Purchasing Strategies - Questions & Success Stories

jmurman42 · June 2006

I just took on, in addition to the Internet Dept that I manager with two websites and 5 salespeople, the Used Car inventory for both websites.

I can tell you all this, Edmunds is not accurate for a retail value, neither is KBB or Blackbook. However, the public "uses" KBB and that makes it valid. If the public came in to my dealership with Edmunds numbers as much as they do with KBB, then Edmunds would be the standard.

Now that being said, the MOST accurate is what the cars are currently being SOLD for, either at auction or through the dealerships.

Sometimes pricing used cars is a little like nailing jello to a tree.

graphicguy · June 2006

Intersting hearing how people negotiate for cars. I think the one thing I've gleaned from all of it is the fact that no one way is right for all people. We, as consumers, negotiate for cars the way we're most comfortable.

The one thing that perplexes me the most, however...is the fact that AFTER someone has already made their purchase, they come here asking "did I get a good deal?".

If you don't feel comfortable with your deal, why write the check and sign the papers? IF you've done rudimentary research, you should have a pretty good idea whether your deal was good or not.

I was looking in today's newspaper car ads. Just looking at those, I could tell that most SUVs are going for invoice less rebates, gas coupons, etc. I could also tell that most '06 models are being closed out to make room for '07s. So, any dealership with a goodly amount of '06 models should be making deals on those.

Again, just a little research and observation goes a long way in determining what kind of deal you can make.

jmurman42 · June 2006

"The one thing that perplexes me the most, however...is the fact that AFTER someone has already made their purchase, they come here asking "did I get a good deal?". "

Isn't that the truth. I see that especially on the "Prices Paid" threads. I have often wondered how they would feel if someone said...hey you got a royal screwing!

After you buy the car is not the time to ask if you got a good deal.

kyfdx · June 2006

Isn't that the truth. I see that especially on the "Prices Paid" threads. I have often wondered how they would feel if someone said...hey you got a royal screwing!

So... If any of you happen to be over there on the Prices Paid forums... please, don't post anything like that! It just makes me cringe...

regards,
kyfdx
Host-Prices Paid Forums

jmurman42 · June 2006

Ok...i promise, but you have to do one thing for me, ok?

Create a dumb-[non-permissible content removed] emoticon.

Kirstie_H · June 2006

Dude, this is Edmunds. They're Emotorcons.

And for you salesfolk, kyfdx's request is simply a chance to hone your skills in tactful response :shades:

isellhondas · June 2006

Someone who has ALREADY bought, go's to the Prices Paid Forums..." Did I get a good deal?"

Without fail, some spoil sport will tell them that, indeed, they paid too much!

socala4 · June 2006

Intersting hearing how people negotiate for cars. I think the one thing I've gleaned from all of it is the fact that no one way is right for all people.

There is no one right way to do it, but some ways are better and more effective than are others, and other ways work really poorly. It's true with diet routines, workouts, jobs...why wouldn't it be with negotiation?

We, as consumers, negotiate for cars the way we're most comfortable.

Which is why they need coaching and training. Obviously, a lot of them could use the help. A lot of people could benefit by getting out of their comfort zones.

The one thing that perplexes me the most, however...is the fact that AFTER someone has already made their purchase, they come here asking "did I get a good deal?".

I have a master's degree in business, and this is exactly the method of education used. It's called the case study method, and it's how people learn from their mistakes by studying real-world business situations.

It would be good to plan before you buy, but people should absolutely look back at what they have done, and make sure that they can learn something from their experience that they can use for next time. I'm sure that if a salesperson here made a mistake during a transaction, his/her sales manager would be sure to point it out so that they didn't do it again.

jmonroe · June 2006

It would be good to plan before you buy, but people should absolutely look back at what they have done, and make sure that they can learn something from their experience that they can use for next time.

Right again, socala4.

A smart person learns from his own mistakes, probably a "C" student. Whereas a WISE PERSON learns from the mistakes of others, probably a "B" student or better, who does their homework before they react.

jmonroe

isellhondas · June 2006

Didn't make it quite that far but far enough to have studied case study methods.

So what? Why do that AFTER buying the car?

Some "expert" will rain on your parade and he may not even know what he's talking about!

I see "Prices Paid" in these forums from time to time that I KNOW never happened!

socala4 · June 2006

So what? Why do that AFTER buying the car?

I think we've gone over this, but oh well. Two basic reasons:

-So that you can learn from your own mistakes (and learn what you did right)

-So that others can also learn from your mistakes (and learn from what you did right)

If you went to a decent school, you didn't just take exams and forget about them. You'd review your work later, even if the grade was not going to change, and you'd take that opportunity to learn what you did wrong so you could get more benefit from the course and avoid repeating the same mistakes.

So it makes sense for people to look back, and improve their game. Professional athletes watch the tapes of the games that they lost, while salespeople review their old deals to see how they could improve the next time, so why shouldn't a car buyer do the same?

biancar · June 2006

I see "Prices Paid" in these forums from time to time that I KNOW never happened!

With all respect, how do you "know" they never happened? You are one guy in the Pacific Northwest. Conditions can vary from place to place, region to region, dealer to dealer. People may strike better deals than would be possible at your store, for whatever reason.

I'm curious why you are branding some folks liars with that comment.

rrsafety · June 2006

KBB says I should pay about $1000 more for a NEW 2006 Odyssey EX than what Edmunds TMV claims.... any thoughts as to what could be going on there? Seems like a BIG difference...

isellhondas · June 2006

Of course, market conditions vary according to several factors. I totally agree with that.

If a dealer pays, say 20,000 for a car, including holdbacks,incentives (if any)and someone comes into a forum and says he/she paid 17,000 for the car, I know that just never happened.

There could have been a massive underallowance on a trade, the people could simply have forgotten what they really paid?

geo9 · June 2006

BUT yet again that person may have bought their car
from a honest dealer that doesn't add on mud flaps,
chrome do-dads, floor mats, mop n glow etc. etc.
as soon as it hits the lot off the car transporter!

Not to mention a little ADM fee................

Support a honest dealer/salesperson !

snakeweasel · June 2006

It is also possible that it was a car that just wouldn't move. It is better to have $17,000 now than $20,000 never. Many years ago when the wife and I were looking at either an SUV or a van we stopped by a Honda dealer. They had this one CRV that was brand spanking new but was completely modified (you know spoiler, light package, strange colors and all the like). Apparently they took it in exchange from another dealer not knowing about what it looked like. They started with an offer for something like 2/3rds the invoice price. It was one heck of a deal but I would have died of embarrassment as soon as I got on the road.

emont1 · June 2006

Re-examining a big decision like a car is always a good idea, but I have 2 issues with the Prices discussions
1. You kinda need to have a pretty thick skin because someone will always say you paid too much
2. No one will really tell you how you could have done better so I'm not sure that treating it like a case study will really get you any further ahead

It's like the majority of newly-minted MBA's that I see running around work. They like to say things like 'get it done' and 'make it happen'. Great, I couldn't figure that out by myself. How about describing to us how to 'get it done'.

Tsgeisel (I think) suggested some time ago the idea of having a 'negotiation' between all the good negotiators here and the salespeople. It's come up again recently though I forget who suggested it. I think this would be extremely helpfull, so I'll try to get it started.

Let's say that I've done whatever it is that I need to so that the salesman is convinced I'm a serious buyer. So what comes next? Do I ask for their best offer, and then doesn't that open up the opportunity for them to start at MSRP? Do I just sit there quietly since 'the first to speak loses'?

Specifically I'm interested in this idea of getting the salesman to make the first offer and then counter themselves. Socala seems to be someone that does this for a living so maybe he'd care to share one of his negotiations? Or maybe a theoretical example?

isellhondas · June 2006

Snake,

I'm only talking about cars I know the market on. When someone says they bought a new Civic LX for 2000.00 below invoice, I know that just didn't happen.

In other instances, you would be correct.

snakeweasel · June 2006

Again, one has to consider was the Civic LX hail damaged? was it like the CRV I mentioned before? Was it in some way put together in options and colors that no one wanted and it sat on the lot for three months?

Granted these are extreme circumstances and in most cases the $2K under invoice didn't happen but these things do happen from time to time.

rrsafety · June 2006

<<<<<Granted these are extreme circumstances and in most cases the $2K under invoice didn't happen but these things do happen from time to time.>>>>>

True, but if someone doesn't detail extenuating circumstance, then it is fair for readers here to assume that its just a regular car of the type in question.

snakeweasel · June 2006

I was going to mention in that post that in most cases we really don't know the whole story behind the sale. It could very well be they were sold that Civic for 2 grand under invoice but they undervalued the trade in by 3 grand. which is why I take a lot of what is said in the prices paid forums with a grain of salt.

Plus they could also be lying or misremembering.

Kirstie_H · June 2006

Or they bought it for $2K under invoice with a $3K extended warranty that they don't mention. Unless someone takes the time to post ALL of the transaction details, it's nearly impossible to figure out what the actual "price" of the vehicle was.

isellhondas · June 2006

Thank you!

Trouble is, people leave out the details such as severe hail damage or the people reading the posts gloss over that part only fixating on the PRICE!

jmonroe · June 2006

Finally, we agree on something. I don't know if you saw my post #2060 or not.

My purchase was a straight cash deal, no trade to complicate things, and as I said I still got ripped if you believe what you read on the prices paid forums !!!

I might be the only one to admit defeat.

jmonroe

dino001 · June 2006

Bingo!

Current state of practice is to make you feel like a winner. All vocabulary is centered around some comparison: "under invoice", "overallowance", etc. so you can believe you got a better deal than guy next door. Then a simple psychology to steer your attention to one part of the deal, whether it is the numinal purchase price, montly payment, or trade-in value, etc. At the end of the day they get their money one way or another (admittedly sometimes less sometimes more), but customers believe they "beat the system". Suddenly everybody is an A student, just like in high schools and colleges. :sick:

stickguy · June 2006

my theory is that a seller won't sell their product for less than what they will sell it for (how's that for logic!). So, by definition, you paid too much if they took your offer!

Same idea to an auction. If you win, then you paid more than every other buyer was willing to pay (although of course it is a limited universe of buyers). SO, you paid more than you could recoup!

I also believe that you can't (normally) compare different sales, at least not exactly. Too many factors go into each deal (time of the month, bonus targets, trade in, stock on hand, sun spots, etc). So, the best you can do is come to a reasonable target range, find the car that is what you really want, and try to get a price in that range.

So, the strategy is to do your research, be realistic, and try to minimize the negotiations, since the more complex they get, the more it favors the seller.

In many ways, Bobst has pretty much perfected this technique, in his own unique way. Call it the "maybe I didn't get the absolute lowest price, but I got a very good deal, didn't get ripped off, and it was quick and painless" method (Bobst method for short).

Oh, and most important to me, is to get the car I really want. Buying a car that I don't like, just because I got a "better" deal, is a losing proposition.

snakeweasel · June 2006

Same idea to an auction. If you win, then you paid more than every other buyer was willing to pay (although of course it is a limited universe of buyers). SO, you paid more than you could recoup!

Yet there are people who are selling systems to make money buying and selling stuff on e-bay. But I agree at an auction at least two people were willing to pay the second highest bid, but only one was willing to pay the highest.

Buying a car that I don't like, just because I got a "better" deal, is a losing proposition.

I don't think anyone has said to settle for something you don't like because its a better deal.

graphicguy · June 2006

If you're coming here and posting, it's a safe assumption that you're doing some research into your car buying experiences. That's a good first step.

Noticing some of the "hand wringing" that goes on, however....tells me that if a dealership accepts an offer, the buyer somehow feels they "left something on the table" just because the offer was accepted.

If you're confident that you've done your research, and your numbers are "doable", on both sides, why the 2nd guessing?

Confidence when walking into a showroom will go a long way to getting you a good deal.

Craig, this doesn't include "unrealistic expectations", however. Given your recent $2K below invoice Civic example, we all should know that there's something else in play on that deal. There's either money on the back end of that deal, underallowance for a trade, higher F&I rates, etc that could be the ONLY way that happens on a Civic at this point in time.

As my dearly departed Father would always say..."let's seperate the wheat from the hull...."

socala4 · June 2006

Noticing some of the "hand wringing" that goes on, however....tells me that if a dealership accepts an offer, the buyer somehow feels they "left something on the table" just because the offer was accepted.

If a seller accepts a first offer, chances are good that it was too high. That's simply a matter of human nature -- the bottom price will not be revealed during the first round of negotiation, you'll have to do a bit of work for it.

If you're confident that you've done your research, and your numbers are "doable", on both sides, why the 2nd guessing?

It's not a matter of second guessing, it's a matter of secondary research not being enough and not being a substitute for primary research, which comes from looking the other guy in the eye and figuring out what will motivate him to move toward that bottom price.

If you do all the offering, then you're doing all the talking and shutting off the flow of information that might help you. It's often best in negotiations to find the time to stay quiet at times, and to let the other person do the talking.

You can learn a lot, but you cannot learn everything from the internet. And expecting to get the best price before a sales team has become committed to your deal is simply unrealistic, and ignores how human behavior affects negotiation.

snakeweasel · June 2006

It's often best in negotiations to find the time to stay quiet at times, and to let the other person do the talking.

You would be surprised how a few seconds of awkward silence can get someone talking. When I interview people for jobs I always keep quite for a few seconds after the applicant answers the question, many start talking again adding to their answer. The usually give the standard question but after a brief period of silence they start talking off the cuff. You should see how many people just talked their way out of a job doing that.

socala4 · June 2006

You would be surprised how a few seconds of awkward silence can get someone talking.

Exactly. Silence can be a very effective tactic, particularly since many people will be inclined to fill that awkward gap with a new concession. Sometimes, your best way to get the price to move downward is to just be quiet.

A useful variant on this is hemming-and-hawing. Let the other guy finish your sentence for you, and you might be surprised what he ends up saying on your behalf.

isellhondas · June 2006

Mark your calendar because I agree with you.

Especially your last sentence.

socala4 · June 2006

Mark your calendar because I agree with you.

Well, miracles can happen.

Let's face it: if you've been able to spend years in commissioned sales and have been able to make a good living at it, then you are almost certainly very good at it, which means that you know how to negotiate.

You probably agree with a lot more of what I'm saying then you'd care to admit, but you choose to represent your side of the table here, which is fair enough.

isellhondas · June 2006

With most of what you say.

I just don't like the backhanded comments.

graphicguy · June 2006

I don't think anyone, including myself, is THE AUTHORITY on how to buy cars. We all have our "ways" that work for us.

Regarding the awkward silence, that's probably the most effective tool in negotiation, hiring someone, even playing poker.....particularly if you spend that silence looking directly into the other person's eyes during that silence.

imidazol97 · June 2006

My strategy is that my money market checkbook and I leave and go to other dealers if what's happening isn't to our pricing and level. And we never _have_ to buy a car now. We've got weeks; one time I waited until the next model year and shopped again.

tballew · June 2006

biancar and fordfool, thanks, for the responses. your info will be very helpful.

roundtrip · June 2006

Edmunds, KBB, and car makers all list an invoice price (the same in all 3 sites for the models I've checked out.) So when I hear of people paying below invoice, are they actually talking about paying less than the manufacturer's price to the dealership?
Example: popular brand of Civic LX Sedan auto. (all prices are base prices--no dest. charge, etc.)
Invoice-$16018
TMV- $16753 4.6% above invoice
KBB- $17420 8.5% above invoice
MSRP- $19260 20.25%% above invoice
If so, TMV of +$735 above invoice sounds ok to me,as long as I don't take any 'extras'. Maybe I'm just ok with getting hosed for $735. However, if folks are paying below invoice, then I really don't know what I'm doing. I thought that below invoice meant the dealer is losing $ (assuming no incentives for dealer.) :confuse:

biancar · June 2006

No, the dealer isn't losing money. He gets dealer holdbacks and other money from the manufacturer.

socala4 · June 2006

I thought that below invoice meant the dealer is losing $

That's a common misperception. As Bianca noted, the dealer does not truly pay invoice, when other sources of cash flow such as the holdback are factored in. At the very least, the dealer's cost is generally several hundred below invoice, if not more so.

And in any case, dealers are sometimes incentivized to sell some units below cost. That's one reason to negotiate -- you'll never stumble on one of these situations if you insist on making the first offer.

isellhondas · June 2006

How do you figure paying 735.00 over invoice for one of the hottest selling cars out there is "getting hosed"?

I'm not sure if you just picked a Civic LX as an example out of the air, but please try to understand...WE HAVE VERY FEW OF THESE TO SELL!

Most of these get pre-sold before they arrive.

It's frustrating for both sides!

isellhondas · June 2006

"Other money?" On Civics? Ah...don't think so.

As far as holdback...I'm not going to get into another drawn out explanation about how this works, but it sure does not fall to the bottom line as profit!

Thsn there is that other little thing called overhead.

socala4 · June 2006

As far as holdback...I'm not going to get into another drawn out explanation about how this works, but it sure does not fall to the bottom line as profit!

That's another mischaracterization. Two basic things happen in a business: money comes in (revenue) and it goes out (expenses.) If the buyer believes that the only source of revenue from the transaction comes from the amount over invoice, that would be a mistake.

Holdback is another source of revenue to the dealership, and helps to make a lower priced deal work. Call it profit or something else if you prefer, it still helps to make a low priced deal to be more attractive than it may seem.

tamaraster · June 2006

Regardless of how dealership finances work (which isn't something buyers really need to care about, frankly), it is definitely sometimes possible to buy cars for less than the invoice price. It happens all the time. That's important for buyers to know.

snakeweasel · June 2006

Thsn there is that other little thing called overhead.

My reply to that is so what? It makes little difference to me what your overhead is (that is unless I am doing your books but thats a different story). Its like you are under the impression that you are guaranteed to make a profit, I hate to break this to you but you don't. There is a market price for a car, if you can't cover your overhead at that price then cut your overhead. If you still can't cover it then get out of the business. But please don't ask me to pay more than I would some place else simply because you have overhead to cover. Its called a free market.

Kirstie_H · June 2006

Please continue this conversation in our Dealer Holdback discussion. Thanks!

isellhondas · June 2006

This is true. It's always the MARKET that determines pricing. This won't happen on cars that ae in high demand and short supply however.

isellhondas · June 2006

You are correct. I don't want anyone to even think about our overhead. It just seems, however that some people love to talk about invoices, holdback etc while ignoring the other side of it.

And I am under no such impression. No business is guaranteed a profit. They had BETTER make a profir however or they will quickly join the growing ranks of failed businesses that did not.

It is, indeed, a free market and that is how it should be. The smart and the strong survive.

ray80 · June 2006

'They had BETTER make a profit however or they will quickly join the growing ranks of failed businesses that did not.'
3 dealers I bought cars from in the past fall into that catagory. Perhaps I paid to little

snakeweasel · June 2006

Maybe, or maybe you paid enough and they just could keep their costs down. Or you paid enough and they fell victim to an embezzler. Or you paid enough and they just closed down business and went on their merry way.

Purchasing Strategies - Questions & Success Stories

Comments

Helpful Tools

Most popular vehicles