Mazda Dealership Quotes

sj1

I am working to negotiate a quotes for a 36 month/12k mile a year, 2023 Mazda CX 5 Select AWD.

In the initial quotes I have received, dealers calculate residual value based off MSRP (rather than capitalization cost). I don't want to ruin my relationships with these dealerships, however, I believe this method of quoting is incorrect. My questions are:
1) Is this method of quoting on MSRP rather than capitalization typical for dealers to do in their initial quote?
2) If you bring to the dealers attention that they should be quoting residual based off the capitalization cost (which I hope to negotiate to ~5-10% below MSRP), will they be receptive? ie. is this just part of their process to take advantage of those who don't know the math behind the negotiation?

Michaell

sj1 said:

I am working to negotiate a quotes for a 36 month/12k mile a year, 2023 Mazda CX 5 Select AWD.

In the initial quotes I have received, dealers calculate residual value based off MSRP (rather than capitalization cost). I don't want to ruin my relationships with these dealerships, however, I believe this method of quoting is incorrect. My questions are:
1) Is this method of quoting on MSRP rather than capitalization typical for dealers to do in their initial quote?
2) If you bring to the dealers attention that they should be quoting residual based off the capitalization cost (which I hope to negotiate to ~5-10% below MSRP), will they be receptive? ie. is this just part of their process to take advantage of those who don't know the math behind the negotiation?

The dealer is correct - residual is always calculated off the MSRP - the bottom line number of the factory window sticker.

This actually benefits you, if you are able to negotiate a lower selling price. The depreciation is the delta beween the residual value and the cap cost.

sj1

I was under the impression residual is (residual % x cap cost). Per the lease calculator in the description of the YouTube video (https://www.youtube.com/watch?v=DUwdyUcd1L8&t=402s).

How do you recommend negotiating the cap cost after being provided the initial lease quote from the dealer? First time leaser trying to understand the math behind the negotiation... appreciate any insight.

Initial Quote
Down - 486-496
1k Down - 470-480
2k Down - 439-449

MSRP/Retail - 29,775

kyfdx

sj1 said:

I was under the impression residual is (residual % x cap cost). Per the lease calculator in the description of the YouTube video (https://www.youtube.com/watch?v=DUwdyUcd1L8&t=402s).

How do you recommend negotiating the cap cost after being provided the initial lease quote from the dealer? First time leaser trying to understand the math behind the negotiation... appreciate any insight.

Initial Quote
Down - 486-496
1k Down - 470-480
2k Down - 439-449

MSRP/Retail - 29,775

I don't have to watch the video to know that residual is based on the MSRP.

Putting more money upfront is making the payment lower, but doesn't save you much money. It's like prepaying the rent on an apartment.

The Adjusted CAP cost is the selling price of the vehicle, plus any fees or costs that aren't paid upfront, minus any incentives or CAP cost reductions.

The main part of the CAP cost is the negotiated selling price. Lower price = lower CAP cost.

sj1

Thanks for the insight! Two more questions below:
1) Would you include month 1 lease payment that is due at lease signing in your fully baked "cap cost"
2) Below is the dealers quote. Can you confirm that the total cap cost I should use for calculating monthly payment would be Selling Price + the fees below (29,910.20 total)? If so, the total cap cost here is actually higher than the MSRP which seems like the dealership is trying to take advantage. Can you confirm?

MSRP: $29,775.00
Selling Price: $28,775.00
Government: $37.20
Proc/Doc Fee: $699.00
Brake Pulse: $399.00
Total Cap Cost: $29,910.20

Thank you for the education. It's extremely helpful and appreciated,

Michaell

sj1 said:

Thanks for the insight! Two more questions below:
1) Would you include month 1 lease payment that is due at lease signing in your fully baked "cap cost"
2) Below is the dealers quote. Can you confirm that the total cap cost I should use for calculating monthly payment would be Selling Price + the fees below (29,910.20 total)? If so, the total cap cost here is actually higher than the MSRP which seems like the dealership is trying to take advantage. Can you confirm?

MSRP: $29,775.00
Selling Price: $28,775.00
Government: $37.20
Proc/Doc Fee: $699.00
Brake Pulse: $399.00
Total Cap Cost: $29,910.20

Thank you for the education. It's extremely helpful and appreciated,

The lack of discounting has been hurting leases the last year or two, so it's common to see the cap cost higher than the MSRP.

The only junk item there is the "brake pulse", but there isn't anything you can do about it.

Generally, you can structure the up front cash any way you want, but my recommendation is to pay the first payment and any government fees (registration, etc.) at signing, and add everything else to the monthly payment.

sj1

Can you elaborate on the "lack of discounting".

Michaell

sj1 said:

Can you elaborate on the "lack of discounting".

The last year or so, due to supply chain issues, dealers have not had to discount the price of the car to sell it. In fact, for many brands, the dealers have been adding a 'mark up', on top of MSRP, to maximize the profit they make.

Sadly, many people have been paying these inflated prices, which makes the resulting lease payment truly insane, in some cases.

sj1

Thank you, understood that the past two years have experienced significant supply chain shortages. If you were looking to sign a lease deal in in say March '23, would you be willing to do so if Cap Cost> MSRP, such as the example I listed above. If so, under what circumstances? I understand that there are many factors to this analysis. I'm trying to better understand is if I should socialize opportunities presented by dealers in which Cap Cost > MSRP.

From a few days worth of research, it's my understanding the cap cost is the main negotiable factor in a lease so knowing deals are being quoted at Cap Cost > MSRP doesn't feel right. However, I'll defer to an experienced professional to assist.

Thank you sir.

Michaell

sj1 said:

Thank you, understood that the past two years have experienced significant supply chain shortages. If you were looking to sign a lease deal in in say March '23, would you be willing to do so if Cap Cost> MSRP, such as the example I listed above. If so, under what circumstances? I understand that there are many factors to this analysis. I'm trying to better understand is if I should socialize opportunities presented by dealers in which Cap Cost > MSRP.

From a few days worth of research, it's my understanding the cap cost is the main negotiable factor in a lease so knowing deals are being quoted at Cap Cost > MSRP doesn't feel right. However, I'll defer to an experienced professional to assist.

Thank you sir.

I haven't leased a car since 2016, so I'm not quite the professional you may think I am.

That said, if I had to lease something, you can bet I'd be shopping every dealer in town, looking for the best deal. The more you narrow down your choices (brand > model > trim > color), the more you're likely to pay.

Meaning, I wouldn't marry myself to Mazda only. Lots of choices in that segment, and you may find a better deal with a different brand.