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Purchasing Strategies - Questions & Success Stories
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I am the customer, so I get to decide if the car is used or not. If I say it is a used car, then it is a used car, and all I will pay is the normal used car price.
Yes they are, the only difference is that they have never been titled, big @#$% difference.
A sludge slowmobile with 6,500 miles is still a sludge slowmobile with 6,500 miles regardless of if it was titled or not. It still was driven around town and has all the wear and tear, maybe even more (I know how some treat a demo).
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
So, thebill. Are you saying that if you sell a car to a customer and he comes back 7 days later (before all the paper work gets processed) with 400 miles on the car and wants to return it.
Then what no problem? You will give him his money back and you can just re-sell this "new" car? *headtilt*
And thats the only difference thats why saying a demo is not a used car is a bunch of hogwash. Its been used and saying its never been titled is a smoke screen.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
===========================
Are we back on this again ..l.o.l....
"Quickly enough" is just a wild guess ..... the current vehicle is paying for the last 3 that came in January .. the 3 in January are paying for the 5 that came in November ....... it's a Porsche store, they're lucky to sell 60 vehicles a month .. and they're certainly not going to gamble on "quickly enough" .. especially when they work off allotments, not phone orders ...
The average dealer is lucky (and I do mean *lucky*) to retain 85% of their projected holdback that they might "maybe" receive in 3 or 4 months, maybe .... depending on the product and the time of the year, most work off of 75% or less ... that's why holdback is not profit or anything even close - it covers a percentage of the expense - nothing more, nothing less .....
Terry.
Holdback is another form of "revenue" at the end of the day, we accumulate revenue then diminish that result by our aggregate expenses resulting in a net profit or a net loss.
How a dealer manages his business will determine weather or not he is profitable.
Not sure if we want a lesson in cost accounting,
On a particular car sale, the dealer's revenue is what he recieves from the buyer, the holdback, any other assortment of incentives.
However, the cost would include the invoice, floorplan, commissions and a certain allocated amount of overhead.
The sale of new vehicles is only 1 profit center to a dealer.
Other profit centers include: F&I, Service, Parts, Used Cars.
I do not think it is out of line to isolate a car transactions merely on "invoice" as a dealer has incentives for volume and has other profit centers to make up for break-even or loss transactions.
Another analogy is to think of a restaurant. The margins on food is often very small but the margins on beverage, especially alcohol is a completely different story.
So, even though a restaurant is losing money on the food, the margins on beverage more than cover that deficiency and the restaurant is still profitable.
Which is why you need to educate yourself on every facet of the transaction and shop around for:
1. The price of the vehicle.
2. The financing of the vehicle.
3. The value of your trade-in.
I think people often loose site of the importance of #3 and fail to shop thier car around to other car buyers than just the dealer.
ok, I have now forgotten the original question I was replying to, post over
That is a contradictory statement, if something reduces expense it increases profit (or decreases debt). Profit is revenue minus expenses (or that what loss is if expenses exceed revenue).
So in fact getting money on a holdback effects profit.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The Demo would because it would qualify for New Car rates and residuals. Even though the USED Audi would have a lower selling price, the Residual would drop and the rate would be higher therefore a higher payment.
Even though a car has 6500 miles on it and its a DEMO Call it a new car I dont care, as long as I get a cheaper rate! And the way I look at it, someone broke it in, and Its still has a warranty on it and most likley they will make it good as new!
Your heading down the right road, so don't fall of the horse now .....
Your right, it effects the potential overall profit .... the dealer pays for the expense of all of the incoming and standing inventory - upfront ..
The holdback is used to offset that cost - not pay for it .. and even that comes in spurts and dribbles .. that's why dealers have to very careful because "writing one down" causes a domino effect and raises the entire unit cost across the board ..... keep in mind, they're lucky to "contain" 80/85% of that holdback, and even that can be months away ... so they're in the negative by 15/20% on their float ~ right from Jump Street ...
Terry. :surprise:
Ya, it sounded like you were drifting around ..l.o.l... .. restaurants are really a poor example .. they're overall profits run 25/40% ..... dealerships are lucky at 3/5% ...
Terry.
I have a question about the car's real price for a dealer.
When dealer order a car from manufacture, the car's real cost to a dealer is:
price of base model + price of options + destination charge ?
or:
price of base model + price of options + destination charge + TDA + dealer holdback + Financial Reserve ?
What's the TDA or Finacial Reserve?
Thanks.
As described by Golic above, dealerships have numerous centers of revenue, with the most important being (a) the sale of the new car, (b) the ability to buy trade-ins low and resell at a high markup and (c) profits related to the F&I department (financing, insurance, add-ons, etc.) Here, I'll focus on the new car aspect of the deal.
If you think that buying a car with an invoice price of $20,000 at $500 over invoice yields the dealer a markup of $500, and a margin of 2.5% (500/20000 = 0.025), you would be sorely mistaken. Instead it looks something like this:
-- Margin above invoice: $500 (invoice includes the base car, options and destination charges, plus possibly some fees, some of which may be reimbursed by the manufacturer post-sale)
-- Holdback: $700 (roughly 2-3% of MSRP or invoice, depending on the manufacturer. Some luxury makes will tie this to CSI scores or some other measure, but the amount paid should still amount to this 2-3% amount.)
-- Total: $1,200
(And that doesn't include any additional incentives that might be paid for selling nameplates that have excess inventories, various incentives for hitting sales targets, etc. Also, as is the case, some automakers reimburse the "advertising fees" that are included on the invoice.)
Now, look at the $1,200 in the context of the margins on the car. The dealership does not actually pay $20,000 for the car with the $20,000 invoice -- instead, it borrows the entire amount (the "floorplan", which includes a modest fee, plus interest.) As a result, his out-of-pocket outlay for this car may work out to be perhaps $200.
So, let's revisit this deal. His margin on this is not 2.5%, but is actually 600%. ($1,200 / $200 = 6.0). Take the same deal at invoice price, and the markup is still a pretty healthy 350% ($700 holdback/ $200 floorplan + interest = 3.5).
Now, roll this into what is the ideal car deal for the dealership, one that also includes a good quality trade-in that can be resold at a nice profit, along with dealer financing. For fun, let's also pretend that there is some sort of extra factory-to-dealer incentive of $500 (the same incentive currently available to Honda dealers for the Accord.) Let's suppose you don't negotiate very hard, and pay $1,000 over invoice, and see what this deal might look like:
-- Amount over invoice: $1,000
-- Holdback: $700
-- Factory to dealer incentive: $500
-- Profit from sale of trade-in: $3,000
-- F&I profits: $700 (this is a national average, according to JD Power)
-- Total: $5,900
Measure it against the floorplan, and it becomes clearer how well the dealer is doing here:
$5,900 / $200 = 29.5, or 2950%.
In other words, you might think that the dealer needs $20,000 in cash to get his hands on a single car, so that he would need millions of dollars to have all those cars sit on the lot. Yet in fact, the dealer needs very little cash to get these cars onto his lot, a fact which greatly affects his relative level of profit.
It also shows how the dealer is motivated to move inventory. The faster he sells a car, the more money he makes, because he can stop paying interest on that particular car. Think of the parking lot as shelf space -- if you can take a given amount of space, and move 100 units from that space instead of just one, the reduced margins you might get on a "mini" deal can potentially be made up by doing a lot more deals.
Now, you're not going to buy a Prius or hot car at $100 over invoice, at least not today -- these are highly popular, and the dealer can afford to decline your low offer because he knows someone else will pay far more. But most cars are available in abundant quantities, in which case your offer can be far more interesting if you negotiate it properly, because the dealer would rather take your money than risk the possibility of carrying more interest charges, while the salesperson wants to get the commission for himself, rather than have it potentially go to someone else.
By the way, the exact numbers above don't matter, so if someone wants to quibble about those exact dollar amounts, ignore them. The salient points are:
-When you buy a new car, the dealer isn't just making the amount that you pay, but amounts from the manufacturer, some of which you do not see.
-The fact that all of the dealer's inventory is financed greatly improves his margins on a percentage basis. Add the low investment to the other money that the deal brings in, and a tiny deal ("mini") looks much better than you might have realized.
-When you buy a car, a dealer gets to stop paying for interest and floorplan that he would otherwise have to keep paying if you didn't buy it, so he is motivated to sell products quickly to reduce his overhead.
-For most cars, the issue for the dealer isn't supply-and-demand, per se, but whether he can get this particular customer who is in front of him right now to buy something today that will help him to hurdle his margin requirements. The dealer knows that some people will pay a little, while others will pay a lot, and he will balance his desire to get a maximum price with these other equally important concerns.
-The fact that the dealership stands to make a lot of money on a good trade-in and the F&I department sometimes means that the new car part of the deal is really just a gateway for the dealer to gain those other profits. Since you know that a dealer wants a good trade-in and to get you to borrow his money, use those as a lure to induce the dealer to do the new car sale at a low price in the hope that he can capture those other components, even if you ultimately pull them off the table later.
Example. Shop your best car rate. Tell the salesman you are pre-approved, but You are willing to finance through them if they match your terms. If your CU/Bank is giving you 5.9% for X months then let this be a bargaining chip to lower the car price.
Dealer may give up more on price, knowing they can recover in F&I.
When I was younger, I was more of the method Ill give you X and my car for this nice new car. But, today I think by seperating each transaction you will do better. I think this approach works to the advantage of the dealer as he can spintalk you more into raising your offer.
Let the dealer know after the car is negotiated, we can talk about my trade in. You should get offers on your car before you go to the dealer, especially like a CarMax who will give you a quote good for 7 days/ 300 miles.
Now, by dangling the carrot of the trade-in. The dealer knows he can make a healthy profit on the used car and once again this can help you get a lower price on the new car. And if you don't like the trade-in. You say no thank you and take your car to carmax.
You have more flexibility on a trade-in as well, since you not only get the value of your car, but you will save sales taxes as well. If you sales tax rates is 8% then the $10,000 they offer you is equivalent to $10,800. So, if CarMax offered you $10,500 the dealers lower offer still works to your advantage.
CAVEAT: If you are upside down on your trade-in, you might need to a different gameplan.
The dealer offered me a price $ABCDE and showed me his invoice price. He told me he lost $1000 by selling the car at $ABCDE and I should take the offer.
Now I understand a little bit about how the dealer makes money. And you also explain what I saw in below posts:
2006 Camry LE, $18,310 OTD
2006 Camry LE, $18,250 OTD
He got a Camry LE for $16,400+TTL(total $18,250 out of door) and the $16,400 is $4,790 below the retail price $21,190!!!
By the way, the so called "TDA" is the ad fee and may be reimbursed by the manufacturer post-sale?
Thanks.
RESPONSE: I am not a stockholder in this dealership, so my purpose of coming here was not to add wealth to the bottom line. I came here to buy a car at my price. If I am waisting your time, please let me know and I will drive over to your comptetitor dealership and negotiate the car with them.
You can also add: Invoices, I have tons of invoices at my office too, want to go over there and look at them?
For one, I'm a proponent of being very careful of getting into what I'll call the "out-the-door mentality". While I understand that buyers often think that they're protecting themselves from extra markup by thinking in terms of the OTD, I believe that they can get more easily blindsided by trying to ignore the parts. Eventually, you do need to get to the OTD price during your discussion, so that you can avoid any unpleasant last-minute surprises, but you should still understand all the pieces that comprise the whole. (That, and if you simply talk about OTD numbers, you lose the opportunity to get a lower price by cutting down each component into smaller amounts. And don't forget to "nibble" at the end....)
That being said, in the case of your Camry, I suspect that the dealer may be using customer cashback in order to conceal what is happening here. Dealers will often not tell customers about these monies that are directly available to them, and quote them "OTD" prices that bury these amounts into the purchase. For example, if you pay invoice on a deal with $1,500 cash back, and you forget to apply the cash back to the deal, guess what? The dealer just made $1,500 over invoice, plus his holdback and any other reimbursements.
I will try to find an internet source that indicates which makers reimburse ad fees and which ones don't. I realize that Edmunds argues that they are always a legitimate part of the invoice, but I would not entirely agree with that position. It would behoove you to do your own research as well.
By the way, 2006 Camrys currently have a factory-to-customer incentive of $750-1,500, so do not forget to use that to get your price to a level that should effectively put you below invoice, after that has been taken into account. Toyota's inventory data by nameplate isn't published in Automotive News, but with an incentive program like that, you can bet that at least for the moment, they have some excess product that they would like to move quickly.
"How does a dealership work?"
Either way it reduces the cost of the car to the dealer, thereby increasing profit on that vehicle.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I will bet that on any given day a typical car dealership has higher dollar sales than a typical restaurant. 3% on the sales price of a vette will be close to what many restaurants will take in in a day.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Oh stuff like that makes me cringe as it is a total violation of GAAP (Generally Accepted Accounting Principals). You calculate margin on COGS (Cost Of Goods Sold) not cash flow. The dealer needs $20,000 to get the car, if not cash then a promise to pay. That $20,000 is a liability on his (or hers) books until paid off and must be accounted for as such.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Now don't quote me on this, but I was told that that is not the case in every state. Mind you I said I was told that so don't quote me on it.
CAVEAT: If you are upside down on your trade-in, you might need to a different gameplan.
If you are upside down on your trade in maybe you should keep it a while longer. If you trade it in you will only get yourself deeper in the hole.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
That being said, this was explained so that consumers understand that a deal that may seem impossibly low can actually be pretty good because the dealer (a) gets cash above and beyond the purchase price, (b) has motivations to payoff his inventory that may not be obvious, (c) is often willing to take a price based upon his costs, and (d) his use of inventory financing impacts the way that he measures profits.
If the dealers had to pay cash to hold their inventory, if the only money in the deal came from the customer, and if inventories were scarce, then things for the dealer might be very different than they are today. All these things play a factor in helping many a "mini" to be a better deal than it may seem.
Maybe I have been living in my hi-line bubble. (I am not trying to be a snob, I apologize If I sound like one)
I have never had anyone say anything like that to me, and I do show invoice, and Edmunds TMV on our car and the trade.
Really the easiest way to negotiate with a dealer is to stroke their ego a little.
That's absolutely true in almost any negotiation, whether it's car buying or anything else. Hardball can sometimes get nasty and can be OK when used appropriately, but generally speaking, paying respect to your opponent's positions and skills is going to get you better results than would disrespect or taunting. You rarely should want to create a situation in which you are overtly competitive with the other side.
I was once involved in one negotiation (not a car purchase) in which my (tactless and talentless) partner at the time made a point of telling the other side after a lengthy haggle that my side was "really beating 'em up," a comment that he uttered with a big dumb grin on his face. Sometime after my unsuccessful attempt to deflect this completely stupid and needless remark (very hard to dig yourself out of the bottom of that one!), the other side went on later to cleverly use it against us with a very well timed act of showboating in which he derided us for our apparent unfairness, while referencing my partner's earlier smug comments.
That appeal to fairness and decency literally cost us, as we then quickly collapsed by agreeing to a deal point that had been fairly important to them that we would have otherwise rejected, all motivated by this desire to rebuild bridges burned by this earlier remark. I have to commend the other side for using my side's faux pas to its advantage, and for using it to get something that they probably would have not had had we had not crossed a line that we should never have crossed.
Its easier to catch bees with honey than with vinegar.
-- Amount over invoice: $1,000
-- Holdback: $700
-- Factory to dealer incentive: $500
-- Profit from sale of trade-in: $3,000
-- F&I profits: $700 (this is a national average, according to JD Power)
-- Total: $5,900
Measure it against the floorplan, and it becomes clearer how well the dealer is doing here:
$5,900 / $200 = 29.5, or 2950%.
===========================
Aaaah yes ... in a perfect world on a perfect planet that sure would be nice ..... you sure have alot of pretending goin' on ..l.o.l...
But let's review:
-- Amount over invoice: $1,000
40% paid to sales and management staff: (conservative figure, but I'll use it) balance = $600
-- Holdback: $700
dealer is paying a quarter point over prime on every inbound and current standing unit everyday - new and used, finance charge plus incoming balance = $450
-- Factory to dealer incentive = $500
-- Profit from sale of trade-in: $3,000
lets add those tires that someone forgot to add before they traded it - $250, let finish the service - $300, lets do the paint and clear work and pay the bodyshop - $700, lets do a detail, advertise it and floorplan it - $400.
40% paid to sales and management staff - $540
balance = $810
-- F&I profits: $700 (this is a national average, according to JD Power)
What JD Powers forgets to tell you ... is that the Retention rate on finance vehicles is less that 48% after 15 months due to: new contracts, refinance, repo'd, traded, stolen or someone just plain paid the loan off - it's a very diminishing return.
40% paid to sales and management staff: $280
balance: $201.60
Total = $2561.60
Then .. just for the grins and giggles we can subtract those silly little things like mortgage payments, insurance costs, fuel, workmans comp, lights, air, heat, office staff and supplies, maintenance, security, health insurance and those double truck Ad's to the tune of $45,000 a month ...
And since we're just "pretending" ..... let's just throw in the landscaper at $800 a month, coffee in lobby, cleaning supplies, promotions and that broken window that the bird flew into that I paid for because it was just under my $1,000 deductible .....
$5,900......? ..l.o.l... let's get into the "Real World" and try $900 before the county, state and then - the Big Tax Man gets there .....
You need to keep the Blarney for St Pattys Day and the drama classes for Baywatch ...
Terry
And since we're just "pretending" ..... let's just throw in the landscaper at $800 a month
Interesting. According to Automotive News, the average Toyota dealership sold 121 vehicles last month. Applying that figure on a per car basis, I guess you must spend $96,800 per month on landscaping.
I might suggest getting a different gardener. Sounds like you're spending too much on fertilizer.
This is a forum about helping people ... and the folks that come here, like Qbrozen, Mathias (stein13), Graphicguy, Woodyww, Bobst, Bdr127, Robr2, Qwalls and the other 200/300+ are informed, educated and they take their time to get information thru Edmunds ...
Trying to belittle Bobst, Qbrozen and a few others isn't information .. it's an "agenda" you have of some sort - it's not help ....
We know you've been up, down and all around the Automotive News Forum last week .. and when you couldn't get any traction there, and you were ignored, you decided to come here .... which is fine - and welcome.!
But if your going to help, then you need to educate yourself and listen to some of the others that have been here for many many years ..... the folks that come here spend their time researching, trading idea's and these are just the guys from "down the street" .. not dealers, no agenda's, just nice folks .... cool your jets, you might like it.
Terry.
PS: I don't think Tiger will pull off Bay Hill ..
Obviously, there are dealers who can and do sell cars at or close to either side of invoice. I am happy to help consumers figure out how to cut those deals. Sorry if you find that to be a problem.
Bob is a good guy and I like him; however, I'm pointing out that his method of negotiation runs counter to the methods that professional negotiators use to cut deals. People reading the thread can choose whichever method they like, but it is to their benefit to get a different viewpoint. No need to shout it down -- if you have a source that shows that take-it-or-leave-it is a superior method, then provide it, otherwise your critique is irrelevant and obviously self-serving, because you benefit when customers are discouraged from negotiating.
Hmmm, really ....?
Is that the reason why every dealer between Oakland and Orlando is bombarded day after day from all those "professional negotiators" lookin' for a job.? ..l.o.l...
Terry. :surprise:
Yes, I agree with you on that one (imagine that?). But you said it with "professional negotiators". The 99% of the car buying public are far from "professional negotiators", in fact for a fair portion, I'd say negotiating is a bad thing.
Most of us here agree with you that the bobst method and it's variations isn't the best way (but it is good and so easy) and that a shrewd negotiator will always get the best deal. But YOU need to find a way to get your point across without coming across as condescending and arrogant.
Lets look at the cashier at the dealership, say they earn $30k a year and the salary is allocated equally between sales and service. With your average 121 cars for the Toyota dealership that cashiers would add at least $13 to the cost of the car. When you add up all the other indirect costs at a few dollars here and there it adds up and fast.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Pervis in Parts. *grimmace*
I'm not gonna read this whole thread, but I was lookin' around and I feel compelled to take up this little tidbit:
Profit from sale of trade-in: $3,000
Come again?
It's not that car dealers would not LIKE to make that kind of a profit on a trade-in car.
It's just that the vast majority of buyers owes what their car is worth wholesale, or a little less, or a lot more... many deals have to be written as an overallowance for that reason.
I'm not sure what kind of a mission you're on, but this is not how it works... it happens occasionally, but it's far from typical.
BTW, I'm not a car dealer, but some of my friends are...
-Mathias
The issue of relevance to consumers is that the dealership has more ways to make money than you might think, and the cost of his inventory is not as high as it might appear. There's a lot more slack in that invoice price than most people seem to realize.
From the standpoint of the consumer, I'm not really concerned about the exact dollar amount of the dealer holdback, the rent that he pays, the cost of electricity or landscaping, etc. I'm not managing the dealership, so I won't bother worrying about that.
My only issue here is to figure out what the lowest price is that I can pay. And except for a car that's popular, that cost is probably fairly close to either side of invoice, less whatever extra marketing incentives might be paid to move excess inventory.
The dealer can sell the car at that price to you and still make a profit. He can and will get his higher margin deals from the other guy, as I expect him to.
My point has been that negotiation is actually quite easy, and you don't need to be a pro to do it. People have been become conditioned to fear the car dealer, when he is really a paper tiger who is easily tamed. Customers are fortunate that dealer tactics are very similar from place to place, so developing a game plan is quite easy.
Case in point about another consumer purchase: The other day, a friend of mine who has limited experience in negotiation -- she barely negotiates even her car purchases, and certainly never used this website -- phones me up to enquire about negotiating to buy furniture. I gave her some tips, fairly similar to what I've advised here, before she went shopping.
As it turns out, she did some of what I told her (built a relationship with the salesman, used the "consultation" process to create his time investment that would make him more inclined to drop prices, etc), while forgetting some of the rest. Even though she did make a few serious negotiation mistakes (i.e. she fell in love with the product and made that love known to the salesman), she still turned a $2,100+ purchase into a $1,500 deal, with free delivery thrown in. (I believe that may have been her "nibble").
Based upon what she said, I'll bet that she could do even better with her next haggle if she simply avoided a few of the pitfalls...and she's a newbie. Whether that's a great deal on the furniture that she bought, I couldn't really tell you, and precisely how much better she could have done with improved technique, I don't know. But I do know that she paid less than most other consumers who happily pay whatever is asked, or who jump at the first counteroffer, instead of continuing to push for more.
If you want to believe that you are incapable of negotiating or that it is too time consuming, that's fine, but I believe that most people underestimate their own ability to do it, and how much they can get with just a bit of effort. In the case of my friend, she invested an additional fifteen minutes into putting her deal together, and got a $600 reduction for her trouble. I don't know too many people who earn $2,400 per hour, so I'd say that in her case, that was a good use of her time. Car purchases work in much the same way.
My comment about all the costs involved was in response to you telling rroyce to get out of the business if he can't make money there. So a dealer makes a grand selling a car, they still have all those other costs to cover with that.
The issue of relevance to consumers is that the dealership has more ways to make money...
The relevant issue is how much do they have to pay. If the going price of the car is 'X' dollars then thats the going price give or take a little, it doesn't matter if the dealer is making $5 or $5,000 on that particular car. Case in point we drove by a Pontiac dealer that had the new G6 convertible out front. Even though they will not be getting them for 3 more months they are already selling them at sticker. So whats relevant is that you are going to pay sticker (maybe more at some dealers) and not where the profits are and how much the profit is.
My only issue here is to figure out what the lowest price is that I can pay.
So am I, thats why I look at selling prices.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
However, In a which came first the chicken or the egg, Dealerships have long played the game of showing the buyer "THE INVOICE" and negotiated off that number on the piece of paper.
I don't recall ever hearing a story about a dealer saying Mr. Johnson you want this car, well here is the invoice and lets add $20 for landscaping, and $8 for incidentals.
So, economically unsound, over years of negotiating tactics "THE INVOICE" has become the BASE factor in negotiating a car.
If the dealer has created this game, then the consumer has evolved into developing a defense against this "tactic"
ie: hold backs, mfg to dealer rebates, volume incentives etc.
And snake is right, market conditions will often dictate the selling price of the car, Hot cars or cars with huge inventories. So, I am all for ending the debate on what a "car costs" and lets move on to something more exciting.
*shrugs*
My point here is that this is largely untrue. Yes, a few models that are flying off the shelves will command relatively high prices, but for the most part, inventories are sufficient for most cars that they can be purchases at prices that provide a modest margin for the dealer.
There is no single market price for a car. Instead, a salesperson will use the sales process to size up the customer, and determine whether this particular customer can be squeezed for a lot, or for just a little. The result is a very wide range of prices that various customers pay, with many of those customers paying far more than what a savvy negotiator would have needed to pay to buy the same car. I'm sure that the car that I can buy at $100 over invoice was bought for close to MSRP by other customers, so using that high-priced buyer as a serious comp would be a mistake.
The goal of the dealership is to sell the customer a car that is on the lot that day, on a price that is based in large part by the buyer's knowledge of the business and his ability to negotiate. If the customer behaves as a "payment buyer" who doesn't really understand the purchase price, then so much the better.
I would venture to say that any car for which there is at least 30-40 days worth of inventory can be bought for an aggressive price (i.e. near invoice, less any factory-to-dealer marketing incentives), particularly if the car has a a fair bit of direct competition in its segment. I would expect there to be less wiggle room on a car with smaller inventories, and virtually none on a car being sold from waiting lists, but the vast majority of cars are produced in large enough quantities that concerns about supply and demand aren't important to the buyer.
See, you don't give much credit for the people that read and spend time on these forums ...
The only difference between these "so called" professional negotiators and the guy on the street is one thing and one thing only: *proper information*
Dealers love well informed buyers .. it makes their job much easier, the deal goes down fast and both buyer and seller leave happy.
All this sizing up stuff, whether you should speak or wear blue shorts on Tuesdays is laughable ... the 3 things that effect the car deal the most - region of the country, time of the year and what the market is doing - *new and used*.
What makes a deal go bad.? .. bad information and misinformed buyers .... wanting $11,000 for a trade that is only worth $8,000 doesn't help things .l.o.l... not knowing and understanding your credit and not getting pre-approved .. and probably most important - not keeping your eye on the prize .. that means not moving off that $28,000 van that you've wanted for 6 months and moving yourself to the $35,000 van, it happens every second of everyday ..... dealers probably spend more time on this than any other thing.
There is alot of wonderful information given on Edmunds .. it's just that folks need to *read it* and not use the rule of 21's -- (call 21 people until someone agree's with them) ..l.o.l...
Terry
The numbers are considerably lower than the info I got from the dealers and the Chevy website. What's up with that?
I have always assumed there is a "single market price".
I have always assumed the sales manager is a professional who knows a price that he will accept. If I offer that price or more, I get the car. If I offer less, then no car for me.
Of course, I have absolutely no idea if my assumption is correct. However, this assumption makes car buying pretty easy.
Is the TMV price really that accurate? I am researching a car that shows TMV as invoice plus ~2K. I know it's a well reviewed and recommended car, but there are posts in the buyng experience forum getting it at invoice to $900 over (at least in some major metro areas with more competition.)
What's a good way to determine if a car is really selling that high or low in order to make the right initial offer?
Thanks
To determine your initial offer, maybe you can find other discussion groups where people discuss prices they have paid.
There is no harm in your initial offer being too low.
I've seen the arguement for adv fees go both ways. Most car sites seem to say they are valid and most people seem to think it's just more dealer profit. I find them ever so annoying. Aren't they a cost of doing business...why not charge me for electricity or pens & paper too? Or if the factory charges it, why doesn't it appear on the sticker like the destination charge? In some of the buying forums some people indicate it appears on the invoice while others don't. It doesn't seem like it should be so mysterious.
"If thy eye offend thee, pluck it out"
If the adv fee offends you, then don't include it in your initial offer.
I go back to one of my central points -- there is no one market price for cars. Each dealer works each transaction seperately, with consideration for that buyer's tolerance to pay higher prices, and then tries to get as much as possible for each deal, while knowing that some legitimate buyers will pay less than others for the exact same products. Therefore, unless the car is very hot (i.e. the dealer can expect to turn this particular item of inventory relatively quickly and at a relatively high price), it is you and your negotiation methods that are the primary determinant of the price you pay, not the market average.