The proper offer formula

yoozer

After reading many threads here it seems that it is not unusual to offer 10% off MSRP on a new car.
I've also read that 13% off MSRP in not unreasonable. And many people end up buying at 10% off sticker.

However, Truecar.com tells me "Your Target Price is 5.55% below MSRP. This is a good price."
Really?

Thus my question is.....which is it? I don't want to lowball and lose credibility.

I don't know if this info is helpful, but I'm looking to make an offer on a 2015 Subaru Outback 2.5i Limited, and my options at Truecar show MSRP at $32,067, which is almost exactly the sticker price on the car at the dealer. It says my Target Price is $30,288, and shows Average Price Paid is $30,393.

A 10% off MSRP would be $28,873. Is that a reasonable offer?

PF_Flyer

I don't think it's unreasonable. And unless you were saying something absolutely silly like $20,000 I wouldn't worry about losing credibility. You're trying to save a bit and everyone in the game knows that. Have you tried the Price Promise here at Edmunds? Click that link or the one up at the top left of the page and see what you can come up with there. More information never hurts!

stever

I don't worry about my "credibility" at the dealer. I worry about my money. If the counter offer seems too high, you can just walk and go do some more research or rethink which make or model to buy. Or expand the distance you are willing to travel to another dealer or two. At least get as many quotes as you can within, say, 100 to 150 miles.

Lots of people use those formulas but I never have. And in recent years, there's been a bit of upward price creep and many people are sticking to their old 5 or 8% off MSRP formula. Ten to 13% probably makes more sense these days. Even worse are invoice prices - there's so much bonus money available to dealers now that invoice really doesn't reflect what the dealer actually pays for a car. Heck, some people's "formula" now is a percentage off invoice.

PF_Flyer

This is why I'm really going to miss the salesman we've been buying from since 1979. He was diagnosed with ALS and has retired. I guess we were involved in long-term negotiations over the 14 vehicles we bought from him over the years

Mr_Shiftright

it also depends on the car. If you're hunting for a brand new "hot" model, you are going to meet very stiff resistance at the bargaining table. If you're shopping now for a 2014 leftover, you might stretch even further than you dare.

yoozer

Thanks for the replies everyone....great info. I made an offer this morning and I'll post how it goes.

stever

Another thing I do (rather, don't do), is make an offer. I wait for the salespeople to make one - that's where online quotes come in handy. If they ask me how much I want to pay, I deflect it right back at them and ask how much they are asking.

It probably makes no difference in the long run, but it's all part of the psychological warfare between you and the dealer I guess. Although I guess it keeps me from making a high offer up front and leaving money on the table.

lsu7

In Massachusetts, I have same question as yooser, trying to buy 2.5i premium with popular package #1, truecar.com sent me 3 dealers offer with MSRP $28,887, truecar price $27,150, a little over 5% off MSRP. The estimated true dealer cost was calculated by formula is about $26,457, supposed to be the best price, but still 8% off MSRP. I am confused about 11-13% off the sticker of MSRP.
Should I start to counter offer from $26,457, or 10% MSRP. I will post final deal
after I finish the final transaction.
Thanks.

Michaell

lsu7 said:

In Massachusetts, I have same question as yooser, trying to buy 2.5i premium with popular package #1, truecar.com sent me 3 dealers offer with MSRP $28,887, truecar price $27,150, a little over 5% off MSRP. The estimated true dealer cost was calculated by formula is about $26,457, supposed to be the best price, but still 8% off MSRP. I am confused about 11-13% off the sticker of MSRP.
Should I start to counter offer from $26,457, or 10% MSRP. I will post final deal
after I finish the final transaction.
Thanks.

You can offer whatever amount you feel comfortable with, based on the research you've done. If you can show the dealer how you arrived at your offer amount, the credibility may go a long way.

Also, it never hurts to work with more than one dealer at the same time; getting them to compete against one another will always result in a lower price for you.

lsu7

Thank you.

raybear

Different brands have different allowances for profit margin, Subaru is on the light side so don't feel dismayed, 8% off is a really good deal on an Outback and you'd probably have to order one to get it.