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Purchasing Strategies - Questions & Success Stories

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  • bobstbobst Member Posts: 1,776
    When I traded in our 87 Taurus for a Honda Accord in 1995, I did it like Mike.

    I figured out what I would offer for the new car and subtracted what I thought our trade was worth. The difference came to $13600.

    I went to one dealer and said, "I will give you $13600 and our Taurus for that new Accord over there." They turned it down.

    I went to another dealer, offered $13750 along with the Taurus, and they accepted.

    Socal, on the other hand, likes to negotiate, so he does it very differently.

    I suggest you do whichever way you enjoy, Rourke.
  • rroyce10rroyce10 Member Posts: 9,332
    ....... My great Grand Daddy used to say .. "always stick to the KISS formula" --- keep it simple stupid ....

    Like Mike and Bobst mentioned above ... the only difference, that makes a difference --- "IS" the difference ... your trade and "X" amount of bucks ..

    You don't need Himalayan soothsayers, crystal balls, Voodoo dancers or Psychiatrists ... just some basic information.

    Find the vehicle or vehicles you like, do the right research - and make sure you drive them all .. and that doesn't mean "around" the block .. that means, take them on your streets, your malls, your driveway ....

    When finished .. you can look up Kbb and Edmunds and get an idea, a ballpark, a zipcode, because that's all they can ever give you ... when you get "serious", then roll over to "Real World Trade-in Values" read the guidelines (with all of the specifics) and we'll get you into $300 of the real deal .......

    K-I-S-S .... keep it simple stupid.



    Terry. ;)
  • socala4socala4 Member Posts: 2,427
    The dealer has given you advice that works best for the dealer. By following that advice:

    (a) You are the first party to name the number, meaning that you are establishing the starting point (read: you've set the starting point for numbers, and from here on out, the numbers will be moving toward his direction and away from yours.) That's why a cardinal rule of negotiation is: "He who names the first number, loses."

    (b) You've put all your cards on the table, before you've ever seen the dealer's hand. You've told him upfront exactly what your hopes are, without getting any information in return that might have helped you to get even better pricing.

    With all due respect to Bob, one flaw with his method is that he names all of the numbers without knowing whether those numbers are truly optimal. While it is certainly possible to guesstimate a range of prices, you don't really know how low you can go with the purchase price, or how well you can do with the trade, until you've used the negotiation process to get more information by interacting with the dealer, observing his individual style, finding his hot buttons, etc..

    It is not correct to assume that there is a magic single price. In reality, there is a range of acceptable prices, and the specific price that you end up with will come from a combination of timing, individual circumstance and finesse. (Think of flying an airplane -- we can guess with reasonable accuracy the range of prices for all of the passengers, but each passenger likely paid different prices from one another. Some will have paid a lot, others not very much.)

    Keeping your trade and new car purchase separate, and putting the new car haggle first, are actually extremely easy -- just do one, then the other. This process conducted in that order also gives you more leverage, so it's easy to see why a dealer would be happy if you gave that up before you began.
  • raybearraybear Member Posts: 1,795
    Actually, Terry's right (though I prefer to Keep It Short & Simple).

    The bottom line is all that matters. You should have a good idea what your trade is worth and what you're willing to pay, then ask the dealer for his offer, all-inclusive.

    It doesn't matter what they want to sell the new car for if they think the trade's a gem or if they're willing to blow out the new one to hit a goal and think the trade's a rat.

    I've had too many buyers confuse themselves by separating the issue, they find dealer A will sell the new car for the price they want but dealer B will give them what they think the trade is worth; it all boils down to one thing.

    I'm not saying you shouldn't know what kind of deal you are getting in advance, it doesn't hurt to filter out the higher-priced stored by sending email requests for a quote, but in the end they will need to see your oldster and that's when the bottom line comes to play.
  • golicgolic Member Posts: 714
    Socala-

    There really is not a flaw is bobst method.

    Let's list the facts.

    1. 99% of dealers are not going to give you the rock bottom price at the first offering, and why would they *headtilt*

    In order to "get there" you need a certain level of research and time to work him down.

    2. Bobst, does his research and based on his criteria determines a price HE is happy to pay. Is it the absolute rock bottom? Who can really say?

    But, this method is not designed to "beat the price your friends, your neighbor or guy who cuts your lawn paid.

    Its a no-nonsense here is what I am willing to pay. Take it or leave it. Bobst does not waiver, he gets up and leaves. Try's it out on a few more dealers. If no one accepts, well then he knows his research or price is flawed.

    But his method, while starkingly different then yours is not flawed.

    I keep going back to the he who offers first loses, proposition. And I think that is dependant on what your first price is?

    If your research indicates the price you are willing to pay is X. And you start off with X. I would agree, chances are you are going to be paying X+.

    Which is why I think if you started below your target price and allowed some room to "give" to get there, I can not say that always offereing up the first offer is a loser?
  • snakeweaselsnakeweasel Member Posts: 19,592
    When discussing trade-ins all tips I've read suggest to keep the new car purchase and the trade-in as 2 separate dictinct deals.

    Well there are two theories to this. One is to keep them separate the other is not to. I hold on to the theory that it really doesn't matter either way. When it comes down to it your paying X amount plus the trade in. So if you get a good deal on the car you won't for the trade in and visa versa. If you negotiate a good deal on the purchase you are less likely to get a good deal on the trade in.

    That being said I would recommend keeping the two separate for two reasons. One is that it keeps each step separate and secondly you can pull the trade in off the table without affecting the purchase. You can usually get a better deal selling your used car yourself, but this could take some time and can be a hassle. If you don't mind the time and hassle involved then I would suggest that avenue.

    Another thing you might try is if you have a used car place nearby like Carmax that buys used cars. Carmax will give you a quote that good for a few days and a few hundred miles. If you can get a quote like that and the dealer cannot beat it take it back and sell to them.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • snakeweaselsnakeweasel Member Posts: 19,592
    There really is not a flaw is bobst method.

    Actually Socal is right, he who mentions price first puts themself at a disadvantage. Say the dealer is willing to sell at less than the buyer is willing to spend the one who mentions price first loses out on either making or saving more money.

    Bobst, does his research and based on his criteria determines a price HE is happy to pay.

    While I have no problem with that the issue becomes what if the price Bobst is happy with is more than what the dealer will happily sell it for.

    Suppose Bobst does his research and comes up with a price of $20,000 but the dealer is happy to sell the car for $19,500. The best case is that the dealer says yes and gets $500 more than he wanted. Of course this means that Bobst overpaid by $500. But id the dealer comes out first with their price Bobst saves $500 and is even happier.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • socala4socala4 Member Posts: 2,427
    Bobst, does his research and based on his criteria determines a price HE is happy to pay. Is it the absolute rock bottom? Who can really say?

    That's why it may or may not result in an optimal deal -- because you don't really know. The dealer has a range of prices that he'll willingly accept (some prices may take more work or finesse to get, while others are readily available), and you won't know where the bottom of that range is (or the top, in the case of your trade) if you name the first number.

    Something to consider here is that the underlying point here: your style of negotiation impacts the price. Someone who is good at negotiation will be able to get to an area of the price range that others will not. A good negotiator will use the process to discover the other side's individual motivations and uncover more facts, which will help to inform the buyer and avoid simply bidding at the top of his price range.

    An exchange here between one of the salespeople was interesting, because he revealed his perspective of "take it or leave it" offers made during Round 1 -- he views your position not as being strong, but as being weak. That's because a take-it-or-leave-it position, when made at the very beginning of the process, essentially tells the other side that you are refusing a dialogue and that you are attempting to dictate terms. A smart salesperson knows that a buyer who draws his line in the sand during the first round is fearful of the process, and is probably conducting his negotiation in this style because he is afraid of making a mistake, not because his position is particularly strong or compelling. And I would bet that if you go in scared, you will probably be tempted to overpay somewhat just so you can "get it over with."

    And this salesperson is not likely to give you that lowest price, because he believes that he can use your fear to get you in a higher portion of the range, or else he takes your unwillingness to negotiate to heart, and simply moves on to the next customer. A salesperson's willingness to take a low price deal is affected in part by the amount of his previous time investment (it is human nature to want to get a return on your prior investment, even though it is spent and gone and cannot be recovered), so the more time and energy that he has previously invested in order to get that offer, the more compelling it will be for him to accept it.

    Which leads to the advantage of Bob's method: If you believe that the negotiation process will lead you to lose your head, make mistakes and being bid up to a substantially higher price, then his method is good because it disciplines you to keep you from going beyond a certain ceiling. With his method, you can use the invoice data and other sources to develop a very good price, meaning that you'll be fairly close to the bottom, but it probably won't be quite as low as it could have been.

    In fact, I somewhat borrowed from Bob's method in working with JenRN, because she indicated that she was inexperienced, and my hope was to get her toward the lower end of the price range, which may not have been the absolute bottom but was better than paying over sticker, as the first dealer would have had her do. For all we know, she may have been able to pay even less than she did, but we obviously can't walk people here through every step in real time, so I figured it was more important to help her to gain a substantial decrease than it was to get the absolutely lowest price. Better to leave perhaps $100-200 on the table (and for all we know, she may not have left any money on the table) than it would have been for her to pay $2,000+ more than she had to. And she was able to come away from this experience with a very good deal and skills that will help her do well in the future.
  • newtosubienewtosubie Member Posts: 39
    Socala4,

    Just to clarify, I didn't disclose my target prices first, the salesman started the negotiations with $32,655, and $5500 on the trade, and we went from there. Sure getting below my target would have been nice, but I stopped when my price was reached.

    Invoice per my research and the sheet the saleman showed me (FWIW) was $32,855, and we settled at $31,855.
  • socala4socala4 Member Posts: 2,427
    Nice job there, Subie, and thanks for the info and for clearing up my misunderstanding.

    You did very well, and it sounds as if you not only saved money, but that you had fun doing it. I'm glad that you've shown that negotiation need not be scary or distasteful, and that getting a great price is just as easy as it is to pay too much.
  • snakeweaselsnakeweasel Member Posts: 19,592
    That's because a take-it-or-leave-it position, when made at the very beginning of the process, essentially tells the other side that you are refusing a dialogue and that you are attempting to dictate terms. A smart salesperson knows that a buyer who draws his line in the sand during the first round is fearful of the process,

    That could very well be, but other factors may play a role in this. I have done negotiations (not for car purchases) that I drew the line right off the bat. It wasn't that I was fearful of the process but that the process was winding down, time was an issue and there were alternatives that didn't cross the line. I wasn't going to waste my time negotiating something that we wouldn't accept.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • socala4socala4 Member Posts: 2,427
    I have done negotiations (not for car purchases) that I drew the line right off the bat. It wasn't that I was fearful of the process but that the process was winding down, time was an issue and there were alternatives that didn't cross the line. I wasn't going to waste my time negotiating something that we wouldn't accept.

    I've actually done the same thing within a B2B context, but generally, both parties have been equally sophisticated, pricing was less fungible and/or there was a relationship that was ongoing, which is also going to impact style and price. I'd say car sales are different, largely because the prices are a lot more fungible and I am necessarily less informed than I would be in a B2B situation.

    Also, the type of information available to the informed buyer necessarily affects the process. It's pretty easy to figure out what people are paying for cameras and TV's, for example -- simply look at what the lowest cost stores are charging on their best days, and you'll probably be pretty close to the bottom. Haggling is certainly possible (and I would encourage it), but you are unlikely to pay huge sums below the posted prices. With cars, it's the opposite -- we know most of the dealer's costs, but not much about what they'll actually accept. Hence, there is a benefit to negotiating for the purposes of getting more information and securing a greater commitment to get the deal closed.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    Legally, there is no such thing as a non-refundable deposit. All monies exchanged can refunded, until the vehicle rolls over the curb. (unless your state has a cooling off period, which california is a no cooling off period state)

    If you leave a deposit, its like a gesture of doing business in good faith. Now for a locate out of state, where a car is trucked in and transportation fees are charged, a deposit is necessary. For local dealer trades, most dealers will still require a deposit. Especially if it is an oddball car that we would be getting. Even if a dealer trade is local there are fees tacked on to our cost, because we must pay for another PDI. (Pre delivery inspection).
  • sbell4sbell4 Member Posts: 446
    I just read the past 80 posts to catch up on what has been going on. On almost every point that there has been "heated" discussions about the consumer needs to remember that dealerships are multimillion dollar organizations and that a few $$$ of holdback on a dealer trade (or whatever other nominal stuff that you can think of) doesnt matter.

    It is just a car deal, dont make it hard because it is really pretty easy stuff.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    No Kidding!! I do not even know why I am subjecting myself to this, I guess I am just a glutton for pain.

    Its funny, When I first started selling cars, I remember this customer had all kinds of information with them, internet stuff, in fact in his trade in he had "car buying for dummies" and I thought he was going to beat me down on price, and he did not, and really he could of probably bought the car from me for about 2000 dollars less. But he had information overload. Throughout the years, I see it all the time Information overload.

    Even with salespeople, the ones who are successful are the ones who keep it simple, follow the same steps everytime, and do not look to deep into a car deal. And customers who do not look to deep into a car deal, get the best deal. Looking for a supposed agenda from a carsalesperson, and sitting there thinking about holdback, and what is going to happen in the F&I office ect ect, will keep you from focusing on the topic at hand and that is getting the best deal for YOU! The best deal for you not what is not what we tell you in these forums, Its what works for you and fits in your budget.

    All these angles and games of trickery we have is so utterly hillarious to me. Talks of holdback and 2 invoices ect ect.....comical.

    Do you know I could not tell you the invoice price on any of our cars, I could not tell you what our going rates are in finance are and dont even ask me about holdback because I have no clue.The only thing that is in my head while doing a deal is, how I am going to sell the car. I leave my voodoo doll on my fireplace at home. ;) In negotiations, to be very honest, I look to see if the buyer is a payment buyer, price buyer, or a rate buyer. That is far as my psyche is going . But usually I dont look to far because most of the time customers say "I dont care what the payment is I want the best price" or" I will pay 1000 over invoice but get my 620 becon score at 5.9%"

    So everyone, do your research, find out what your budget is, find out a realworld trade number for your car, get pre-approved and have fun and enjoy your car!

    Remember also, the salespeople in this forum are here to help you. Because, we have sold more cars than the most season car buyer in here has bought! :P
  • mikefm58mikefm58 Member Posts: 2,882
    I too agree, my head aches more after reading the posts that go on for more than a couple paragraphs......
  • socala4socala4 Member Posts: 2,427
    Looking for a supposed agenda from a carsalesperson, and sitting there thinking about holdback, and what is going to happen in the F&I office ect

    You might want to offer that bit of insight to JD Power:

    Dealer profits generated by F&I-related business continue to increase. Dealers report averaging a $693 profit per vehicle this year generated by F&I—an increase of $44 in gross profit per vehicle (6 percent) compared to 2004. Likewise, profit for used vehicles has increased $20 per vehicle—up 3 percent since 2004. While used vehicles continue to be more profitable for the dealers than new vehicles, the increase in new-vehicle profits has narrowed the gap between the two in 2005.

    And mind you, that's just the amount of profit that they voluntarily reported.

    Now you can see why F&I matters so much to the dealership. For an investment of a couple of hundred dollars which puts the car on his lot (your dealer doesn't actually buy the car at invoice, he finances his purchase), your dealer gets access to several areas for profit:

    -holdback
    -whatever amount that you may have paid him above invoice
    -the value of your trade-in
    -financing fees
    -F&I sales
    -possible marketing incentives

    And that doesn't include any other additional reimbursements and kickers that may be available.

    Now you can see why they push these F&I products here, and why they'd like to pretend that they have no gameplan for getting their hands on these sources of profit. (Witness the misstatements above about gap insurance, with which they try to have you confuse the trade-in value with the much higher amount that your insurance would pay to you if your car was stolen or totalled when determining whether you'd need that insurance.) It isn't to help the consumer, it's to make more money.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    oops sorry long winded..... :blush:
  • snakeweaselsnakeweasel Member Posts: 19,592
    All these angles and games of trickery we have is so utterly hillarious to me. Talks of holdback and 2 invoices ect ect.....comical.

    I have to agree with you, thats why I keep saying forget what the invoice is, what the hold backs are concentrate on what the selling prices are. that is the best guide in ascertaining where you start in your bargaining position.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    OH MY GOODNESS PROFIT!!!!! NASTY WORD!!! We would'nt want that!!!

    Part of the reason there is more profit in F&I is the increase of Sub Prime finance deals. The average credit score is declining year after year.

    Plus the availabiity of new products are available to consumers also. WHICH ARE ALL NOT BAD.

    It isn't to help the consumer, it's to make more money.

    I chanllenge you work one week in a dealership and I think your views would change drastically. GAP is not a cash cow it is a necessity for those who put little or none down and roll in negative equity or have high insurance deductable. I do not want to beat a dead horse but I feel you are misleading people about this. Again in many states GAP is state regulated and is not marked up it is a percentage of the selling price.
  • platinumbird1platinumbird1 Member Posts: 25
    I've seen user posting messages about getting a price for a new car from $500.00 up to $2000.00 What purchase strategy I can use to save money?. Any advise is highly appreciated. :)
  • socala4socala4 Member Posts: 2,427
    I don't mind if you make a profit, but I'm not going to give you more than I'd need to.

    You are trying to pretend that holdback, invoice, incentives, financing fees, etc. don't matter. But if it doesn't matter, then why does Edmunds provide this information on this website? Why is it that those who pay the lowest prices all know the data before they buy their cars?

    Because they know that it absolutely matters (and of course, so do you). If the customer understands how dealers pull profits from many sources, and measure that profit against the amount of their floorplan, then it becomes easy to understand why most cars being sold today can be bought near invoice, or even below invoice.

    This information is amply available to consumers, so why shouldn't they use it? The fact that the dealers are trying to discourage us from looking at them shows me that Edmunds, etc. are on to something.
  • rroyce10rroyce10 Member Posts: 9,332
    ..... Sorry Charlie .... but holdback is not a profit center and never has been .... dealers are lucky to retain 80% of that income over a period of 6 months ... keep in mind, the dealer pays for everything "upfront" and is reimbursed for some things later ...

    I asked you this before .. what business are you in.?



    Terry.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    I NEVER said that invoice price and holdback did not matter.
    I said, in negotiations, from my angle it makes no difference. I, I, I, do not need to know it. If I know it will the customer be more likely to buy from me? No.

    What I said is that there are many components to a good deal. And what people can afford. I can buy an A8 for invoice and get buy rate. That is a great deal. But I can not afford that so it is not a good deal for me.

    Some people a good deal is offering 500 over cost on a car and getting out of a dealership in a 1 hour and a half. Others its offering invoice and minus 1/2 hold back and staying in a dealership for 6 hours budging 100 dollars an hour. And that is a good deal to them. And others inbetween.
  • british_roverbritish_rover Member Posts: 8,502
    Used vehicle sales are flat across the country. Everyone I know has said that over the past year or more their used vehicle sales and gross profit per vehicle is down. The domestics giving their cars away for the past two years has depressed the entire used car market.

    If auto dealers were so incredibly profitable then why aren't they springing up at every corner? Many dealerships are closing or consolidating their autogroups. We have closed our pre-owned only location just before the first of the year.
  • sbell4sbell4 Member Posts: 446
    I know how you can get a free car of your choice

    Just go out and buy some land, a franchise, finance about six million dollars worth of cars, buy yourself another couple of million dollars worth of used vehicles, build a facility, hire some people and try your luck and see how it works out for you.

    I left out the part about insurance, liability, overhead, advertising, etc....

    we could just take the bus to work.
  • socala4socala4 Member Posts: 2,427
    I said, in negotiations, from my angle it makes no difference. I, I, I, do not need to know it.

    As a salesperson, you may not know it, but you can bet that your sales manager knows it.

    From my standpoint, I know that there is somebody on your side of the table who knows it, and who uses it accordingly. Whether you specifically know it doesn't change things much for me as a buyer.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    probably has a "consultanting business"
  • socala4socala4 Member Posts: 2,427
    I know how you can get a free car of your choice

    Who said anything about free cars?

    If you want to pay more, then go ahead, nobody's stopping you.

    But this thread is about consumers saving money, not about finding new ways for dealers to increase their profits. Feel free to start a "Why we should pay higher prices" thread, and provide your viewpoint as to why it's more important for a dealership to make money than it is for a customer to keep it.

    (And I assume that the guys who run the dealership are grownups who aren't going to allow customers like me to put them out of business. If they don't want to meet my price, they don't have to.)
  • snakeweaselsnakeweasel Member Posts: 19,592
    You are trying to pretend that holdback, invoice, incentives, financing fees, etc. don't matter.

    Because holdback, invoice, incentives, and the like in reality don't matter. It doesn't matter how much profit the dealer make, if any at all. Just like it doesn't matter how much profit the Piggly Wiggley makes on a can of soup, if at all. Or how much Best Buy makes on the 60 inch HDTV, if they made any at all.

    If those thing truly mattered then it would be a simple matter to plug it all into a formula and get a figure that is close to what the car will sell for. But guess what? Some cars sell for under invoice, some for invoice, some for more than invoice, some for just under sticker, some for sticker and some over sticker. It doesn't matter what the invoice or the hold backs are, if it did every car would sell for X amount above or below invoice less rebates. But they don't.

    Cars sell for what the market will bear, nothing more, nothing less. What matters is what the dealer can sell them for, not what you think they should sell them for. That is why it is far more important to know what the particular car you are looking at sells for. Any smart consumer knows that.

    Try buying a Corvette Z06 or a Pontiac Solstice for under sticker and you will understand.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • snakeweaselsnakeweasel Member Posts: 19,592
    If auto dealers were so incredibly profitable then why aren't they springing up at every corner?

    Well first off is a high startup cost.

    Secondly if there was a dealer on every corner how many cars would each sell every month? two? The market will support only so many dealers.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • british_roverbritish_rover Member Posts: 8,502
    Just like you are never going to see any of my the Rovers on my lot for anything close to invoice at least at our particular dealership. There are some rover dealers who will sell that way. No, let me rephrase that there are 5 or 6 in the country that are large enough to sell that way. The only time you are going to see close to invoice deals on Rovers is at the end of the model year when the 3000-5000 dollar factory rebates come out.
  • british_roverbritish_rover Member Posts: 8,502
    I know I was asking a rhetorical question that if there was so much profit then their should be more dealers.

    I think the average dealership returns, at best, high single digit percentage points on the original investment after all expenses.
  • black_tulipblack_tulip Member Posts: 435
    Try buying a Corvette Z06 or a Pontiac Solstice for under sticker and you will understand.

    Sure, there are a few hot cars, but for the vast majority of mass produced vehicles, it is important to know all the line items to find out the absolute minimum a car will sell for. If I could look at some data that would tell me what the new cobalts sold for in my area for the past month, I would use it. In the absence of such data, next best thing is to find out the true dealer's cost so that one make an intelligent offer.
  • socala4socala4 Member Posts: 2,427
    Sure, there are a few hot cars, but for the vast majority of mass produced vehicles, it is important to know all the line items to find out the absolute minimum a car will sell for. If I could look at some data that would tell me what the new cobalts sold for in my area for the past month, I would use it. In the absence of such data, next best thing is to find out the true dealer's cost so that one make an intelligent offer.

    Exactly right:

    -Almost no cars are "hot", and many are well overstocked. Cars such as the Prius are an exception, not the rule.

    -You don't really know what people are paying (and there is no single market price, there is a range of prices that you can only estimate at best). However, you do know what the dealers are paying, and what their sources of revenue are.

    (And don't let Royce mislead you, holdback is a form of revenue that contributes to profit, no matter what he'd like to call it.)

    All this stuff is actually quite easy. A good haggle is fun, and will save you money. We've got someone on this thread who would have paid more than $2k more than she did, and had higher payments, if she had ignored this information.
  • bdr127bdr127 Member Posts: 950
    I asked you this before .. what business are you in.?

    I think he's ignoring you.... :P
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    But this thread is about consumers saving money

    Heaven forbid if consumers on this thread listen to professionals in the industry points of view who actually have to customers best intrests in mind.

    I take my friends to buy cars and I am not going to lie, I wear the salespeople out, and I grind on price(but I am fair) and I give the F&I fair warning before we go in the box, but its because my friends are not educated in car buying and most of the time We end up with a green salesperson, and Its usually for one of my girlfriends and we giggle and have fun and the salespeople think that we arent serious until the negotiation process. I make my friends as most prepared as possible before we get there too. But its like this if I was consumer on this forum I would listen to someone who has sold 1000 cars in their career over someone who has bought 100 in his or hers life.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    And don't let Royce mislead you, holdback is a form of revenue that contributes to profit, no matter what he'd like to call it.)

    RRoyce, how long have you been in the business isnt like 25 years? You must not know of what you speak. I forgot all car people have an agenda to pollute the customers minds even in the edmunds forums....hee hee!!

    Ya dealerships make oodles of money from holdback....thats why we got a memo friday saying we have to pay for our own drinks for saturday lunches.
  • black_tulipblack_tulip Member Posts: 435
    thats why we got a memo friday saying we have to pay for our own drinks for saturday lunches.

    And I have to pay for all my lunches and all my drinks...oh the horror!
  • socala4socala4 Member Posts: 2,427
    Ya dealerships make oodles of money from holdback...

    Holdback is usually several hundred dollars. It's good for customers to know that if they buy a car, the dealer will be paid additional money that contributes to their profit. Royce can label it as a "reimbursement" if he likes, but it's still a source of income to the dealer that is going to motivate him to close my deal.
  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    we work 12 hours with no break and we can not leave the dealership on saturdays to get lunch. Most stores cater in on saturdays.I work at a store that only needs 5 people during the week but on Saturday, we should have 8 but we get slammed on Saturday.

    I was using that as an example to show what dealers are having to do to cut costs.
  • rroyce10rroyce10 Member Posts: 9,332
    .... You betcha ....!

    Me and the g/f are taking our 2nd trip to Australia and our 3rd trip to China with it for 6 months .. then we're going to build right next door to Tiger, then I'm going to buy that new Baja 405 and put it in the backyard .. oh, and I need to get me some more Rolodex's, and I always wanted a Llama for a caddie ...........

    That boy is so lost we'll need to get him 2 GPS's .. one for his pants and one for his shirt pocket, because he speaks in such fork tongue we'll need a parachute and some duct tape to bring him back to earth ... Whooo.!



    Terry. :shades:
  • snakeweaselsnakeweasel Member Posts: 19,592
    Sure, there are a few hot cars, but for the vast majority of mass produced vehicles, it is important to know all the line items to find out the absolute minimum a car will sell for.

    Yes cars that sell for over sticker are rare, but it was to provide the point that looking at the line items may not be the best way to go. Its like this, suppose I look at the invoice dealer hold back and the like and come up with a figure of say 17,500. If the dealers are selling that car all day long at 18,500 you will have to dramatically increase your price. That would put you at a disadvantage. but lets say that it is a slow moving model and they sell few and far between at 17,000. Now you come in and say "I will buy that car for 17,500. Guess what? you over paid.

    While getting that information may be a little harder and it changes faster than other information it can be gotten and helps out better.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • bigdveedubgirlbigdveedubgirl Member Posts: 402
    the money is spoken for. It goes to operating costs. If you want to attack a cash cow in a dealership go visit the service department. I worked at a dealership that sold 12 cars a month and still turned profit because we had a stellar service department.
  • socala4socala4 Member Posts: 2,427
    You can call it what you like, or say that it's spoken for, but from the customer's standpoint, it doesn't matter.

    To provide a numeric example, if you sell Car A at $500 over invoice + $500 holdback, or if you sell Car B at $300 over invoice + $700 holdback, you still end up with $1,000 in both cases.

    It really doesn't matter to me what you'd choose to call it, all I know is that you are motivated to get me to buy a car because you want both my money and the holdback (and to pay off your floorplan financing.)

    It's a bit like paying money into a matching 401k -- if my employer matches my contributions, then I am more motivated to make my contribution because I'm eyeballing my employer's kicker, i.e. I know that my $100 becomes $200 because of the matching plan.

    That extra money motivates the dealer in the same way, and it makes that at-invoice price a lot more appealing than it looks to someone who doesn't understand what the holdback is about. (That's especially true when you consider that the true cost for the dealer to secure that vehicle is perhaps $200, not the entire invoice price.)
  • bdr127bdr127 Member Posts: 950
    Sure, there are a few hot cars, but for the vast majority of mass produced vehicles, it is important to know all the line items to find out the absolute minimum a car will sell for. If I could look at some data that would tell me what the new cobalts sold for in my area for the past month, I would use it. In the absence of such data, next best thing is to find out the true dealer's cost so that one make an intelligent offer.

    But still, you can't use an invoice price to define a "deal", even with "normal" cars that sell below MSRP.

    For example, if you're looking at a Honda Accord, then you could probably get around invoice or less. If you're looking at a BMW 3-Series, you'd be lucky to get as low as $1000 over invoice. On a Hyundai Elantra, an invoice deal is common. If you're buying a BMW 7-Series, you're getting a great deal at $4500 over invoice.

    Then you have the market influence.... In hyper-competitive markets like southern California and south Florida, you can get much closer to invoice on practically any vehicle. Move to somewhere else like mid-Iowa (?) and you'll pay much more for the same car.

    It totally depends on the car and the market. Just knowing the invoice price will not tell you what is a "good deal" and what is not.
  • black_tulipblack_tulip Member Posts: 435
    But still, you can't use an invoice price to define a "deal", ...

    I never said you define a deal (whatever that is) using invoice.

    I was advocating to use all the cost information (invoice/holdback/rebates etc.)to formulate a starting point (below which the dealer would lose money). You make your offer at that figure-100 (an example) and after the salesdude complains about "taking food off his baby's mouth", slowly raise it (use the bobst method if you like) in small increments till a sale happens.

    Is it guaranteed to give you the lowest price under all circumstances? No. But it is a pretty good method that works most of the time. I understand there is nothing like having a finger on the pulse of the market, but that takes lot more effort than I am willing to exert to buy a car.
  • bobstbobst Member Posts: 1,776
    Hi everyone. I see you have been talking about me while I was out playing golf with my 7-year old granddaughter.

    Anyway, Socal made this interesting point: "A salesperson's willingness to take a low price deal is affected in part by the amount of his previous time investment"

    Do you all think this is true?

    For example, assume I offer $25K OTD for a car and have it turned down. Could Socal come in and negotiate for awhile and get them to accept $25OTD?
  • snakeweaselsnakeweasel Member Posts: 19,592
    For example, assume I offer $25K OTD for a car and have it turned down. Could Socal come in and negotiate for awhile and get them to accept $25OTD?

    Maybe, maybe not. Some deals are so bad that no matter how much time you have invested its just better to cut and run.

    2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D

  • socala4socala4 Member Posts: 2,427
    I offer $25K OTD for a car and have it turned down. Could Socal come in and negotiate for awhile and get them to accept $25OTD?

    If the $25k deal falls within the range of acceptable prices, then yes. If not, then no.

    Time or not, I wouldn't expect you to get a car for $10,000 under invoice just because you're persistent, but if your price is within the ballpark, it will become more appealing as more time is invested in closing you. Some deals are simply not doable, but others become more doable (or less painful, if you prefer) as time passes.

    The value of time in a negotiation is integral to negotiation strategy. Again, I'd advise reading Herb Cohen's You Can Negotiate Anything, as he does an excellent job of providing examples of how this works and how you can use time to your benefit.
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