLen J
Dec 23, 2001 3:19 PM
Lot's of great advice here.

Doug hit rule number one: Be willing to walk away. As soon as the car becomes important enough to you that you are afraid to lose it, the dealer has won.

Ultimatly, as someone else said, the more you know the better you are ready.

You are ready!

Go get them!

Len
Thanks Len - I feel preparedKristin
Dec 23, 2001 9:10 PM
except for some numbers are still throwing me off...but I have three days to sort that out.

I can walk away quite easily. The only reason I'm shopping is that my car is notorious for a short life span. I really want to unload it while it still runs. That being said, I will not trade it for less than $1500 (Absolute bottom line). This is the amount at which I figure it is more profitable for me to trade...and less than that and it's more valuable in my driveway. Since I refuse to discuss the trade-in before the Sentra sale price is settled, I will not be married to the sale. I feel pretty safe with this mindset. I just have to remember...don't sign anything before the trade-in discussions.
The last time I bought a car...Cliff Oates
Dec 23, 2001 3:30 PM
in January 1999, I used Autobytel and Carpoint via the Edmunds and M$ Carpoint sites, respectively. I used these sites, along with the Kelly Blue Book site, to research pricing and such, then submitted a specific request for the truck, options and color I wanted to buy via the buying services. The fleet sales guys at 3 local dealers contacted me and made selling offers on trucks that matched what I was looking for. I ended up paying about $500-600 over invoice which I felt was a fair price. I was able to conduct nearly the entire transaction over the phone, and was in and out of the dealer with my new truck in 45 minutes. I secured financing through my credit union in advance of the purchase, so my time at the dealer was spent having my trade appraised and signing loan docs. It was the most pleasurable car buying experience I have ever had, and the one where I believe I paid the fairest price for a new car.

I did my test drives and such in advance of this process, and I ignored dealer sales guys who tried to pressure me. I did a lot of research on the web prior to the purchase, so I had a very good idea of what I was likely to pay for the truck I wanted. There was no real negotiation over price. I started to play one dealer off another, until I realized this wasn't a very productive activity on my part and just went with the guy with the best, first offer. He was a pro, the other guys were not up to his standards, and that was that.

That's what worked for me. Other folks enjoy haggling. I'm not one of them.
Thanks for the helpKristin
Dec 29, 2001 1:45 PM
I've actaully negotiated a pretty sweet price for the car. I'm still a bit hesitant to sign though, and I think I've finally figured out why. Many (MANY) people have said that the car I've purchased was not a good choice. But it finally occured to me that I have never pressed anyone for the details. So I don't know WHY my car should be sold. i.e. why am I going to trade it in for only $1100 when I bought it just over a year ago. I'm gonna do some more research before I close the deal on the Nissan. But the techniques above, plus bringing a friend with me worked like a charm. Got a very good offer price of $11250. Two days sleep should resolve my gitters. If it doesn't, then I walk away.

Thanks again,
Kristin