Isellhondas doesn't want you to improve your negotiating smarts. He wants you to not worry about a few hundred dollars here or there, just enjoy your purchase. Usually the holdback stays with the dealer who took delivery of the car from the factory.
Virgiesmom: of course the holdback can be part of negotiations. Salesmen might not want you to think that way. I start from invoice-holdback and work up from there when negotiating. I still laugh about Chevy dealer long ago who took msrp on his new car and subtracted wholesale value for my Mustang and expected me to pay the difference. If I didn't work for the same business as his wife, I would have laughed at him as I walked out.
Benjaminh: rule #1; the dealer never plans to lose money. Look for the angle.... Dealer has overhead, insurance, utilities, salesmen's commissions, back office people, etc., who want to be paid...
...... Everyone is looking for a great deal with as little time, aggravation and grief that is possible ..
But trying to negotiate holdback is a quick and easy way to get shown the door, not a way to purchase a vehicle .. especially since it's not a profit center - but you knew that .. right ..?
Would be like trying to buy clothes in a mall store, and asking the sales person to drop the price of the dress, because you know they had a reduction in rent to incent stores to stay.
that said, I would take it into account when factoring my offer, I just wouldn't jaw about it. when it comes right down to it, the dealer is not going to take a loss, and will sell the car at what the market will bear, regardless of where you start your negotiations (invoice-holdback-incentives-$5,000 of double secret money the factory gives the dealer in a brown paper sack, no questions asked fugedaboutit)
that said, I would take it into account when factoring my offer, I just wouldn't jaw about it
Its not the customer's place to demand the holdback from a dealer but that doesn't mean a dealer won't give it up willingly. Calculate a price and make an offer. If that offer means the dealer has to go into holdback, then fine, but let them make that call. That way there are no hard feelings and everyone leaves happy. As Terry said, negotiating from holdback will prolly get you the boot - a total waste of time for all involved. But do this right and you'll get the deal you want (for the most part).
Prod and Bret have it right - be aware of what it is and how it works (as well as the fact that depending on the unit's age, it may not be there at all). Don't run in waving it over your head like a banner. There are times when it may be ok to mention it, breifly, but if you try to make it a BIG issue, you'll likely get deadlock.
Good times to bring up holdback: 1.) "We are losing money to make this deal" (Note: sometimes the dealer DOES, for one reason or another, lose on one particular deal to meet a bonus, move an old unit, etc. even after accounting for holdback. Usually this is not the case, but I did want to point out that contrary to popular opinion, this statement is not necessarily a lie) 2.) "If I accept your offer I'm only making $x." 3.) " I need that profit to cover my floorplan expenses"
When and if you DO bring up holdback, get ready for a bit of a sililoquy on the nature of holdback, how a dealerships finances work, why holdback belongs to the dealer, and the price of tea in China.
Ben: That $1000 loss is seen as an "advertising expense". If by losing $1000 on that one, they can bring in 10 other customers who pay a profit, they hope to come out ahead.
I doubt there is ever a good time to bring up holdback, whatever it is.
Tk865 gave three things the salesman might say that would entice him to mention holdback. Well, these three things were statements, not questions, and there is no need for the customer to say anything in response.
After the customer has made his offer, all he needs to do is sit there for a couple minutes to see if the offer was accepted. No discussion is necessary.
When discussing holdback, IF needed. The first thing to take into consideration is how long the vehicle has been in stock. If it has been there 90 days or more, Holdback is no longer PROFIT. It has been eaten up by the interest it takes to hold the unit in stock. If it has just came off the truck, it IS partially profit. BUT the sales rep will not get paid on a single red cent of it. The reason for the HOLDBACK is to keep the dealer from LOSING money when you have a buyer that wants to buy for INVOICE (wich is every other one nowdays) So keep trying to beat the car biz and they will eventually come up with some way to make $$$$ without everyone knowing it. just like other retail businesses.... the way for that is EVERYONE PAYS STICKER!! Just lower the profit margin so it's not a rip. like Saturn or the soon to arrive SCION. Then just find the car and buy it. no more "Haggling"
I believe that's what I said a long time ago on the bigorange30 "Just what is a good deal?" Jan 9, 2003 11:08am board. I remember that you agreed with some of it but I got hammered by every other salesman here because they believe it wouldn't work.
Actually, I wouldn't have a problem paying sticker if it didn't already have about 4 to 5 thousand dollar profit (I'm looking at a limited 4runner). If buying a car were more like buying a can of soup from the store, it would be great. Safeway is $.89, but Food Lion is $.78 so I'll go w/ them. Until then I'll play their game and only buy when the price suits me.
I see a lot of anger here from the salespeople and I do understand a good bit of it. I understand that being a car salesman is a hard job and few make good money. But does that mean that I should pay an extra $1000 so they make $200. I'm sorry, but I'm not that nice. If you don't make any money off my offer then don't accept it.
I'm not angry and I do make good money. That's why I stick at it.
It's always the market that determines pricing. Some customers can't stand the thought that a dealer may be making "too much" profit on the sale of a hot mover in short supply.
When this happens, they either have to pony up the required dollars or settle for something else.
I agree that if someone wants the hot car in short supply, they have to pay a premium. If those people can't wait 6 months for the prices to come down then they deserve the price they get.
Also, I understand that the dealer should make a fair profit off me. That of course is where the disagreement starts I understand. I think a fair profit is 5% over wholesale and the dealer might think that it's 5% over that invoice they show me which I could produce on my computer. And I don't want to get into ad fees/holdback. They could call their profit Oreo tax for all I care. I just want my "fair deal" without hidden fees.
For your buying style, that 100% accurate. As you've mentioned, you find the driving dealer-to-dealer an enjoyable process, making an offer, and, if no yes is recieved in 5-10 minutes, going to the next dealer. That works for you. Most buyers don't have the time or inclination to shop that way, and will attempt to bring a given dealer (or 2 or 3) around to their way of thinking. FWIW, Bobst, I like your method. Direct, to the point, no fuss.
if you don't like the dealer making 4-5k profit on the $40k car, i hope you never find out how much the corner store buys their coke/pepsi or their doritos for!
as for a "fair deal", what is a fair deal?
the dealer would love for you to pay a trillion dollars. you would love to pay 0. now, you just have to meet somewhere in the middle.
i don't think there is such a thing as a fair deal in a market economy.
the bobst-method is truly the best method, if it weren't for all the driving involved.
that's why i liked the priceline model. too bad that didn't work out for them. i was pretty excited when that came out.
you were able to bid X dollars and have that bid go out to all the dealers in your area. if you didn't get hit, you could keep raising your bid incrementally without driving to ten different dealers. if your bid continued to not get hit, then you obviously had an incorrect read on the market for that particular car.
The Ody is a great example of supply and demand. For years they commanded MSRP, often with a long wait of several months. This was still the case last year when my cousin was shopping, even after researching here on Edmunds.
Now that the Sienna is here, I went back to the Ody "What did you pay" topic and $2000 off MSRP is the norm. What a difference a year makes.
The last 4Runner, when it was new, commanded premiums in the DC area. By the end of its run, it had rebates and invoice pricing.
When competitors see a good thing, they rush to copy it, and that improves things on the supply side. In other words, you see more choices.
Price is a tricky topic. The domestics are building in huge padding for rebates. It's completely absurd that a brand-spanking new model carry a rebate from day one. This creates the illusion of a good deal, and erodes resale values.
Well, it seems that your buddie punjab or whatever his name was has calmed down for now. Anyway, I've noticed that in all this bantering about how consumers think this and salesmen feel this, there has been no consensus on how to buy a car decently. My question is, if your mother had to buy a car w/o your intervention, how would you suggest she go about doing it?
If the sales manager doesn't want to accept your offer, do you really think that talking with them for a half hour or so will change their mind?
I assume the sales manager knows his business, and he knows right away whether your offer is acceptable or not. Of course, they want to talk with you so you will change your mind and increase your offer, but do you think they will change theirs?
It is very easy to find out if your offer is acceptable - just head for the door. It has worked for me more than once.
kinda like knocking on someone's door, then running away. I've heard it called "tommy knocking", among other (less politically correct) phrases. Either way, it's a game that's a waste of time for both parties.
It's nothing like knocking on someone's door and running away. Last time I did it we were $300 apart. I left on amicable terms and by the time I got home the salesman had left a voicemail saying that my offer is now acceptable. If I'd like to come back we could do the paperwork.
I helped my mom buy a new car just a couple months ago. She enjoyed the process, had fun shopping and driving, and ended up with a car perfect for her at an excellent price.
Some of the shopping/driving I helped with but the rest she managed on her own. She had not owned a car in over 10 years, having driven trucks, vans, and SUVs all that time. This time she wanted a nice luxurious car that had lots of power and a great stereo system, among other goodies. I wanted her to get a luxo SUV. She shopped for several months, drove many cars, wrote off cars that were once high on her list and considered cars she initially ignored.
When she finally settled on a car (Infiniti I35) I helped her with pricing and making an offer. I found out that there was a $500 dealer cookie on the I35 so I dug up pricing online and advised her to make an "out the door" offer on the car. I also told her to let the dealer make the first offer as she might be pleasantly surprised. This tactic worked perfectly as the dealer accepted her offer right away and the deal was done. The F&I mgr tried to throw her a curve ball but she caught it before signing and got the deal straightened out.
The I35 is perfect for her and she absolutely loves it. The car wasn't on her list at all in the beginning (the G35 was #1) but she shopped carefully and persistently and ended up with a car better suited for her I think.
was what grand mentioned..... Silly as it sounds, a lot of times the dealer needs to feel they "won" something, or at least didn't "leave money on the table". If you don't mind a small bit of silly game playing, it can actually save you time if you don't get bogged down in it. Allow about 30 minutes to negotiate, and make this clear to the salesman up front. Start about $250 low, stick to your guns the first 2 passes, offer to concede $100 when a floor manager comes in, give him 1 pass, then offer the $250. If the next answer isn't yes, proceed to walk. At this point, the dealer is much more likely to take a slim deal (or very small "loser") just to recoup thier time investment. They can justify it to themselves by saying "Well, we bumped him $250, and even that took 3 turns....We got all we could".
Understand, I'm not saying playing games is fun, or even a the best way. I'm just offering an alternative to Bobst's "offer and run" strategy. My way plays on the old school mentality that is still prevalent, at least on the "walk-in" side of the business. Remember - even new-school dealers are usually staffed by managers steeped in the old-school processes. Use this to your advantage - make them think they won. People LIKE to feel they won. My wife has been using this on me for a while now.
REgarding your message. Read my messages (3957/58/60....thats is the whole point we are trying to make. Everyone comes in with this atttitude that we are representing the devil himself and create the arguments. You don't have to be afraid of buying a car and it can be just as easy as buying a diamond ring, if you would treat us the same as you would want to be treated as a consumer. In this day and age it doesn't matter if you see nothing BUT car ads on TV. YOU KNOW what the costs are, holdback, incentives, etc..You can find out to the penny my costs but yet you feel your still getting ripped off...HOW and FROM WHERE. But again, go buy that diamond, furniture, clothes and yes smart [non-permissible content removed]..pizza and you don't have the foggest idea how much their cost are and they are treated like family. Come in today, sit down, relax, buy an Accord and I will be happy to give you any numbers you like and I will try to sell you the car for whatever you like....Come in with a chip on your shoulder and tell me to do this and tell me to do that....well you all then know what happens next....I say again, don't start an argument or fighting back and forth and you will find buying a car is as easy as buying anything else. Just because some geek in a basement somewhere writes a novel on how to screw the car salesman everyone wants to try to do it, AND THEN you get pissed because we don't want to let you do it....
viper, actually you help me make my point. The corner convenience store has an outrageous markup, but people by because a) they don't know any better or b) convenience. For me I would rather go the supermarket and my my soda when they're on special getting the best deal possible. As for what is a fair deal, that is clearly in the eye of the beholder. I'm sure that most any salesman would tell me that my fair deal is robbing them. My point is if my price is too low, politely say no and then I'll get the picture, but as long as the dealership is going to play games and I am going to do the same and stick to my idea of "fair".
Isellhondas, I realize that jewelry and furniture are horribly marked up. I rarely buy jewelry and my furniture comes from more direct sources than Haverty's or what have you. As for the difference between dealer's invoice and wholesale. Dealer's invoice is that sheet of paper with add fees and whatever included and wholesale is Edmunds invoice - holdback.
In general, the pay structure in car sales is what it is. Would you prefer to sell pizza with it's insane markup and make $5/hr delivering it. Or how about a real estate agent that nurses customers for weeks or months for the chance of a paycheck. Again, different jobs with different pay structures. I understand that salesmen feel persecuted and this forum has turned into a place for them to vent, but I am not responsible for their pay structure. If I get a great deal that is below dealer's invoice and the salesman gets diddly, well I'm sorry.
Last, I understand that my idea of fair may be unreasonable. If weeks pass and nobody budges then I'll throw in some more cash and call people back.
I am all for any type of car buying service. I am the Internet salesman at my store and I am very happy to see an educated consumer. It makes it easier and happier for ALL. Get the information, Find out my costs, do all those things, but don't take 3 months of research finding out my DEAD cost is 15,000 and get pissed and "walk out" when I won't take and offer of 14,000. Come on folks....I mean really, all going back and forth here aside...you are making it harder than it really is......If you know my costs, you know what the car is selling for and know your budget...make that offer and buy the car...it's that easy...
Isellhondas---You hit the nail on the head, perfectly describing how most american business is run, "It's called being in a trap that they created for themselves. Short term thinking for today's sales that create tomorrows problems."
Gotta love $4500 rebate on Durango, or 0% for 60 on every GM product. How can they make it any sweeter?
by giving you crap for it because of all those great incentives when you trade it....You think they are giving you all that stuff for the heck of it...you pay one way or another (trade in, service, being stranded when it breaks) Now who is being naive..
pizza, supermarkets...etc etc are just another bunch of lousy analogies. Guess this board is just full of them.
What business other than vehicle sales relies on direct, buyer-to-seller negotiating skills - where poor skills on one of the sides of the table equates to a substantial loss of money for either the buyer or the seller?
So when was the last time you auto sales people negotiated a price on a few delivered pizzas? Or case of detergent at the market? Or walk into a well-known jewelry store at the mall and open with 75% of the sticker price on that Rolex? Or how about cutting you some slack at Macy's on that advertised loss-leader sofa in green leather?
Right. Not often and, for most folks - never. And that's the reason, in survey after survey, auto sales is at the bottom with the telemarketers.
Folks hate shopping for a car because the sales structure put in place over the years by dealership owners in search of best possible returns on their investment mandates a confrontational methodology of us-versus-them.
IMO, it's the IDEA that somebody with more aggressive negotiating tactics can get a better deal that bothers people the most.
thats my point too....I'm NOT trying to but heads here, lol...honest. I agree, people go and buy that green leather couch for reatil and the salesman laughs all the way to that bank, but yet you come in and offer (WHEN YOU KNOW IT) below my cost and can't understand why I say no, then you "walk towards the door". Let me help you, I'll open it !!Just be honest with me and get the same. You could come in right now and offer a couple hunderd below invoice for 10 civic's and my manager and myself would be happy to take them all, Because I sell ALL my trucks at MSRP, so it balances out for me and them at the end of the month. I will lose money all day on cars because I Avg. 2600 on trucks that I sell 10 of a month. The bottom line is though, no reason for the sneaky way of talking to me. I know, I know, there is a lot of bad salesman out there, but I being one, there is a lot of honest sales guys out there just making a living and working at my job.
Like the other guys in here and a ton of us round the country...just relax and come in and sit down and talk nice and make a realistic offer and you too and leave saying what I hear all day long..."this was the best car buying experience I'v ever had" Yes you aren't buying a pizza or a can of soup but you are not buying the Louisiana Purchase either...
"but yet you come in and offer (WHEN YOU KNOW IT) below my cost and can't understand why I say no, then you 'walk towards the door'"
Well, this happens because some salesmen/dealers actually accept the "below cost" offer. This leads buyers to believe that there is really more profit in the deal then we have been told. Even with information from Edmunds, KBB or whomever, how do we know we have all the costs. When an offer we believe is below cost is accepted (or we hear about anyone that has had one accepted), we come believe that we were misinformed about the real costs. Accepting just one below cost offer EVER because all the other ones will make up for it, actually works against you since it convinces us that we really didn't know the real dealer cost. Word does get around you know.
You are 100% right.I can't argue with that. When you go to Edmonds, KBB, Consumer Reports Etc....They all reflect the same invoice. I will be happy to agree with the number you have, I check them for accuracy from, time to time and Edmonds right here have the EXACT invoice amount. When I say offering below dead cost, I mean AFTER holdback and everything, some people just get crazy and create the controversy. My point about accepting below invoice offer is that if I sell 10 cars at invoice or couple hundred under and then sell 10 trucks at 2600 over invoice plus holdback on all, in avg. out. Plus they have bank money they may make in the finance office, service dept., body shop, etc...My Gen. Mgr. is happy to sell a hand full of cars at cost to get volume and bragging rights for the area from Honda. It all goes back though,,If you know from several sources that my dead cost is 15,000 dont get mad at no for `14,000. I can see your point though if one deal every now and then gets thru at below cost. It's not a practice though..
When I bought my Tag Heuer watch the jewelry store knocked off 15% w/o me even asking - of course I took it and ran.
On the flip side, when negotiating the price for my new BMW(an everyday 325i, i.e. no special, limited edition anything), I made an offer something like 1700 over invoice and the salesman actually told me that he feels that BMW's should sell for atleast MSRP so they weren't going to negotiate. Went to the other BMW dealership and they outright offered to me 1500 over invoice. Gave the original guy a call back(big mistake) to try and match it or beat it and he said I should come back over and he'll see what his manager will let him do. Sorry - but no thanks - I'm not wasting any more time to "see what they can do". This is what irks me about the entire car buying process - let me see this and my manager won't sell for that - especially when they are extremely fair offers.
I'll start by saying I agree with you, too, about the need for a courteous, respectful interaction. (Can you tell that's a Prelude, uh, prelude?)
Let me politely ask why you think any customer knows where to start negotiating, much less stop? Between holdback, 'trunk money', 'held rate' and commissions on loans and leases, ad consortium costs, doc fees, dealer volume incentives, and what-ever-the-heck-else-that-I-don't-about, there's no way for a customer to know with any precision what his deal is actually worth in profit, gross or net. Where's a customer gonna get that number? There's an indeterminate cost problem here, created by the industry, in a negotiated sales process, again created by the industry. My point is that your wish for customers to 'make a realistic offer' is more reasonable than it is realistic. Given that . . . Does that mean I think a customer is justified in getting bent when his 'invoice - $1K' offer is rejected? Nope! Even less justified, IMO, is a salesman getting bent upon a receiving an 'invoice - $1K' offer or even an offer that's 5% below 'dead cost'. Your posts suggest that you think the fix for 'grinding' is with the grinders, and buyer's posts usually suggest they think the fix for 'sleazy sales' is with the salesguy. FWIW, I think everybody's wrong. Buyers being 'inconsiderate' and salesmen being 'inconsiderate' and each reacting to each reminds me of Nero, fiddling while Rome burns.
"the pump don't work 'cause the vandals took the handles" ~ Bob Dylan
For whats it's worth...sorry for that bad experience...that is a small % of salesman that ruin it for the straight forward ones out here. Depending on the car, market, and availability 1500 is fair. I can't say for BMW's though, lol...don't know much about them...
I totally understand..lol.. I guess what I am saying is if you know my cost (with Honda it's easier than most) take that and what you think is a fair profit ...0.00 tell me, 5% tell me, whatever it is, just say it. There is no rebates, this or that with Honda so my invoice is cost, so when you come in save yourself and me a whole lot of time and grief and offer realistic from the beginning...But I know how you feel when it comes to cars with rebates, incentives, this , that, kitchen sink.,...gets crazy
earlier today someone came in and did the low ball offer and spent an hour and a half going back and forth with me saying he didn't believe me and etc....needless to say he left with no car and a headache....later on someone came in from the internet and offered me in the first sentance a 100.00 over invoice on a Civic, my only response was...."congradulations, and are we paying cash or are we financing".....which of those two will be happy tonight and which would you like to be.......hmmmmmm
LOL, if it were an Si, I'd think you'd ripped me off if you didn't do the 1.9%. (Ya tole me there are no 'rebates, this or that'; and Edmunds shows $500 dealer cash or 1.9%.)
Truly, I get your point. Given our example, do you still get mine?
(FWIW and to be fair, if I made an offer at all, it would include a financing proviso. So, I think we'd end up fine.)
Here's why I'd make an internet quote request rather make an offer at all.
On an '03 Civic Si, Edmunds shows invoice of $17,822 with $500 dealer cash. Ok, the way you sketch it out, I offer $17.9K + TTL with 1.9 apr or $17.4 + TTL using my own money. The prob, LOL: A guy posts (Town Hall - Honda Civic - Honda Civic Si / SiR, check it) tonight that he's gotten an initial net quote of $16.9K + TTL.
I'm gonna walk off from a possible $1K and offer anyone $17.9K? Not likely. Would you? I'm gonna offer you $16.9K, knowing you think that's 'unrealistic'? Even I wouldn't do that.
That's a real life example of the prob with a customer making any offer at all. Given the way this ground really lies, what would you want a customer to do? Other than shooting the poster or the dealer who quoted him?
Some areas around Columbus, OH got hit hard by hail. Some dealerships are going to have to sell damaged cars. What should the discount be on a camry that has sheetmetal that looks like a giant golf ball?
...is that you can buy Civic SIs in whatever quantity you want all day long for less than $17k, at least in CA. And no one's panties get in a bunch about it, either. A truly competitive market makes the process easier for everybody, though inherently less profitable, I would presume.
The debate seems to hinge on how disfunctional the process is that determines a reasonable price - hard to argue that one. Both sides of the table seem to end up out of sorts and disappointed at various times. I've heard all kinds of suggestions for how to remedy this, but nothing seems to work in every market and every situation. Real competition that results in real bottom-line advertised prices seems to be the best of all worlds, but those markets are unfortunately not everywhere - it's good when you live near one, though...
"Real competition that results in real bottom-line advertised prices seems to be the best of all worlds, but those markets are unfortunately not everywhere - it's good when you live near one, though..."
Right on!
Those of us who don't live in such a market can access 'em by the net. An example of the power of capitalism or of creeping societal decay, LOL?
Four years ago we had our new Accord damaged by hail, and State Farm paid $4K to have it fixed. It cost $6K to fix my friend's Buick. If you buy a hail damaged car, be sure to get a BIG discount.
Comments
Benjaminh: rule #1; the dealer never plans to lose money. Look for the angle.... Dealer has overhead, insurance, utilities, salesmen's commissions, back office people, etc., who want to be paid...
2014 Malibu 2LT, 2015 Cruze 2LT,
The shopper also wants a "good deal". Somehow the numbers have to please both parties.
imidazo...
Must not have been a Corvette you were shopping for or you WOULD have paid MSRP or more!
The prevailing market always sets the pricing.
But trying to negotiate holdback is a quick and easy way to get shown the door, not a way to purchase a vehicle .. especially since it's not a profit center - but you knew that .. right ..?
Terry.
that said, I would take it into account when factoring my offer, I just wouldn't jaw about it. when it comes right down to it, the dealer is not going to take a loss, and will sell the car at what the market will bear, regardless of where you start your negotiations (invoice-holdback-incentives-$5,000 of double secret money the factory gives the dealer in a brown paper sack, no questions asked fugedaboutit)
Its not the customer's place to demand the holdback from a dealer but that doesn't mean a dealer won't give it up willingly. Calculate a price and make an offer. If that offer means the dealer has to go into holdback, then fine, but let them make that call. That way there are no hard feelings and everyone leaves happy. As Terry said, negotiating from holdback will prolly get you the boot - a total waste of time for all involved. But do this right and you'll get the deal you want (for the most part).
Good times to bring up holdback:
1.) "We are losing money to make this deal" (Note: sometimes the dealer DOES, for one reason or another, lose on one particular deal to meet a bonus, move an old unit, etc. even after accounting for holdback. Usually this is not the case, but I did want to point out that contrary to popular opinion, this statement is not necessarily a lie)
2.) "If I accept your offer I'm only making $x."
3.) " I need that profit to cover my floorplan expenses"
When and if you DO bring up holdback, get ready for a bit of a sililoquy on the nature of holdback, how a dealerships finances work, why holdback belongs to the dealer, and the price of tea in China.
Ben: That $1000 loss is seen as an "advertising expense". If by losing $1000 on that one, they can bring in 10 other customers who pay a profit, they hope to come out ahead.
Tk865 gave three things the salesman might say that would entice him to mention holdback. Well, these three things were statements, not questions, and there is no need for the customer to say anything in response.
After the customer has made his offer, all he needs to do is sit there for a couple minutes to see if the offer was accepted. No discussion is necessary.
That was tried in the UK about 10 years back. It worked too, for a couple of months.
I see a lot of anger here from the salespeople and I do understand a good bit of it. I understand that being a car salesman is a hard job and few make good money. But does that mean that I should pay an extra $1000 so they make $200. I'm sorry, but I'm not that nice. If you don't make any money off my offer then don't accept it.
It's always the market that determines pricing. Some customers can't stand the thought that a dealer may be making "too much" profit on the sale of a hot mover in short supply.
When this happens, they either have to pony up the required dollars or settle for something else.
The old supply and demand theory still applies.
Also, I understand that the dealer should make a fair profit off me. That of course is where the disagreement starts I understand. I think a fair profit is 5% over wholesale and the dealer might think that it's 5% over that invoice they show me which I could produce on my computer. And I don't want to get into ad fees/holdback. They could call their profit Oreo tax for all I care. I just want my "fair deal" without hidden fees.
as for a "fair deal", what is a fair deal?
the dealer would love for you to pay a trillion dollars. you would love to pay 0. now, you just have to meet somewhere in the middle.
i don't think there is such a thing as a fair deal in a market economy.
peter
that's why i liked the priceline model. too bad that didn't work out for them. i was pretty excited when that came out.
you were able to bid X dollars and have that bid go out to all the dealers in your area. if you didn't get hit, you could keep raising your bid incrementally without driving to ten different dealers. if your bid continued to not get hit, then you obviously had an incorrect read on the market for that particular car.
how did the dealers here feel about pricline?
peter
Now that the Sienna is here, I went back to the Ody "What did you pay" topic and $2000 off MSRP is the norm. What a difference a year makes.
The last 4Runner, when it was new, commanded premiums in the DC area. By the end of its run, it had rebates and invoice pricing.
When competitors see a good thing, they rush to copy it, and that improves things on the supply side. In other words, you see more choices.
Price is a tricky topic. The domestics are building in huge padding for rebates. It's completely absurd that a brand-spanking new model carry a rebate from day one. This creates the illusion of a good deal, and erodes resale values.
-juice
Constant rebates, zero percent financing, etc...now the consumers expect and demand this or they won't buy the cars!
delguy...I understand that you consider a 5% profit to be "fair". I hope you never buy furniture or jewelery!
That thinking will work on some cars but not on many others.
And...I don't understand...what's the difference in your mind between a dealer's invoice and "wholesale"? Just curious.
Thanks for the reply in advance.
fo
I assume the sales manager knows his business, and he knows right away whether your offer is acceptable or not. Of course, they want to talk with you so you will change your mind and increase your offer, but do you think they will change theirs?
It is very easy to find out if your offer is acceptable - just head for the door. It has worked for me more than once.
Some of the shopping/driving I helped with but the rest she managed on her own. She had not owned a car in over 10 years, having driven trucks, vans, and SUVs all that time. This time she wanted a nice luxurious car that had lots of power and a great stereo system, among other goodies. I wanted her to get a luxo SUV. She shopped for several months, drove many cars, wrote off cars that were once high on her list and considered cars she initially ignored.
When she finally settled on a car (Infiniti I35) I helped her with pricing and making an offer. I found out that there was a $500 dealer cookie on the I35 so I dug up pricing online and advised her to make an "out the door" offer on the car. I also told her to let the dealer make the first offer as she might be pleasantly surprised. This tactic worked perfectly as the dealer accepted her offer right away and the deal was done. The F&I mgr tried to throw her a curve ball but she caught it before signing and got the deal straightened out.
The I35 is perfect for her and she absolutely loves it. The car wasn't on her list at all in the beginning (the G35 was #1) but she shopped carefully and persistently and ended up with a car better suited for her I think.
BTW, you do give the dealer time to answer the door and say "yes", don't you?
Understand, I'm not saying playing games is fun, or even a the best way. I'm just offering an alternative to Bobst's "offer and run" strategy. My way plays on the old school mentality that is still prevalent, at least on the "walk-in" side of the business. Remember - even new-school dealers are usually staffed by managers steeped in the old-school processes. Use this to your advantage - make them think they won. People LIKE to feel they won. My wife has been using this on me for a while now.
Isellhondas, I realize that jewelry and furniture are horribly marked up. I rarely buy jewelry and my furniture comes from more direct sources than Haverty's or what have you. As for the difference between dealer's invoice and wholesale. Dealer's invoice is that sheet of paper with add fees and whatever included and wholesale is Edmunds invoice - holdback.
In general, the pay structure in car sales is what it is. Would you prefer to sell pizza with it's insane markup and make $5/hr delivering it. Or how about a real estate agent that nurses customers for weeks or months for the chance of a paycheck. Again, different jobs with different pay structures. I understand that salesmen feel persecuted and this forum has turned into a place for them to vent, but I am not responsible for their pay structure. If I get a great deal that is below dealer's invoice and the salesman gets diddly, well I'm sorry.
Last, I understand that my idea of fair may be unreasonable. If weeks pass and nobody budges then I'll throw in some more cash and call people back.
Gotta love $4500 rebate on Durango, or 0% for 60 on every GM product. How can they make it any sweeter?
What business other than vehicle sales relies on direct, buyer-to-seller negotiating skills - where poor skills on one of the sides of the table equates to a substantial loss of money for either the buyer or the seller?
So when was the last time you auto sales people negotiated a price on a few delivered pizzas? Or case of detergent at the market? Or walk into a well-known jewelry store at the mall and open with 75% of the sticker price on that Rolex? Or how about cutting you some slack at Macy's on that advertised loss-leader sofa in green leather?
Right. Not often and, for most folks - never. And that's the reason, in survey after survey, auto sales is at the bottom with the telemarketers.
Folks hate shopping for a car because the sales structure put in place over the years by dealership owners in search of best possible returns on their investment mandates a confrontational methodology of us-versus-them.
IMO, it's the IDEA that somebody with more aggressive negotiating tactics can get a better deal that bothers people the most.
Well, this happens because some salesmen/dealers actually accept the "below cost" offer. This leads buyers to believe that there is really more profit in the deal then we have been told. Even with information from Edmunds, KBB or whomever, how do we know we have all the costs. When an offer we believe is below cost is accepted (or we hear about anyone that has had one accepted), we come believe that we were misinformed about the real costs. Accepting just one below cost offer EVER because all the other ones will make up for it, actually works against you since it convinces us that we really didn't know the real dealer cost. Word does get around you know.
On the flip side, when negotiating the price for my new BMW(an everyday 325i, i.e. no special, limited edition anything), I made an offer something like 1700 over invoice and the salesman actually told me that he feels that BMW's should sell for atleast MSRP so they weren't going to negotiate. Went to the other BMW dealership and they outright offered to me 1500 over invoice. Gave the original guy a call back(big mistake) to try and match it or beat it and he said I should come back over and he'll see what his manager will let him do. Sorry - but no thanks - I'm not wasting any more time to "see what they can do". This is what irks me about the entire car buying process - let me see this and my manager won't sell for that - especially when they are extremely fair offers.
my $.02
fo
Let me politely ask why you think any customer knows where to start negotiating, much less stop? Between holdback, 'trunk money', 'held rate' and commissions on loans and leases, ad consortium costs, doc fees, dealer volume incentives, and what-ever-the-heck-else-that-I-don't-about, there's no way for a customer to know with any precision what his deal is actually worth in profit, gross or net. Where's a customer gonna get that number? There's an indeterminate cost problem here, created by the industry, in a negotiated sales process, again created by the industry.
My point is that your wish for customers to 'make a realistic offer' is more reasonable than it is realistic. Given that . . .
Does that mean I think a customer is justified in getting bent when his 'invoice - $1K' offer is rejected? Nope!
Even less justified, IMO, is a salesman getting bent upon a receiving an 'invoice - $1K' offer or even an offer that's 5% below 'dead cost'.
Your posts suggest that you think the fix for 'grinding' is with the grinders, and buyer's posts usually suggest they think the fix for 'sleazy sales' is with the salesguy. FWIW, I think everybody's wrong. Buyers being 'inconsiderate' and salesmen being 'inconsiderate' and each reacting to each reminds me of Nero, fiddling while Rome burns.
"the pump don't work
'cause the vandals
took the handles" ~ Bob Dylan
I guess what I am saying is if you know my cost (with Honda it's easier than most) take that and what you think is a fair profit ...0.00 tell me, 5% tell me, whatever it is, just say it. There is no rebates, this or that with Honda so my invoice is cost, so when you come in save yourself and me a whole lot of time and grief and offer realistic from the beginning...But I know how you feel when it comes to cars with rebates, incentives, this , that, kitchen sink.,...gets crazy
Truly, I get your point. Given our example, do you still get mine?
(FWIW and to be fair, if I made an offer at all, it would include a financing proviso. So, I think we'd end up fine.)
On an '03 Civic Si, Edmunds shows invoice of $17,822 with $500 dealer cash. Ok, the way you sketch it out, I offer $17.9K + TTL with 1.9 apr or $17.4 + TTL using my own money.
The prob, LOL: A guy posts (Town Hall - Honda Civic - Honda Civic Si / SiR, check it) tonight that he's gotten an initial net quote of $16.9K + TTL.
I'm gonna walk off from a possible $1K and offer anyone $17.9K? Not likely. Would you?
I'm gonna offer you $16.9K, knowing you think that's 'unrealistic'? Even I wouldn't do that.
That's a real life example of the prob with a customer making any offer at all. Given the way this ground really lies, what would you want a customer to do? Other than shooting the poster or the dealer who quoted him?
The debate seems to hinge on how disfunctional the process is that determines a reasonable price - hard to argue that one. Both sides of the table seem to end up out of sorts and disappointed at various times. I've heard all kinds of suggestions for how to remedy this, but nothing seems to work in every market and every situation. Real competition that results in real bottom-line advertised prices seems to be the best of all worlds, but those markets are unfortunately not everywhere - it's good when you live near one, though...
Right on!
Those of us who don't live in such a market can access 'em by the net. An example of the power of capitalism or of creeping societal decay, LOL?
As a buyer, I'd want a discount equal at least to the cost of repair ($2K, maybe, if paintless would work?).
Tough break for the dealerships, even if they were insured.