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Well, This is interesting.... I wish that we could make at least 5%, but when you really truely think about it... and yes there are exceptions.... If you have ever worked as a salesman at a frachised store, there is so much training and technical things you have to do. For example, say a customer buys a car for invoice, what incentive do i have to show them how ANYTHING operates in the car. Especially with the nav, bluetooth, and other handy dandy features that everyone wants, you can know cars, but when you can go through all the models and explain exactly how everything works thats when you KNOW cars. Now if you like to play with all that yourself then fine, that happens. But its our job to show you every little nuance of the car. But to be fair for everyone I think 5-8% is fair. And on top of that, we can charge whatever we want, but if the banks don't think the car is worth that much then they will not loan you the amount. Most of the time they have 100% 110% 120% of kbb or nada retail or wholesale (yes they use it to make their lending decisions) And no dealer can jack up the interest rate more than 1% because thats how mandated we are by the banks and goverment. And people will say well what about "holdback" etc, its costs most dealers about $1500 to sell a NEW car! If you doubt any of this, sell cars for more than 6 months you will learn all the truths about it and the misconceptions 95% of consumers have. So original point 5-8% is pretty fair. End note- your gallon of milk, believe it or not you pay about 50-75% markup.
What is fair IMHO is what ever the dealer can charge. Too much profit? Oh well, we live in a capitalistic society. They can charge what ever they feel the market will bear. Don't like? Take your business down the street.
Just my humble opinion on this gorgeous Monday afternoon .
Thank you Mikefm58. As you suggested, on many occassions I have taken my business down the street when insulted by a salesman in the manner you suggest :lemon: . Bad for the dealer, I never, ever return. What your statement fails to recognize is a basic fact of marketing - an unhappy customer is not good for business. Too many can destroy a business. When a dealer informs a customer that, if the customer "doesn't like" the customer can take his/her business down the street that really makes for an unhappy customer. Not many businesses succeed in alienating too many potential customers with such an insulting attitude. Good automobile salesman, those who succeed for years, treat customers with respect not the disdain you seem to suggest. A good salesman would simply inform the customer the dealership is unable to satisfy the customer's needs on that particular day and the customer is always welcome to visit at a later date when priorities may change and then wish the customer well.
Bad for the dealer, I never, ever return. What your statement fails to recognize is a basic fact of marketing - an unhappy customer is not good for business. Too many can destroy a business.
I will agree wit that. One Chevy dealer tried to play silly little games and not only did it cost them my deal but I can honestly say at least another dozed in the almost 20 years since. It was a dealer my sister bought religiously from and she suggested it. When I bought from another dealer she inquired as to why and I told her the story. She switched to the dealer I bought from and has bought many cars from them. As well as my mom, my wife and several friends that I recommended them to.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Good automobile salesman, those who succeed for years, treat customers with respect not the disdain you seem to suggest. A good salesman would simply inform the customer the dealership is unable to satisfy the customer's needs on that particular day and the customer is always welcome to visit at a later date when priorities may change and then wish the customer well.
Well actually I was being very blunt, didn't mean for my post to come off so direct. I agree with you in that some professional courtesy is needed when declining a potential sale.
Yes, courtesy is key at all times, though I didn't read anything disdainful or insulting in your post. I sold MB's for years, and every now and then someone would think we should match the price they saw for a new Hyundai or something similar. I was always proffesional when declining a sale, and gently hinted that maybe they would be better off looking elsewhere for that $179 lease. I really couldn't help them. I also think some people just relish any opportunity to posture or get on a soapbox.
I would agree some people pay sticker and when they do it is not all that much on a new vehicle these days. People who pay sticker are very few and it is on non average vehicles so lets get real. Let me also tell you the no hassle pricing does not work since a majority of buyers seem to like to haggle and always feel a dealer is making to much. We had a perfectly fine 2010 33k miles 1LT Malibu that for some reason was not selling. We mark down prices every two weeks. This car was advertised at wholesale price and the lady who finally bought it came back 1 week later after demanding more and not getting it. I had a guy buying a New Cruze for his son. I came to him with a preffered price which is what GM suppliers and employees get. It was not good enough he had to make sure. Found a dealer 80 miles away that was for some reason willing to go more. If they went more it was giving up a hot selling car for a loss to only sell one car to a guy that wont be in the dealership for service. So lets not make it that the dealers are the reason for the hassle. I have no problem making a 100 commission for a customer who truley needs the extra 500 to 1000 for payment, I am now to the point in customer retention and referals that I will not budge for people wanting to squeeze every dollar out. I pass them to the newbies.
I believe the customer should pay based on market value. Not edmunds but supply/demand. If a car has no rebates then it is selling well therefore MSRP or no more than 300 discount is fair. With rebates is fair for customers to take atleast half the rebate at a selling price close to invoice. If the buyer keeps demanding invoice or close to price and the dealers keep doing it then you will eventually see the demise of small town dealer franchises who can not afford to sell even 5% of their new cars at such prices. It makes me sick when I see cars in my small town dealership from the bigger dealerships.
Everything below is from a guy that sold for a luxury brand for 2 years. Working 12 hours a day, 7 days a week. (ok maybe less on Sunday). Everyday. For 2 Years. Minus Christmas, and thanksgiving.
First off, someone wrote.. "I think $500-1000 is fair, that way the salesperson makes a nice commission, the dealer makes a profit, blah blah." That is so completely random. I am sure if most dealers made $500 on every car they sold, they would go out of business. So while it is done, its only out of necessity to mix profit AND volume with the manufacturer.
Also.. Jesus Christ.. If you pay $500 over invoice, a salesperson will make between $150 and $250 at most stores.. and while theres nothing WRONG with that.. lets not call it a 'nice' commission (we dont get paid hourly dont forget). If its the $250, its because the dealership has a minimum, because his typical 25% would be too low to keep him from strangling you or just kicking you out or of course just quitting. And then youd be left with only worse quality people in the business than you already think there are. While I wasn't anti making $250, if all your deals were like that you would quit the business. The average amount of time spent with a buying customer is just too long. Then factor in time with non buying customers, because most people do test drive or shop atleast some other brand no matter how good you are. Even a killer salesperson will have many customers "oh I just had to try that Audi, but I stuck to my original idea of getting that BMW". I dont blame those people. But realize eventually when you buy, you are paying a bit for all the test drivers, just like the guy that buys elsewhere is paying for your testdrive somewhere there.
Regarding trade-ins. Just like you are trying to buy cheap, they are also. Except the difference is you are buying what we could call a perfect car, it's everything you expect. They on the other hand are buying a mystery time bomb. I personally saw us buy many cars that later on in the shop we discover had real problems and simply killed us and made the manager look bad. I saw us onetime lose substantial money on a car because I accidentally told the manager it was a G37S because the lettering on the back said so. None of us on that busy Saturday would have really known that it wasnt a real S.. the customer just installed the S badge. Monday morning comes and we find out we overpaid drastically for a base model. Want to know why it takes 30 minutes to evaluate your trade in? Because the manager at your dealership got burned last month and almost lost his job because he didnt put your 4x4 SUV into 4 wheel drive mode to notice that it doesnt work. Considering we cant sell junk, and dont want to pay to repair your junk, we test everything. You think we WANT to extend deals into multi-hour ordeals? Never.
Ive seen people lose jobs for paying too much for tradeins, because they got emotionally involved with customers and the salersperson, and just wanted to make the deal to make everyone content. My god, theres nothing more a dealership GM or owner hates being told than "Look, the customer said the dealership down the street would do it so I had to!" One, you cant alter your reality of a sound business deal based on random things people quote because often its exaggerated. Two... Our General Managers favorite saying was "We dont need to match the mistakes of other dealerships" and its honestly true. Customers find the one desperate, or mistaken, or blind, or whatever, dealership that will do a certain deal, and get angry for us not matching it. Somehow simply going back to that dealership isnt an option 50% of the time. I always wondered why that was.....
***
Many times customers asked "whats the best deal you can do on this car?"
Theres really no good answer to that. Because it depends on how you want to be remembered.. and what you want to happen to me and the business after you leave.
You could pay MSRP, a fair price deemed by the manufacturer, and I will remember you forever, smile at your thought, be happy when I see you in service, happy when I get your phone call asking a question, and probably do whatever I can to help you in the future just because I like you. You didnt pay for that service really. You paid for the car. But I honestly like you so you get whatever I can give.
You could pay a bit less, and a proportional amount of the above things will apply.
You could pay a some fair advertised special price, edmunds TMV price, close to invoice, where I probably make my $150 or $250 'mini' .. and I'll give you good service. I'll barely remember you though. I honestly cant give you too much mental attention because I have to think about the next customer, the next call, and my todo list on how else to make money today because this deal sure isnt going to cut it. Its not your fault. Its not really mine. I will give you as much service as I mentally can, but psychology is psychology and you delivered stimulus was less than someone paying top dollar. It is what it is. If I PERSONALLY like you, maybe youre cool, I'll remember you a bit more. If you ask me to go to your home to program your garage door, I'll start thinking youre a dick thats oblivious. Yes you think if I do this I should be happy to know that you'll buy your NEXT car, same mini deal from me.. great.. I get to do it all over again knowing this time atleast its for $250 (or $150 at some stores). I can treat you accordingly from the start.
Then there is someone grinding out the annoying deal. He shopped 6 dealers. He found the lowest, and now he wants you to BEAT that deal STILL. The lowest is not enough. Its well below what we would normally do. But he already used tons of my time emailing, calling, talking, test driving, sitting down, all this... Im honestly embarrassed to go the manager and present it. If he does the deal, its often simply for me. He wants me to atleast make the $250 mini. The way his pay plan works though, he will LOSE some money from his total earnings so far since he is paid a percentage of total monthly gross, this deal thus reducing it. Yes our units go up, but we know what each unit is worth to us, and as mentioned, this offer is below what we deemed this car is worth. Since there isnt an unlimited supply of most cars, there comes a point when losing it makes no sense since youll sell it eventually (yes, before flooring costs eat you up). Or the discount you are asking is many months of flooring, and we know the odds of it selling before are much greater. He does the deal for me. I feel so bad I buy him lunch the next day. I hate you a little. If I knew that this is how it would go when we started I would of been firmer before we met and you could of played your game elsewhere, while I did a good job returning emails and calls to better customers I can tell will help atleast provide the dealership with the basic
..revenue required to make this venture make any sense. But thats life. When I see you in service, I will probably not remember you (your odds are actually better for being remember, since you created a bit of drama), but if I do I will probably pretend a smile, and say hello if I have to. Probably Ill try to stay away. We will talk about you when I return to my desk. I will hope not to have a customer like you for a while. NOTICE I made the same $250 with you as the guy above. A mini is a mini. But I simply feel bad for the store, the sales manager, and I dislike that some jerk thinks playing everyone against each other in a race to the bottom dollar is fair. The only reason you got your deal is because you won out and got a deal out of desperation. The sales manager could tell I was invested, and didnt want to lower moral for the weekend. He knows I work hard and if thats what its come to, thats it. Lets get this over with.
Finally, all the above apply, you already got a deal the dealership shouldnt be doing, but it goes further, we include a trade in, things get convoluted, a mistake in a number, lease term, who knows what and you throw a fit and make last minute demands or ultimatums about walking and we do it for really no good reason except the fear of bad word of mouth or your insane yelp review full of incorrect facts. Maybe YOU even play a bit of a game this time and simply say "no no you said that was included.." when in reality that was 7 iterations ago and was dropped off the time, we both know it. But hell, you want to see what else you can get out of us. This happens once a month at a high volume store. Monday comes and meetings are called.. people get yelled at, sales managers maybe fired or much closer to being fired. The biggest mistakes always get made on the most annoying customers, because they have everyone so emotionally worked up. Decent people working stupid hours for on a pretty average hourly calculated rate get hurt because you just had to play your games. I'll see you in service, and when you step away from the counter, Ill go up to them and say "**** that guy. Whatever you do, screw him." and hell answer "Oh I already know. I could tell". Because its that damn obvious.
So you tell me, whats the lowest this car can sell for?
You might enjoy hopping over to our Stories from the Sales Frontlines discussion. Not a lot of salesfolk there these days, but it's a very friendly group, and they're not anti-salespeople.
MODERATOR /ADMINISTRATOR Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name. 2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h) Review your vehicle
Some salesman seem to have an inflated opinion of their importance to a buyer. Any buyer who thinks a salesperson is on their side is making a huge mistake which will likely cost them money. If I locate a salesperson I like, I will buy from them. I will also recommend them. However, I am not so uninformed to think they are working for me!
As a buyer, it really is not my task to determine the selling price of a vehicle. My task is simply to determine what I will pay for a vehicle.
In today's sales environment, I don't need to be concerned with the salesperson. Chances are the salesperson I deal with on one purchase won't be there for my next purchase. Buyers should treat a good salesperson with respect, but that is it. As a buyer, it is not my business what amount the salesman makes on a sale. That is between the salesperson and the dealership.
Thats absolutely true. We don't work for you, but we will usually give you as much information as you want regarding the cars and the overall process of buying and ownership. Thats what we do for you. But when it comes to prices, we work for the dealership, obviously, and our job is to make you pay as much as we can. 'As much as we can' doesn't mean steal from you, it means limit your desire for a random discount to as little as possible. Once again, I'm sure you know thats obvious.
You mention its not your task to determine the selling price, but only what you will pay for it.. which seems like the exact same thing if you actually want the car in any logical reasoning. Sure I think $5000 is what Id pay for an ugly kia van, but thats because I dont want it. Once I want it, I come to the quick realization that I have to pay some number that is acceptable to the dealer, and THAT is the only thing that really matters. If you think it's anything else, I would really like to know what method of financial analysis of the currency market, labor market, materials market you use to determine what you're willing to pay. Most people understand that if they WANT something, they have to pay pretty damn closet to whatever it takes. If they then do some education and determine that the number is too high for them, they readjust their desires.
So lets not try to use some clever working to say that you buy cars this special way. You dont determine what youre willing to pay out of thin air. You decide what you want, you do some research, and if you still want it, you try to get a deal on the more favorable end of your research.
And I still dont have too much problem with that. Remember, I said Im happy to give good service to the guy that comes in on a very competitive advertised special, or comes in and quickly says hell pay the edmunds true market value, or whatever accurate reasonable source. I dont make much money, but thats one fair way to buy a car and still get a good deal.
My main problem is with people that try to get BEYOND a good deal. And do so by a sometimes completely unreasonable number. And even those people would be fine if they just simply stated that quickly and way upfront. But they dont. They honestly play a game often, making you invest a lot of your time knowing that then you are also more likely to give in. And thats just bs plane and simple. Theres nothing else you can say about that.
Everything else is as you said and usually pretty clear to most people. A decent successful car salesman treats his customers well, and 90% of customers treat salespeople really nicely too.
I have no problems with people deciding what they will pay, and acting on it. HOWEVER, if you do some research, and the number that you decided this car is worth to you is below the average market value, please be more clear about it and sooner. Thats all we can really ask. Because sometimes we do sell cars under average market value. It happens. But if you use time consuming, deceptive, hostage like tactics to get it, its simply being a bad person in my opinion. Yes car sales people are sometimes bad people too. Obviously I know me telling the service manager, as I wrote earlier, to make your service experience as unpleasant as possible is being a pretty bad person.. I am who I am but I know it, and Im just writing this so you can decide which person you want to be too. Its just a car sales in the end, but some people take the process so certain extremes that make it unpleasant for everyone involved I think.
On a side note, with everything I know about buying and selling cars after years in the business, and being one of the best in my luxury brand in the country, when I go to buy any car, I'll probably do this:
Look at a 'TMV' type of report and take that number. Id try to possibly figure out what the next iteration of 'good deal' is, and take down that number.
I would then use one of the online 'get a quote from multiple dealers' function, and request quotes on a model.
I would get the quotes back from their internet departments. Already noticing that some of them are even lower then the TMV ! (which is true because TMV reports non internet transactions that include the high gross deals).
I would probably take the lowest quote below TMV and go there. IF they said they didnt have the car, I would ask them to get it. If they couldnt, and somoene else had the car, I would now contact the dealership that has the car and ask them to match the printed quote of the other dealership. I would do this over email or phone, without wasting tons of time on anyones part. If they wouldnt, I would ask them what they can do, and hopefully its below TMV. If whatever they come back with is around TMV I would do it.
It is what it is, its still a fair deal.
Thats how I would do it. Its just not worth then employing a 3 hour time waste a thon to see if I can squeeze out someone matching the previous dealers deal. Maybe that dealer gave a great price because they only had undesirable models left and you dont even know which ones that is.
Buying a car is only as hard as people want to make it.
If I valued time, and was one of the people that say 'I HATE NEGOTIATING !!!! AHHH!' and I was a smart informed customer that cared about 'a deal' I would request quotes online and pick the lowest or the one that has the car and has a semi close price and be done with it. Which I think is pretty much what I wrote above. If I hated negotiating and wanted the BEST service and to feel good about EVERYTHING I would pay MSRP. It is what it is.
Sounds like someone forgot their meds and has been having really bad days at work. I can tell the business is wearing on you, and you're having problems dealing with the public. My only suggestion is to grow thicker skin or find a new line of work.
"I would request quotes online and pick the lowest or the one that has the car and has a semi close price and be done with it." _________________________________
What a load of garbage!
I deal with this mentality often as a sales person. If it's a *new* car, perhaps your method works, perhaps not.
Pre-owned? You can't do it this way since no 2 used cars are the same...the consumer still has to come in and evaluate the vehicle...and even then 99% want to haggle making claims about how it is not in perfect condition etc..blah..blah..blah...
After 12 years selling, I've heard every lame excuse the consumer can offer. The great thing is that I AM a professional sales person and have far more responses than they have excuses, dodges, objections.
I've been the "good guy" who cares about the customer and I've been the "bad guy" who sells and moves on to the next mark. Guess what?
The "Bad Guy" earns far more than the good guy. Period! The general public doesn't give a rats rear end about us; do you really think we care about them? LMAO
Sorry; but car dealerships don't work like Walmart where you just pick it off the shelf.
I suppose if you work in a one horse town, you may have to develop ongoing rapport just to make a measly 40K a year if you are lucky.
I work in a large city. Plenty of "UPS" to keep me well fed. I've lived off the lot for years and continue to do so.
Consumers need to open their eyes and realize KBB, Edmunds, Black Book etc...DO NOT prepare the consumer to get a great deal. They are deceived and I am happy about that; otherwise I would not be making a great living.
Car dealerships AND salesman are not only better trained than the consumer to sell, the deceptive practices continue, the lies continue and the monster money we earn is proof of this.
I suppose those who live in "Happy Land USA" believe otherwise or at least hope it ain't so.
www.consumercaradvocate.com
This guy wrote a incredible book for the consumer. It's not about leasing, numbers or beating up the sales person in the attempt to get a good deal.
It's about the salesman's mindset and tactics, the lies and easy procedures that lull the consumer into a false sense of security..the kind of false sense of security they get from Kelly Blue Book.
Understanding the sales process when a consumer walks on the lot will equip them to negotiate from power & understanding. Luckily for me, 99% of my fresh (UPS) are not equipped with what they really need to know. I LOVE the buyer who walks in with all his internet printouts. It's like clubbing a baby seal.
I've always maintained; IF a consumer sold cars for 90 days (AND) their living depended on it, they would be in a far better position to negotiate a deal.
You're welcome to continue this debate here, but it'd be nice, since we have some pros here, if you'd hop over and help out a consumer who has a confusing issue in our Quick Question for a Car Dealer discussion: http://townhall-talk.edmunds.com/direct/view/.f1aea81/2949#MSG2949
MODERATOR /ADMINISTRATOR Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name. 2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h) Review your vehicle
I think any car sales person who believes I, as a buyer, have to pay some number that is acceptable to the dealer, and THAT is the only thing that really matters is not likely a car sales person who would earn my business.
Of course many people will try to get a better than average deal. It is, in the end, their money. Getting the best deal is, after all, the goal of negotiating.
I would not be surprised a dealer would accept the Edmunds TMV. TMV is, as Edmunds discloses, an estimate of the AVERAGE price for a vehicle. Average means half pay more and half pay less. I, as a buyer, choose to pay less.
A buyer who simply accepts a car sales person's on line quote as the price will almost always pay too much. At any dealership the best price available from that dealer is rarely achieved without a visit to the dealership with some action taken to make the sales person believe the buyer is walking. At that point most sales people will offer a better price. No sales person wants to see a potential buyer walk out the door as they are aware that person will not likely return. A person's feet are the best negotiating tool they have.
In the end, it is the sales person and dealer who needs the customer. The customer does not need a particular sales person or dealer. After all, there is always another dealer down the road a bit. Therefore, the only thing THAT truly matters is what the buyer is willing to pay.
Yes buyers can walk. Of course, getting to the lowest price a dealer will sell for is ultimately the goal of the negotation process. However, I would not expect a dealer to sell me a vehicle at a price below the level they need.
When I buy I do my homework. I research invoice, incentives, holdback, etc. I develop a purchase price including a few hundred for dealer profit. I recognize I may need to negotiate up a bit from this amount. I am not looking for the lowest price anyone has ever paid. I am looking for a below average price which is fair to both me and the dealer. Of course from my perspective the me is more important than the dealer.
I contact multiple dealers via internet. Some don't give a price but simply ask me to drop by. Those I ignore, why waste time. Most do provide a price. I consider the overall dealer response not just the price. I also consider on line reviews recognizing many are simply people venting. But some good information can be gleaned from those reviews. I am particularly interested in reviews to identify dealers who attempt to include too many added silly fees. Those I always avoid. Finally, I select the most appealing dealer for the purchase.
I discuss with the sales person and after a bit of talk to let each of us get to know the other I tell them my price. They usually come back with something a bit higher buy not crazy high. I think they do this because they have concluded I have done my research and they don't want to put a potential sale at risk.
Just about everytime I have used this approach I have found the dealer and I are able to reach an agreeable price very quickly. Almost always the sales person has told me how appreciative they are that I let them know what I was looking for in the purchase. Apparently this makes their job easier.
To be honest, over the past decade or so I think the average sales person has become much more ethical and certainly much more professional than in years past. Of course, it could be that I am far more knowledgable and calmer than I was in my youth. Probably both.
Buying a car does not have to be a war. If done right both sides can feel good about the sale. I have found the best practice from a buyer's prospective is to be totally upfront with the sales person. Best to tell them what you want and let them respond. That saves everyone a lot of time and effort.
Seems like a decent approach, but do you give the salesperson who test drove you in the car a shot of at least earning your business?
Also, from a dealer's point of view, giving out prices over the internet almost never results in a deal because that price is taken and shopped at other dealers. So if I give out a quote at $150 over invoice, I have no idea whether the customer is taking that to another dealer to beat. In most cases that's what happens and we just gave a price to someone who was not commited to buying, never stepped foot in our dealership, and in some cases, never even drove the car.
The funniest thing is that the competing dealers (at least in my area) who usually quoted the lowest internet figures end up slapping the customers with a bunch of fees when they end up in the business office. Very few customer will walk at that point because they either asssume that same fees will also be charged at competing dealers, and because they do not want to start the process all over again.
This is unfortunate because in this case some customers end up paying more than at other dealers with a higher price but lower (or none) doc fees.
Although this happens often, I had an encounter with a customer who was phoning for "best price" on a certain specific model.
He was ready to make an over the phone offer, but never stepped foot into our showroom. Reluctantly I gave it a shot and heard him out.
He wanted me to beat a competing dealer's price by another $500 on a $25k new car we had in stock.
I presented the offer to my manager, and after he looked a the cost and invoice he told me either the customer is bluffing or the competing dealer is bs'ing him.
I called him back with a counter offer. He negotiated more and came back with a number that was also not doable.
I called him back and told him sorry but we couldn't do business, but explained to him how his numbers don't make sense, and asked him if he knew whether his number he got elsewhere included freight/pdi or doc. He said yes, then said no, then said not sure, but then asked me what freight meant. Then he said no it didn't include any of these. I told him ok, that made more sense then. After I added these to his competing dealer's price it turns out our counter offer was lower than the competing dealer's offer with the fees added on.
He got excited and was about to make an appointment to come in but then dropped a bomb: he said his wife doesn't know he's car shopping and he's not sure if she'll like this model he's calling about. Furthermore, he said he hasn't even driven it yet. So he said my job would be convincing his wife to not only buy this car, but to buy a new car in general.
I did not want to waste any more time with him and told him when he's serious to buy, after he convinces his wife, then he should come and see me, but all this havy negotiating and calling a bunch of dealers before even knowing if you're in the market is doing things [non-permissible content removed] backwards and wasting everyone's time.
That's why we take customers who are in front of us more seriously than phone or internet price shoppers.
I can understand a sales person's reluctance to provide a price over the internet as I am sure prices are shopped. However, while I don't know how many times providing a good price via the internet results in an actual sale I suspect not giving a price to someone looking for a price rarely results in a sale. Buyers who don't get what they want look elsewhere.
The reality is those buyers will ultimately get what they want from another dealer. Why let someone else be that other dealer simply due to a refusal to provide a price?
An example, I recently leased an Acura. I contacted several dealers with an internet inquiry. A couple did not provide a price but rather invited me to visit. Those I dismissed. A couple provided prices which were above my numbers. I commuicated with them via internet and they eventually reduced their prices. I did not shop prices which I don't think is fair nor necessary if a person has done the correct research.
One dealer had a very inviting response. Within thirty minutes that dealer provided a very professional summary of the lease complete with detailed capitalized cost, money factor, residual, and payment. The numbers provided were very competitive with the numbers I required. That was the dealer I visited and, after a bit of further negotiation, reached a deal.
Companies who do not give customers what they want will not be as successful as they can be. Consider JC Penny, which recently decided their customers really don't need the coupon buying process. Bad move as customers left in droves. JC Penny has just returned to coupons. Of course, who knows if customers will return.
I suspect the best sales people simply give each customer what they need to make the sale. I doubt sales people often get more than once real chance to make a sale. Would not it be advisable to make the best of that single opportunity and give the customer what they request?
Would not it be advisable to make the best of that single opportunity and give the customer what they request?
Yes, but in the end you have to understand that dealers are in the business to make money. Giving rock bottom quotes over the internet where there is almost no profit makes very little sense. It actually makes more sense holding on to that car and getting someone who walks in to buy it as the profit will always be higher.
Let me explain how.
Every new car dealers gets monthly sales reports from the manufacturer about every competing same make dealer. The monthly sales reports include sales figures and gross profit average per car.
The dealers that sell the least, also have much lower average gross profits. The dealers that sell the most have much higher gross profits on average. This is a fact that's common across almost every car brand.
The reason is that the dealers who sell more know how to sell and build value in a vehicle, and you can do that only by matching a customer's needs with the right vehicle, doing a proper presentation, and proper demo drive. They're also good at closing on the spot and don't drop the price needlessly.
Dealers that don't build value in a product or ones that don't match the customers needs with a product, have nothing to go on except price, so they have to drop the price to entice the customer to buy because the customer does not see the value in the product. It's almost impossible to build value in a car over email to someone who may or may have not even sat in it or has not driven it.
So when we were on track to meet our targets and had a good selection of specific model/color combinations there was no point giving them away for next to nothing. This was especially true if we had a specific hot selling car that not many other competing dealers had in the region. If we had 4 customers who came and looked and drove a specific new model over the weekend and we had one person email us about it, we'll quote close to MSRP (less rebates) and leave it at that because we know we'll sell it at that price.
And no, moving an extra one off the lot, at cost or at a loss, is not what most dealers are in the business for. Moving one off the lot and making a profit, yes.
And lastly walkin customers tend to provide more repeat business than email customers. They come back for servicing, because usually they're from the local area, they come back to buy another one if they liked the service and were happy with the overall deal, and they refer family and friends.
Email customers tend not to be loyal, and they're price driven only. So selling a car at cost or a little over cost results in no profit, lower CSi (survey) scores, no service business (most email customers are out of the neigbourhood), no repeat business (most email customers will email every dealer again next time they're buying a car), and no referral business.
And with margins being razor thin these days, sometimes selling a new economy car at full MSRP might mean $1500 in gross profit for the dealer (before commission is paid out), vs giving one away at close to cost might mean $200 gross profit. And if a dealer is good at holding the price, then why give away a car that can bring in more money from someone that walks in the door?
These are all good points. I would like to know how much more than Edmunds trade-in value should be offered to a Ford dealer who is asking within 12k of original MSRP for a 2012 BMW 535i with 11k miles. 10 years ago I bought a then current model year 530i that had 600 miles on it for 6k less than MSRP. That car was purchased at a BMW dealer who should be able to get more for a BMW than a Ford dealer I would think. It was a used car that could not be told from new so naturally I am thinking the 2012 is overpriced but I do not want to make an offer that has no chance of being accepted. At the same time I am only interested in the car if I am able to get a great deal. My goal here is to not waste the salesman's time nor mine. Further complicating the issue is not knowing how accurate those trade in values really are.
All good points. However, today's automobiles are commodities. They can be found at many dealers. I suspect the days of buyers having a long term relationship with a dealer or sales person are going, if not already gone. There is simply too much information available and too many places to buy any product eliminating the need for long term relationships.
I remember my dad always bought from the same salesman at the same Pontiac dealer. No longer, recently even he varies his purchases.
It would think dealers would, as you suggest, strive to get a potential buyer to visit. Few sales are likely to occur without that visit. If giving an Internet buyer a low quote might result in such a visit, that seems the prudent thing to do.
I suspect dealers who choose only to deal with walk in customers are sending a lot of potential sales to their competitors who are very pleased to accept such help.
I suspect I am similar to many of today's car buyers. I have done my research and I know what I want. Honestly, the last thing I want is a sales person's presentation. All I need to know is will the dealer sell me that vehicle at my price. I find the Internet most useful to identify those dealers who seem most likely to satisfy my goals. Those also have earned a chance for my repeat business.
The price that a dealer paid for their used car is influenced by many factors. There is no "magical" number for which a specific make and model is sold or traded in at, so the only way to really find out is to present an offer you're comfortable with and see what the dealer says.
I answered this question on the Edmunds Question/Answers page here:
But I'll copy my explanantion here on factors that affect how much a dealer paid for a trade in:
"All of these online price guides and book values serve just as that: guides, guidelines etc...
There is no national standardized system where every 2003 Accord or 3005 XYZ model gets exactly the same trade in value at every dealer in every region or nation wide. Why? Because once again no two used cars are alike.
What affects used vehicle pricing are quite a few factors:
-Year, make, model, trim level (obviously) -Engine and transmission combination -Mileage -Color -Modifications if any (usually in a negative way) -Service history -Accident history -Condition, both cosmetic and mechanical -Amount of money a dealer put into a vehicle after they took it in trade -Availability of said make and model in local markets -Popularity and demand of said make and model in local markets -If used car is only 1 or 2 years old, then manufacturer rebates of same brand new models will have an effect on used market -Lease maturities and fleet returns that will lead to market saturation -Popularity and sales figures of the car when new, and when used -Supply vs demand -Ability and ease of financing by major banks (usually hard to finance 6 year old or older vehicles which means smaller purchasing audience) -Finance rates of such vehicles -Auction values and what the dealer can buy an equivalent model for at the auction -Any negative publicity of specific models in terms of recalls, high accident rates, or high theft rates
That's the basic overview of what affect used vehicle pricing.
So even though you can find approximate values of these cars from various sources, it is not these sources you are buying these vehicles from. You are buying them from individuals and dealers who each have a specific amount of money vested in them and are looking for a specific return."
You can offer a couple thousand over Edmunds TMV, but if the dealer put money into the car via reconditioning, servicing (maybe oil service, brakes, fixing a dent or a few chips) and all that cost them a couple thousand then they won't accept your offer.
What is the asking price of the car, and how much were you thinking of offering?
If you don't want to waste time, then pay the asking price, it's as simple as that. If you want a discount, then you have to work for it via going back and forth a few times to find the sweet spot.
What I was referring to is that dealerships will never turn away internet customers, they will always invite them to come in. However dealers don't always have to give away rock bottom pricing in order to do so. There is absiolutely no point talking about pricing and discounts unless you have seen the car and are commited to purchasing it if the price is right for you. If you haven't seen it or even sat in it, why talk pricing? Agreeing to a lowball sales price in order to get someone just to look at a car for the first time will almost never result in a sale.
People don't email 20 realtors with houses for sale asking for "best price". Because in order to get the seller to discuss numbers you have to put in a binding offer to purchase. They usually look at few houses first, in person, do some research and make an offer on one or two they're ready to buy. Not the other way around (putting in 20 offers, then going seeing a house because the price was the lowest).
No different with cars.
Over the years with the few cars I sold privately I always have a few people emailing or texting me asking me if I'll take this amount or that amount, or what my bottom line is.
I always respond that why even offer anything if you haven't even seen my car. And I always say that their email offer means nothing because they're not standing in front of me with cash in hand ready to buy if I accept their offer. And actually seeing a car in person is a big part of buying a car, so from experience NONE of these offers that I got via email/text and agreed to ever materialized in a sale because the "buyer" didn't show up, didn't reply, or came and tried to knock the price down even more from their offer. So really all they were doing in the first place is knocking odwn my asking price.
And I understand you'vce done your research. But did you not go to a dealer to look at the car, ask questions about specific features and options, warranty, and test driven the car? That is part of the presentation by a salesperson.
I can't believe after a few months of NOT checking this forum..how ppl are still talking about how to get the best deal or how to beat the salesman or low balling me or how no one has a relationship with a dealer and how the internet has so well equipped the general public to get the best deal.
Well; guess what? I AM "Still Sellin and still making a great living!
The general public, or human nature seem to have this need to be in control.
You have no more control on pricing or how things really work in a dealership than you do telling a surgeon how to perform a proceedure.
This thread cracks me up still as well. I'll admit I wrote my posts out of a bit of tired aggravation after a long week, or probably month, but it's 100% true.
To the guy that says "I wouldnt do business with the salesman that says I have to pay what they want or I dont get the car!"... obviously if it was said to you straight to your face, you wouldnt, because its a bit harsh and aggressive. But in the end, you pay exactly what they want or more, or otherwise they obviously wouldn't have sold you the car.
Your magical formula for figuring out "a few hundred dollars profit" is a joke because 'profit' is different than revenue and income.. (im not a finance person.. but you know what I mean). Thats like saying a coffee shop could give away their coffee for 18 cents a cup, making about 80% profit, they'd make a killing. Obviously not because true costs per car are different just price paid for the commodity.
And not that many will care, but reread what I wrote and know that its coming from one of the top people in the industry. I sell about 32 cars a month, make over 200k a year for several years, so I am not delusional or naiive about the industry. I was top 1% for my brand for several years.
I'm fair to customers, give decently nice people decent deals, and all are happy except for people you could label unhappy from the moment they walk in.
@Still Laughing - You're wrong. I have 100% of control over the price I pay for any car that I buy.
Get your sales manager to agree to my "one, only and final" offer within ten minutes and you get my money. If not, I'll leave - pleasantly, but permanently. No unneccessary negotiation that costs me money and no wasting anyone's time. After doing lots of pricing research - thanks Edmunds - I make a very low offer. I've had to get up and start for the door, but I've never been turned down.
No car buyer should negotiate to a "middle point". The dealer and the sales person are *not* your friend. They want as much of your money as they can possibly get. Every dealer has a bottom that will work for them, profit-wise. It's the car buyers' job to find that bottom as close as they think they can...before they step in the office....and then stick to that number. Once the dealer knows you'll negotiate on price, they know they have power to move you to a point well above their bottom. You've lost.
@the_oe.. Oh man, here we go again. Once again someone thinks they paid 'their price' when in reality its the dealers price based on information garnered from a source that uses dealer information for their guide.
The only reason they went after you and agreed is because your price was good enough, they just didn't want to admit it too early. I'll agree that playing that stupid game is a decent way to get your realistic offer accepted without being 'bumped' to pay more..
I guess my point is that if you had 100% control, you'd buy a Porsche for $19,999, but you cant. Yes you can buy a $24,999 car for $21,999 but only if the dealer agrees that in reality thats all its worth to them. So you get a car worth $21,999 for $21,999, but they control it, not you. You were fed information on sales from a website paid for by dealer advertising, and with information based on cars that sold for what dealers want to sell them for. So you make an educated guess as to what a dealer will accept, and then go offer that. So who controlled who?
Edit: On a side note, on certain ethnic people that love to do the walk-out on salespeople, we let them walk out, and usually they stand around their car for a while and then come back inside, because no one ran after them.
Do you seriously think you'll out-game a team of people that has meetings on tactics to outgame you every friday, and practices hundreds of times a month? Thousands of times a year? For several years?
Also consider the fact that dealers will let unreasonable offers walk, because obviously theres no point to taking an offer you don't really want or need, and it is good for the industry as a whole. When we let someone walk that wants/needs to buy a car, they just go buy it elsewhere for more than the offer they made with us. So you offer $29k to us, we laugh and let you go, so you go to the next town over and offer $29,500. They laugh. Tell you its ATLEAST 30k. You go to town #3 and offer 29,900 and they do it. Dealer #3 had a quick and easy deal.
Why would anyone let that happen and give dealer #3 a deal?
Because yesterday we were dealer #3 and got THEIR deal they walked a few days ago.
You wouldn't believe how often that happens. I do my best to get you to pay the market value of the car that I know is true in the region.. and if you won't do that, then I let you walk and learn your lesson. Then later in the afternoon I get the guy that was taught a lesson by another dealer and he pays a fair price because he actually wants to buy the car.
@rickhassold - I appreciate your perspective. As long as there's no illegal collusion on the part of the dealers #1, 2 and 3, the way you describe the process is perfectly fine with me. It wouldn't surprise me at all if there is collusion in some places, but that's a different issue.
Assuming your last paragraph is correct, perhaps we now have the answer to the question in title of the thread. Answer: How much "profit" is irrelevant. The only question that matters is: "what's the cheapest you can get a dealer - any dealer - to sell you the car for." In your example, Dealer 3 just gave you the answer for that market. It took three dealers to get the answer, but you can be pretty confident it's reasonably close to the bottom price available. Confidence that I'm paying the best price I can is valuable to me. If I have to go through a stressful negotiation with just you, I may end up at the same price, but will have zero idea if that's the best available price or simply better negotation by a trained negotiator whose job is explicitly to get as much money out of me as I'm willing to give (there's nothing wrong with that, by the way). By starting low at dealer 1 and 2, I know dealer 3's price is the lowest available and found it out without stressful negotiation.
As an aside, you may see the experience with dealer 1 and 2 as a "lesson", but from the consumers' standpoint, what it really is is gaining "valuable information" towards certainty that you've found the lowest available price. You see it as punishment for me, I see it as steps one and two towards my reward.
"Do you seriously think you'll out-game a team of people that has meetings on tactics to outgame you every friday, and practices hundreds of times a month? Thousands of times a year? For several years?"
Absolutely not. That's why I won't negotiate with you. You get one shot at my money. And I guarantee I won't stand out at my car waiting.
"I'll agree that playing that stupid game is a decent way to get your realistic offer accepted without being 'bumped' to pay more"
Bingo - we have a winner! Serious question: why do you call a tactic that gets a realistic offer accepted quickly and without being bumped "stupid"? I'm happy to stop playing a game you think is stupid, when your dealer stops putting meaningless prices on the sticker.
Many of the responses I read simply re-enforce my point that people have this emotional need to feel they are in control. The only control you have is to buy or not buy. I have no requirement to sell you a vehicle at ANY price. I have turned down more than fair offers from people I simply don't want as customers. Why? Because they are the type who come back, time and again looking for all sorts of free service!..when I politely refuse, they bad mouth us. These are the people who grind a dealer down to nothing and then feel they deserve the royal treatment. Umm, not where I work.
Edmunds, KBB, NADA? It's interesting that when I offer to sell a pre-owned car at book prices how the customer balks at that too. If the books work in THEIR favor, the cust is all in....if it works against them, well sir, they want more for their trade and less for mine. Please. You don't think we deal with this crap everyday? You wanna walk? Walk.
I don't come to the place of your employment and knock the hamburger off the spatula, don't even think you have any power to get the best deal...WE decide what the best deal is; you don't. It's a hard lesson, yet it is the truth.
Now new cars is a different animal..many dealerships will whore out their new cars at invoice or less just to get the numbers up and keep their holdback...I don't sell new cars..no real money in it.
If you think your offer of $17, 220 is the proper offer on my used car AND the "so called" "I saw the same car down the road" ..well; guess what? I've yet to see the same used car on two different lots.
Any salesman will tell you Mr. Civilian, it's the (GRINDER) who almost always gets the shaft, NOT the person who paid me a (FAIR) profit.
Here is one of my all time favorite quotes I hear from time to time from customers trying to exercise their power over me..LOL
"I can get this car at the auction for $xxx." My response "Oh, you have a dealers license? or "Well sir, sounds like you better hit the lanes early"
"I can get this car at the auction for $xxx." My response "Oh, you have a dealers license? or "Well sir, sounds like you better hit the lanes early"
I felt the need to comment on this one because the response I often get annoys the hell out of me, too.
First, though, I don't say "I can get." Mine is typically "this car goes for $xxx at auction" or "wholesale on this car is $xxx." Now, mind you, this is an absolute last resort for me. I don't like having to share that I have this information. And my fair offer is typically $2k-$2500 over this number.
So, after a while of back and forth, the dialogue is something like this: me: "Ok. $17k for your car." sales: "I can't do it. I have more into it than that." me: "But similar cars are only getting $15k at auction." sales: [indignantly] "Well I'm not in the business of selling cars at auction prices!" me: "Yes, I know, which is why I offered you MORE THAN auction value."
But, almost inevitably, when the conversation has gotten to this point, it is over. They obviously aren't hearing me and I've obviously offended them.
Of course, that's not always how it goes. More often, I don't have to mention it at all. Occassionally, when I do bring up that information, they appreciate I know and I've made a fair offer.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
The point many have tried to make is the exaggerated level of self-importance many in auto sales seem to have. The reality is only the customer actually controls price. The customer does not need a sales person. The sales person really does need we customers. So who, really, controls the sale?
This is very simple. A decent to great salesperson controls the customer. I'll offer actually two examples and I hope these are enough.
1) I sell over 300 cars a year (top 1%). I would say that the number of people that got me to sell them a car for a number so little I was embarassed to tell my manager or the owner the next day, has to be less than 10. There were a FEW. Those few people controlled me and won, yes. Those are the bad days. The days I was wore out, tired, stressed over something, and Id also say busy with other customers at the same time. I ran out of emotional energy, and mental energy, and just said "Fine! You win... let me go tell the boss theres nothing else, and Ill get it approved." I go to the boss and say "This offer is stupid.. Im sorry.. I cant get him to pay more right now.. Ive got someone else outside, a better customer.. but I really think this is all I got from this guy.." And if the manager likes me, knows Ive been working hard lately.. Ok hell do that deal. Thats the FEW cases a year a customer controls the price. All 290 other people paid ABOVE the price I knew I could sell it for, because I convinced them.
2) A better and more entertaining statistic is what we track, 'Bump' and 'Super Bump". It's when you have an offer to buy, total done deal at that number, but you go back in for more. A Bump is when you NEED to convince a customer to pay more because his offer is too low. He wants the car but hes offering an unrealistic number. So our job is to 'bump' the dollar amount hes offering. We track that. I personally can get an interested customer that needs to bump, to bump MOST times. Im not at work so I dont have our excel spreadsheet, but its something like 70%. This is the guy that said 'Rick, Ill buy it.. just give me my number.'. He wants to buy and I turn him into a buyer at the price we want.
A 'Super Bump' is the high some salespeople live for. A customer makes an offer, and the offer is a number a salesperson knows is acceptable. Maybe you had to bump him to this number even, but that doesnt matter. You have a deal at $20,000. you know it and the manager knows it. The salesperson goes BACK and bumps the customer for MORE. Do you know how hard that is as a person to do, that was raised in our musshy feel good pretend to be nice school system and society? Maybe if I was Indian and learned to haggle at the bazaar since age 7 back home, it would be another thing (hey thats not racist, its a real damn thing). But anyway, we track that percentage, and once again some salespeople have a decent percentage for that score. My dealer tracks it and gives perks based on top percentage of bumps.
I would say if a salesperson can walk in and get a customer to pay more than he knows the owner will accept, I'd call that person in control. Yes the customer has to give the final OK and go ahead, but thats part of the process that we just lead you to.
*On a note to avoid all crazy replies, realize that nobody has ever bumped a customer to OVER MSRP, or over asking price. It all starts with a customer asking for a discount (I guess we could call that their control part..), at which point its just our part to limit the damage that a customer wants to inflict on us.
Your perspective makes sense as I think back to the purchases that I have made in the past and the times when I passed on a car or truck because we just couldn't come to an agreement. Today I went back and test drove the car that I wanted to offer 40k for rather than the 48k that they were asking. I decided to just get their offer for their car minus my 10 year old BMW that I was offered $7500 by the BMW dealer just last week. I saw no point in insulting them by offering them 8k less than they wanted. They will trade me for 42k difference. Apparently they weren't as concerned about not insulting me.
"Apparently they weren't as concerned about not insulting me."
Apparently YOU have no problem going from dealer to dealer (testing) the waters and wasting salesman's time. You are known as "The Stroker" in the biz. I'd love to see how many here make an offer on a home purchase w/o earnest money?
You don't think a pro can recognize your non-commitment to do business now?
People like you sir really believe you have the only check book in town. Secret: You don't.
..and to the ones who claim to know the value of a car at auction, you must have special access to Manheim. You must know exactly what reconditioning costs the dealership incurred. Surely you have done the title search yourself..no, not carfax.
Price control? You have no more control over vehicle cost than you do over the daily swings in gasoline cost. Yep; you CAN control what YOU spend on gasoline...just start peddling yourself to work every morning.
I know; you would love to think you do control the process. I will allow you your self deception..and I will continue to cash my commission checks.
My car was at the BMW dealership for service for something other than normal maintenance for the first time since I bought it 10 years ago and while I was there I told the salesman that I was contemplating replacing it. I told the Ford dealer who had the used BMW the same thing. To be honest, I am more interested in not wasting my time than that of the salesman but "testing the waters" is a necessary step in determining whether or not I will be buying a car.
An interesting insight into the thought process of sales people. Obviously no sales person has a requirement to sell a vehicle to any customer even those who make a more than fair offer. I do think it fair to consider what the owner would do if he or she new his or her sales people were turning down a sale simply because they don't like something about the customer?
I, as a buyer, do control whether I will buy or not buy. That is the essence of control!
I cannot speak for all customers. However, I can say no sales person controls me. Before I buy an auto, I have done my homework and I have reached a price which I believe is fair myself as well as to the dealer. I do not deviate from this price by more than a couple of hundred dollars. If I cannot attain my price, it is obviously not the right time for me to buy.
My car buying process starts early. Initially I identify several vehicles I would like to buy. I continually access Edmunds' Prices Paid forums to determine when those vehicles are selling at a discount. When I find a good time to buy I begin to develop a price.
I start at invoice for the vehicle I want to buy and work backwards removing any incentive, both to the buyer and to the dealer, as well as the holdback. I then add a few hundred for the dealer's profit. I research the interest rate or money factor for which I qualify. I then compute a monthly payment, which is most useful for the trip to the box, Finance and Insurance.
I access True Car to arrive at their target price. This confirms whether my selected vehicle is selling at a solid discount. I recognize the True Car price is overstated, at least by the $300 dealers pay for any sale through True Car.
I then contact several dealers via internet. I select one dealer which has provided a fair price quote to purchase. I try to reward the dealer which provided the most informative and responsive response to my inquiry.
I visit the selected dealer and begin the negotiation. Since that dealer has already provided a price, the first pencil, I tell them the price I am willing to buy. Knowing they will bump, I have offered a price which is a bit lower than my goal.
I have used this process for years and I have always been able to purchase a vehicle at my price or perhaps a couple of hundred higher. Surprisingly, this method usually requires very little time. Usually the longest wait is to get the vehilce ready for delivery.
And lastly, the only word I say in the dealer's box is NO! I refuse to allow a good deal to go bad in the Finance and Insurance office.
After reading through the last few pages of this thread now I know why I only deal with Internet sales managers when I buy a new car...
I do my research, know what incentives the dealer currently has, know the holdback numbers on said manufacturer, and then I email dealers within a 100 mile or so radius then only work with those high volume dealers that responded with the best price and seem the easiest to work with. And I go straight to the internet sales manager at this point.
And I don't buy any accessories or add-ons unless I heavily negotiate those, and have at least two finance deals lined up through local credit unions or bankrate.com
No paint protection, wheel locks, alarms, etc.. The dealer is most often than not fleecing you on those items too.
I also try to wait until end of month and end of quarter when many high volume dealers are trying to hit sales quotas. I just bought a vehicle and negotiated to the invoice price, minus the $1000 dealer marketing incentive, minus $600 of their $847 of holdback. I had 1.9% financing lined up but the dealer beat it with .09% financing. Zero accessories or add-ons (I can get those online for about 1/2 the price of what the dealer quoted for the exact same OEM parts). I also take the vehicle to my local mechanic for all maintenance that is not covered and they follow the owners manual for servicing. About half the cost vs the dealer typically and they don't do some of the ridiculous service that the dealer tries to push on you even though it is not outlined in the manual.
Yes, as a few have posted, the simple key to a good deal is research, more research coupled with a bit of timing.
Know what incentives are available. Know your credit rating. Buy the right car at the right time, a car with manufacturer incentives. Buy a car with a solid reliability record eliminating the attraction of an extended service contract.
And always, say no to any and all overpriced products presented by the dealer's top sales person, the overly friendly one in the finance office. Regardless of how friendly that person may seem, that person has only one goal, to increase his profit and your cost.
I'd love to see how many here make an offer on a home purchase w/o earnest money?
You don't think a pro can recognize your non-commitment to do business now?
People like you sir really believe you have the only check book in town. Secret: You don't.
Lol, very true. 99.9% of the time I could recognize when someone in the showroom is full of it and has absolutely no intention of buying based on what's coming out of their mouth.
Comments
Just my humble opinion on this gorgeous Monday afternoon
I'm amazed that more or less identical dealerships will do vastly different deals on the same car but experience tells me it is so.
I will agree wit that. One Chevy dealer tried to play silly little games and not only did it cost them my deal but I can honestly say at least another dozed in the almost 20 years since. It was a dealer my sister bought religiously from and she suggested it. When I bought from another dealer she inquired as to why and I told her the story. She switched to the dealer I bought from and has bought many cars from them. As well as my mom, my wife and several friends that I recommended them to.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Well actually I was being very blunt, didn't mean for my post to come off so direct. I agree with you in that some professional courtesy is needed when declining a potential sale.
First off, someone wrote.. "I think $500-1000 is fair, that way the salesperson makes a nice commission, the dealer makes a profit, blah blah." That is so completely random. I am sure if most dealers made $500 on every car they sold, they would go out of business. So while it is done, its only out of necessity to mix profit AND volume with the manufacturer.
Also.. Jesus Christ.. If you pay $500 over invoice, a salesperson will make between $150 and $250 at most stores.. and while theres nothing WRONG with that.. lets not call it a 'nice' commission (we dont get paid hourly dont forget). If its the $250, its because the dealership has a minimum, because his typical 25% would be too low to keep him from strangling you or just kicking you out or of course just quitting. And then youd be left with only worse quality people in the business than you already think there are. While I wasn't anti making $250, if all your deals were like that you would quit the business. The average amount of time spent with a buying customer is just too long. Then factor in time with non buying customers, because most people do test drive or shop atleast some other brand no matter how good you are. Even a killer salesperson will have many customers "oh I just had to try that Audi, but I stuck to my original idea of getting that BMW". I dont blame those people. But realize eventually when you buy, you are paying a bit for all the test drivers, just like the guy that buys elsewhere is paying for your testdrive somewhere there.
Regarding trade-ins. Just like you are trying to buy cheap, they are also. Except the difference is you are buying what we could call a perfect car, it's everything you expect. They on the other hand are buying a mystery time bomb. I personally saw us buy many cars that later on in the shop we discover had real problems and simply killed us and made the manager look bad. I saw us onetime lose substantial money on a car because I accidentally told the manager it was a G37S because the lettering on the back said so. None of us on that busy Saturday would have really known that it wasnt a real S.. the customer just installed the S badge. Monday morning comes and we find out we overpaid drastically for a base model. Want to know why it takes 30 minutes to evaluate your trade in? Because the manager at your dealership got burned last month and almost lost his job because he didnt put your 4x4 SUV into 4 wheel drive mode to notice that it doesnt work. Considering we cant sell junk, and dont want to pay to repair your junk, we test everything.
You think we WANT to extend deals into multi-hour ordeals? Never.
Ive seen people lose jobs for paying too much for tradeins, because they got emotionally involved with customers and the salersperson, and just wanted to make the deal to make everyone content. My god, theres nothing more a dealership GM or owner hates being told than "Look, the customer said the dealership down the street would do it so I had to!" One, you cant alter your reality of a sound business deal based on random things people quote because often its exaggerated. Two... Our General Managers favorite saying was "We dont need to match the mistakes of other dealerships" and its honestly true. Customers find the one desperate, or mistaken, or blind, or whatever, dealership that will do a certain deal, and get angry for us not matching it. Somehow simply going back to that dealership isnt an option 50% of the time. I always wondered why that was.....
***
Many times customers asked "whats the best deal you can do on this car?"
Theres really no good answer to that. Because it depends on how you want to be remembered.. and what you want to happen to me and the business after you leave.
You could pay MSRP, a fair price deemed by the manufacturer, and I will remember you forever, smile at your thought, be happy when I see you in service, happy when I get your phone call asking a question, and probably do whatever I can to help you in the future just because I like you. You didnt pay for that service really. You paid for the car. But I honestly like you so you get whatever I can give.
You could pay a bit less, and a proportional amount of the above things will apply.
You could pay a some fair advertised special price, edmunds TMV price, close to invoice, where I probably make my $150 or $250 'mini' .. and I'll give you good service. I'll barely remember you though. I honestly cant give you too much mental attention because I have to think about the next customer, the next call, and my todo list on how else to make money today because this deal sure isnt going to cut it. Its not your fault. Its not really mine. I will give you as much service as I mentally can, but psychology is psychology and you delivered stimulus was less than someone paying top dollar. It is what it is. If I PERSONALLY like you, maybe youre cool, I'll remember you a bit more. If you ask me to go to your home to program your garage door, I'll start thinking youre a dick thats oblivious. Yes you think if I do this I should be happy to know that you'll buy your NEXT car, same mini deal from me.. great.. I get to do it all over again knowing this time atleast its for $250 (or $150 at some stores). I can treat you accordingly from the start.
Then there is someone grinding out the annoying deal. He shopped 6 dealers. He found the lowest, and now he wants you to BEAT that deal STILL. The lowest is not enough. Its well below what we would normally do. But he already used tons of my time emailing, calling, talking, test driving, sitting down, all this... Im honestly embarrassed to go the manager and present it. If he does the deal, its often simply for me. He wants me to atleast make the $250 mini. The way his pay plan works though, he will LOSE some money from his total earnings so far since he is paid a percentage of total monthly gross, this deal thus reducing it. Yes our units go up, but we know what each unit is worth to us, and as mentioned, this offer is below what we deemed this car is worth. Since there isnt an unlimited supply of most cars, there comes a point when losing it makes no sense since youll sell it eventually (yes, before flooring costs eat you up). Or the discount you are asking is many months of flooring, and we know the odds of it selling before are much greater. He does the deal for me. I feel so bad I buy him lunch the next day. I hate you a little. If I knew that this is how it would go when we started I would of been firmer before we met and you could of played your game elsewhere, while I did a good job returning emails and calls to better customers I can tell will help atleast provide the dealership with the basic
..revenue required to make this venture make any sense. But thats life. When I see you in service, I will probably not remember you (your odds are actually better for being remember, since you created a bit of drama), but if I do I will probably pretend a smile, and say hello if I have to. Probably Ill try to stay away. We will talk about you when I return to my desk. I will hope not to have a customer like you for a while. NOTICE I made the same $250 with you as the guy above. A mini is a mini. But I simply feel bad for the store, the sales manager, and I dislike that some jerk thinks playing everyone against each other in a race to the bottom dollar is fair. The only reason you got your deal is because you won out and got a deal out of desperation. The sales manager could tell I was invested, and didnt want to lower moral for the weekend. He knows I work hard and if thats what its come to, thats it. Lets get this over with.
Finally, all the above apply, you already got a deal the dealership shouldnt be doing, but it goes further, we include a trade in, things get convoluted, a mistake in a number, lease term, who knows what and you throw a fit and make last minute demands or ultimatums about walking and we do it for really no good reason except the fear of bad word of mouth or your insane yelp review full of incorrect facts. Maybe YOU even play a bit of a game this time and simply say "no no you said that was included.." when in reality that was 7 iterations ago and was dropped off the time, we both know it. But hell, you want to see what else you can get out of us. This happens once a month at a high volume store. Monday comes and meetings are called.. people get yelled at, sales managers maybe fired or much closer to being fired. The biggest mistakes always get made on the most annoying customers, because they have everyone so emotionally worked up. Decent people working stupid hours for on a pretty average hourly calculated rate get hurt because you just had to play your games. I'll see you in service, and when you step away from the counter, Ill go up to them and say "**** that guy. Whatever you do, screw him." and hell answer "Oh I already know. I could tell". Because its that damn obvious.
So you tell me, whats the lowest this car can sell for?
You might enjoy hopping over to our Stories from the Sales Frontlines discussion. Not a lot of salesfolk there these days, but it's a very friendly group, and they're not anti-salespeople.
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As a buyer, it really is not my task to determine the selling price of a vehicle. My task is simply to determine what I will pay for a vehicle.
In today's sales environment, I don't need to be concerned with the salesperson. Chances are the salesperson I deal with on one purchase won't be there for my next purchase. Buyers should treat a good salesperson with respect, but that is it. As a buyer, it is not my business what amount the salesman makes on a sale. That is between the salesperson and the dealership.
Thats absolutely true. We don't work for you, but we will usually give you as much information as you want regarding the cars and the overall process of buying and ownership. Thats what we do for you. But when it comes to prices, we work for the dealership, obviously, and our job is to make you pay as much as we can. 'As much as we can' doesn't mean steal from you, it means limit your desire for a random discount to as little as possible. Once again, I'm sure you know thats obvious.
You mention its not your task to determine the selling price, but only what you will pay for it.. which seems like the exact same thing if you actually want the car in any logical reasoning. Sure I think $5000 is what Id pay for an ugly kia van, but thats because I dont want it. Once I want it, I come to the quick realization that I have to pay some number that is acceptable to the dealer, and THAT is the only thing that really matters. If you think it's anything else, I would really like to know what method of financial analysis of the currency market, labor market, materials market you use to determine what you're willing to pay. Most people understand that if they WANT something, they have to pay pretty damn closet to whatever it takes. If they then do some education and determine that the number is too high for them, they readjust their desires.
So lets not try to use some clever working to say that you buy cars this special way. You dont determine what youre willing to pay out of thin air. You decide what you want, you do some research, and if you still want it, you try to get a deal on the more favorable end of your research.
And I still dont have too much problem with that. Remember, I said Im happy to give good service to the guy that comes in on a very competitive advertised special, or comes in and quickly says hell pay the edmunds true market value, or whatever accurate reasonable source. I dont make much money, but thats one fair way to buy a car and still get a good deal.
My main problem is with people that try to get BEYOND a good deal. And do so by a sometimes completely unreasonable number. And even those people would be fine if they just simply stated that quickly and way upfront. But they dont. They honestly play a game often, making you invest a lot of your time knowing that then you are also more likely to give in. And thats just bs plane and simple. Theres nothing else you can say about that.
Everything else is as you said and usually pretty clear to most people. A decent successful car salesman treats his customers well, and 90% of customers treat salespeople really nicely too.
I have no problems with people deciding what they will pay, and acting on it. HOWEVER, if you do some research, and the number that you decided this car is worth to you is below the average market value, please be more clear about it and sooner. Thats all we can really ask. Because sometimes we do sell cars under average market value. It happens. But if you use time consuming, deceptive, hostage like tactics to get it, its simply being a bad person in my opinion. Yes car sales people are sometimes bad people too. Obviously I know me telling the service manager, as I wrote earlier, to make your service experience as unpleasant as possible is being a pretty bad person.. I am who I am but I know it, and Im just writing this so you can decide which person you want to be too. Its just a car sales in the end, but some people take the process so certain extremes that make it unpleasant for everyone involved I think.
On a side note, with everything I know about buying and selling cars after years in the business, and being one of the best in my luxury brand in the country, when I go to buy any car, I'll probably do this:
Look at a 'TMV' type of report and take that number. Id try to possibly figure out what the next iteration of 'good deal' is, and take down that number.
I would then use one of the online 'get a quote from multiple dealers' function, and request quotes on a model.
I would get the quotes back from their internet departments. Already noticing that some of them are even lower then the TMV ! (which is true because TMV reports non internet transactions that include the high gross deals).
I would probably take the lowest quote below TMV and go there. IF they said they didnt have the car, I would ask them to get it.
If they couldnt, and somoene else had the car, I would now contact the dealership that has the car and ask them to match the printed quote of the other dealership. I would do this over email or phone, without wasting tons of time on anyones part.
If they wouldnt, I would ask them what they can do, and hopefully its below TMV.
If whatever they come back with is around TMV I would do it.
It is what it is, its still a fair deal.
Thats how I would do it. Its just not worth then employing a 3 hour time waste a thon to see if I can squeeze out someone matching the previous dealers deal. Maybe that dealer gave a great price because they only had undesirable models left and you dont even know which ones that is.
Buying a car is only as hard as people want to make it.
If I valued time, and was one of the people that say 'I HATE NEGOTIATING !!!! AHHH!' and I was a smart informed customer that cared about 'a deal' I would request quotes online and pick the lowest or the one that has the car and has a semi close price and be done with it. Which I think is pretty much what I wrote above. If I hated negotiating and wanted the BEST service and to feel good about EVERYTHING I would pay MSRP. It is what it is.
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What a load of garbage!
I deal with this mentality often as a sales person.
If it's a *new* car, perhaps your method works, perhaps not.
Pre-owned? You can't do it this way since no 2 used cars are the same...the consumer still has to come in and evaluate the vehicle...and even then 99% want to haggle making claims about how it is not in perfect condition etc..blah..blah..blah...
After 12 years selling, I've heard every lame excuse the consumer can offer. The great thing is that I AM a professional sales person and have far more responses than they have excuses, dodges, objections.
I've been the "good guy" who cares about the customer and I've been the "bad guy" who sells and moves on to the next mark. Guess what?
The "Bad Guy" earns far more than the good guy. Period!
The general public doesn't give a rats rear end about us; do you really think we care about them? LMAO
Sorry; but car dealerships don't work like Walmart where you just pick it off the shelf.
I suppose if you work in a one horse town, you may have to develop ongoing rapport just to make a measly 40K a year if you are lucky.
I work in a large city. Plenty of "UPS" to keep me well fed. I've lived off the lot for years and continue to do so.
Consumers need to open their eyes and realize KBB, Edmunds, Black Book etc...DO NOT prepare the consumer to get a great deal. They are deceived and I am happy about that; otherwise I would not be making a great living.
Car dealerships AND salesman are not only better trained than the consumer to sell, the deceptive practices continue, the lies continue and the monster money we earn is proof of this.
I suppose those who live in "Happy Land USA" believe otherwise or at least hope it ain't so.
www.consumercaradvocate.com
This guy wrote a incredible book for the consumer.
It's not about leasing, numbers or beating up the sales person in the attempt to get a good deal.
It's about the salesman's mindset and tactics, the lies and easy procedures that lull the consumer into a false sense of security..the kind of false sense of security they get from Kelly Blue Book.
Understanding the sales process when a consumer walks on the lot will equip them to negotiate from power & understanding. Luckily for me, 99% of my fresh (UPS) are not equipped with what they really need to know.
I LOVE the buyer who walks in with all his internet printouts. It's like clubbing a baby seal.
I've always maintained; IF a consumer sold cars for 90 days (AND) their living depended on it, they would be in a far better position to negotiate a deal.
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Of course many people will try to get a better than average deal. It is, in the end, their money. Getting the best deal is, after all, the goal of negotiating.
I would not be surprised a dealer would accept the Edmunds TMV. TMV is, as Edmunds discloses, an estimate of the AVERAGE price for a vehicle. Average means half pay more and half pay less. I, as a buyer, choose to pay less.
A buyer who simply accepts a car sales person's on line quote as the price will almost always pay too much. At any dealership the best price available from that dealer is rarely achieved without a visit to the dealership with some action taken to make the sales person believe the buyer is walking. At that point most sales people will offer a better price. No sales person wants to see a potential buyer walk out the door as they are aware that person will not likely return. A person's feet are the best negotiating tool they have.
In the end, it is the sales person and dealer who needs the customer. The customer does not need a particular sales person or dealer. After all, there is always another dealer down the road a bit. Therefore, the only thing THAT truly matters is what the buyer is willing to pay.
I've let many people walk before when they presented offers that we just wouldn't/couldn't do.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
When I buy I do my homework. I research invoice, incentives, holdback, etc. I develop a purchase price including a few hundred for dealer profit. I recognize I may need to negotiate up a bit from this amount. I am not looking for the lowest price anyone has ever paid. I am looking for a below average price which is fair to both me and the dealer. Of course from my perspective the me is more important than the dealer.
I contact multiple dealers via internet. Some don't give a price but simply ask me to drop by. Those I ignore, why waste time. Most do provide a price. I consider the overall dealer response not just the price. I also consider on line reviews recognizing many are simply people venting. But some good information can be gleaned from those reviews. I am particularly interested in reviews to identify dealers who attempt to include too many added silly fees. Those I always avoid. Finally, I select the most appealing dealer for the purchase.
I discuss with the sales person and after a bit of talk to let each of us get to know the other I tell them my price. They usually come back with something a bit higher buy not crazy high. I think they do this because they have concluded I have done my research and they don't want to put a potential sale at risk.
Just about everytime I have used this approach I have found the dealer and I are able to reach an agreeable price very quickly. Almost always the sales person has told me how appreciative they are that I let them know what I was looking for in the purchase. Apparently this makes their job easier.
To be honest, over the past decade or so I think the average sales person has become much more ethical and certainly much more professional than in years past. Of course, it could be that I am far more knowledgable and calmer than I was in my youth. Probably both.
Buying a car does not have to be a war. If done right both sides can feel good about the sale. I have found the best practice from a buyer's prospective is to be totally upfront with the sales person. Best to tell them what you want and let them respond. That saves everyone a lot of time and effort.
Also, from a dealer's point of view, giving out prices over the internet almost never results in a deal because that price is taken and shopped at other dealers. So if I give out a quote at $150 over invoice, I have no idea whether the customer is taking that to another dealer to beat. In most cases that's what happens and we just gave a price to someone who was not commited to buying, never stepped foot in our dealership, and in some cases, never even drove the car.
The funniest thing is that the competing dealers (at least in my area) who usually quoted the lowest internet figures end up slapping the customers with a bunch of fees when they end up in the business office. Very few customer will walk at that point because they either asssume that same fees will also be charged at competing dealers, and because they do not want to start the process all over again.
This is unfortunate because in this case some customers end up paying more than at other dealers with a higher price but lower (or none) doc fees.
Although this happens often, I had an encounter with a customer who was phoning for "best price" on a certain specific model.
He was ready to make an over the phone offer, but never stepped foot into our showroom. Reluctantly I gave it a shot and heard him out.
He wanted me to beat a competing dealer's price by another $500 on a $25k new car we had in stock.
I presented the offer to my manager, and after he looked a the cost and invoice he told me either the customer is bluffing or the competing dealer is bs'ing him.
I called him back with a counter offer. He negotiated more and came back with a number that was also not doable.
I called him back and told him sorry but we couldn't do business, but explained to him how his numbers don't make sense, and asked him if he knew whether his number he got elsewhere included freight/pdi or doc. He said yes, then said no, then said not sure, but then asked me what freight meant. Then he said no it didn't include any of these. I told him ok, that made more sense then. After I added these to his competing dealer's price it turns out our counter offer was lower than the competing dealer's offer with the fees added on.
He got excited and was about to make an appointment to come in but then dropped a bomb: he said his wife doesn't know he's car shopping and he's not sure if she'll like this model he's calling about. Furthermore, he said he hasn't even driven it yet. So he said my job would be convincing his wife to not only buy this car, but to buy a new car in general.
I did not want to waste any more time with him and told him when he's serious to buy, after he convinces his wife, then he should come and see me, but all this havy negotiating and calling a bunch of dealers before even knowing if you're in the market is doing things [non-permissible content removed] backwards and wasting everyone's time.
That's why we take customers who are in front of us more seriously than phone or internet price shoppers.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
The reality is those buyers will ultimately get what they want from another dealer. Why let someone else be that other dealer simply due to a refusal to provide a price?
An example, I recently leased an Acura. I contacted several dealers with an internet inquiry. A couple did not provide a price but rather invited me to visit. Those I dismissed. A couple provided prices which were above my numbers. I commuicated with them via internet and they eventually reduced their prices. I did not shop prices which I don't think is fair nor necessary if a person has done the correct research.
One dealer had a very inviting response. Within thirty minutes that dealer provided a very professional summary of the lease complete with detailed capitalized cost, money factor, residual, and payment. The numbers provided were very competitive with the numbers I required. That was the dealer I visited and, after a bit of further negotiation, reached a deal.
Companies who do not give customers what they want will not be as successful as they can be. Consider JC Penny, which recently decided their customers really don't need the coupon buying process. Bad move as customers left in droves. JC Penny has just returned to coupons. Of course, who knows if customers will return.
I suspect the best sales people simply give each customer what they need to make the sale. I doubt sales people often get more than once real chance to make a sale. Would not it be advisable to make the best of that single opportunity and give the customer what they request?
Yes, but in the end you have to understand that dealers are in the business to make money. Giving rock bottom quotes over the internet where there is almost no profit makes very little sense. It actually makes more sense holding on to that car and getting someone who walks in to buy it as the profit will always be higher.
Let me explain how.
Every new car dealers gets monthly sales reports from the manufacturer about every competing same make dealer. The monthly sales reports include sales figures and gross profit average per car.
The dealers that sell the least, also have much lower average gross profits. The dealers that sell the most have much higher gross profits on average. This is a fact that's common across almost every car brand.
The reason is that the dealers who sell more know how to sell and build value in a vehicle, and you can do that only by matching a customer's needs with the right vehicle, doing a proper presentation, and proper demo drive. They're also good at closing on the spot and don't drop the price needlessly.
Dealers that don't build value in a product or ones that don't match the customers needs with a product, have nothing to go on except price, so they have to drop the price to entice the customer to buy because the customer does not see the value in the product. It's almost impossible to build value in a car over email to someone who may or may have not even sat in it or has not driven it.
So when we were on track to meet our targets and had a good selection of specific model/color combinations there was no point giving them away for next to nothing. This was especially true if we had a specific hot selling car that not many other competing dealers had in the region. If we had 4 customers who came and looked and drove a specific new model over the weekend and we had one person email us about it, we'll quote close to MSRP (less rebates) and leave it at that because we know we'll sell it at that price.
And no, moving an extra one off the lot, at cost or at a loss, is not what most dealers are in the business for. Moving one off the lot and making a profit, yes.
And lastly walkin customers tend to provide more repeat business than email customers. They come back for servicing, because usually they're from the local area, they come back to buy another one if they liked the service and were happy with the overall deal, and they refer family and friends.
Email customers tend not to be loyal, and they're price driven only. So selling a car at cost or a little over cost results in no profit, lower CSi (survey) scores, no service business (most email customers are out of the neigbourhood), no repeat business (most email customers will email every dealer again next time they're buying a car), and no referral business.
And with margins being razor thin these days, sometimes selling a new economy car at full MSRP might mean $1500 in gross profit for the dealer (before commission is paid out), vs giving one away at close to cost might mean $200 gross profit. And if a dealer is good at holding the price, then why give away a car that can bring in more money from someone that walks in the door?
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
I remember my dad always bought from the same salesman at the same Pontiac dealer. No longer, recently even he varies his purchases.
It would think dealers would, as you suggest, strive to get a potential buyer to visit. Few sales are likely to occur without that visit. If giving an Internet buyer a low quote might result in such a visit, that seems the prudent thing to do.
I suspect dealers who choose only to deal with walk in customers are sending a lot of potential sales to their competitors who are very pleased to accept such help.
I suspect I am similar to many of today's car buyers. I have done my research and I know what I want. Honestly, the last thing I want is a sales person's presentation. All I need to know is will the dealer sell me that vehicle at my price. I find the Internet most useful to identify those dealers who seem most likely to satisfy my goals. Those also have earned a chance for my repeat business.
I answered this question on the Edmunds Question/Answers page here:
Questions/Answers
But I'll copy my explanantion here on factors that affect how much a dealer paid for a trade in:
"All of these online price guides and book values serve just as that: guides, guidelines etc...
There is no national standardized system where every 2003 Accord or 3005 XYZ model gets exactly the same trade in value at every dealer in every region or nation wide. Why? Because once again no two used cars are alike.
What affects used vehicle pricing are quite a few factors:
-Year, make, model, trim level (obviously)
-Engine and transmission combination
-Mileage
-Color
-Modifications if any (usually in a negative way)
-Service history
-Accident history
-Condition, both cosmetic and mechanical
-Amount of money a dealer put into a vehicle after they took it in trade
-Availability of said make and model in local markets
-Popularity and demand of said make and model in local markets
-If used car is only 1 or 2 years old, then manufacturer rebates of same brand new models will have an effect on used market
-Lease maturities and fleet returns that will lead to market saturation
-Popularity and sales figures of the car when new, and when used
-Supply vs demand
-Ability and ease of financing by major banks (usually hard to finance 6 year old or older vehicles which means smaller purchasing audience)
-Finance rates of such vehicles
-Auction values and what the dealer can buy an equivalent model for at the auction
-Any negative publicity of specific models in terms of recalls, high accident rates, or high theft rates
That's the basic overview of what affect used vehicle pricing.
So even though you can find approximate values of these cars from various sources, it is not these sources you are buying these vehicles from. You are buying them from individuals and dealers who each have a specific amount of money vested in them and are looking for a specific return."
You can offer a couple thousand over Edmunds TMV, but if the dealer put money into the car via reconditioning, servicing (maybe oil service, brakes, fixing a dent or a few chips) and all that cost them a couple thousand then they won't accept your offer.
What is the asking price of the car, and how much were you thinking of offering?
If you don't want to waste time, then pay the asking price, it's as simple as that. If you want a discount, then you have to work for it via going back and forth a few times to find the sweet spot.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
People don't email 20 realtors with houses for sale asking for "best price". Because in order to get the seller to discuss numbers you have to put in a binding offer to purchase. They usually look at few houses first, in person, do some research and make an offer on one or two they're ready to buy. Not the other way around (putting in 20 offers, then going seeing a house because the price was the lowest).
No different with cars.
Over the years with the few cars I sold privately I always have a few people emailing or texting me asking me if I'll take this amount or that amount, or what my bottom line is.
I always respond that why even offer anything if you haven't even seen my car. And I always say that their email offer means nothing because they're not standing in front of me with cash in hand ready to buy if I accept their offer. And actually seeing a car in person is a big part of buying a car, so from experience NONE of these offers that I got via email/text and agreed to ever materialized in a sale because the "buyer" didn't show up, didn't reply, or came and tried to knock the price down even more from their offer. So really all they were doing in the first place is knocking odwn my asking price.
And I understand you'vce done your research. But did you not go to a dealer to look at the car, ask questions about specific features and options, warranty, and test driven the car? That is part of the presentation by a salesperson.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
I had to laugh when I read this but you are absolutely right. They want 48.5 and I was thinking 40.
Well; guess what? I AM "Still Sellin and still making a great living!
The general public, or human nature seem to have this need to be in control.
You have no more control on pricing or how things really work in a dealership than you do telling a surgeon how to perform a proceedure.
I remain amused.
To the guy that says "I wouldnt do business with the salesman that says I have to pay what they want or I dont get the car!"... obviously if it was said to you straight to your face, you wouldnt, because its a bit harsh and aggressive. But in the end, you pay exactly what they want or more, or otherwise they obviously wouldn't have sold you the car.
Your magical formula for figuring out "a few hundred dollars profit" is a joke because 'profit' is different than revenue and income.. (im not a finance person.. but you know what I mean). Thats like saying a coffee shop could give away their coffee for 18 cents a cup, making about 80% profit, they'd make a killing. Obviously not because true costs per car are different just price paid for the commodity.
And not that many will care, but reread what I wrote and know that its coming from one of the top people in the industry. I sell about 32 cars a month, make over 200k a year for several years, so I am not delusional or naiive about the industry. I was top 1% for my brand for several years.
I'm fair to customers, give decently nice people decent deals, and all are happy except for people you could label unhappy from the moment they walk in.
Get your sales manager to agree to my "one, only and final" offer within ten minutes and you get my money. If not, I'll leave - pleasantly, but permanently. No unneccessary negotiation that costs me money and no wasting anyone's time. After doing lots of pricing research - thanks Edmunds - I make a very low offer. I've had to get up and start for the door, but I've never been turned down.
No car buyer should negotiate to a "middle point". The dealer and the sales person are *not* your friend. They want as much of your money as they can possibly get. Every dealer has a bottom that will work for them, profit-wise. It's the car buyers' job to find that bottom as close as they think they can...before they step in the office....and then stick to that number. Once the dealer knows you'll negotiate on price, they know they have power to move you to a point well above their bottom. You've lost.
Oh man, here we go again. Once again someone thinks they paid 'their price' when in reality its the dealers price based on information garnered from a source that uses dealer information for their guide.
The only reason they went after you and agreed is because your price was good enough, they just didn't want to admit it too early. I'll agree that playing that stupid game is a decent way to get your realistic offer accepted without being 'bumped' to pay more..
I guess my point is that if you had 100% control, you'd buy a Porsche for $19,999, but you cant. Yes you can buy a $24,999 car for $21,999 but only if the dealer agrees that in reality thats all its worth to them. So you get a car worth $21,999 for $21,999, but they control it, not you. You were fed information on sales from a website paid for by dealer advertising, and with information based on cars that sold for what dealers want to sell them for. So you make an educated guess as to what a dealer will accept, and then go offer that. So who controlled who?
Edit: On a side note, on certain ethnic people that love to do the walk-out on salespeople, we let them walk out, and usually they stand around their car for a while and then come back inside, because no one ran after them.
Do you seriously think you'll out-game a team of people that has meetings on tactics to outgame you every friday, and practices hundreds of times a month? Thousands of times a year? For several years?
Why would anyone let that happen and give dealer #3 a deal?
Because yesterday we were dealer #3 and got THEIR deal they walked a few days ago.
You wouldn't believe how often that happens. I do my best to get you to pay the market value of the car that I know is true in the region.. and if you won't do that, then I let you walk and learn your lesson. Then later in the afternoon I get the guy that was taught a lesson by another dealer and he pays a fair price because he actually wants to buy the car.
Assuming your last paragraph is correct, perhaps we now have the answer to the question in title of the thread. Answer: How much "profit" is irrelevant. The only question that matters is: "what's the cheapest you can get a dealer - any dealer - to sell you the car for." In your example, Dealer 3 just gave you the answer for that market. It took three dealers to get the answer, but you can be pretty confident it's reasonably close to the bottom price available. Confidence that I'm paying the best price I can is valuable to me. If I have to go through a stressful negotiation with just you, I may end up at the same price, but will have zero idea if that's the best available price or simply better negotation by a trained negotiator whose job is explicitly to get as much money out of me as I'm willing to give (there's nothing wrong with that, by the way). By starting low at dealer 1 and 2, I know dealer 3's price is the lowest available and found it out without stressful negotiation.
As an aside, you may see the experience with dealer 1 and 2 as a "lesson", but from the consumers' standpoint, what it really is is gaining "valuable information" towards certainty that you've found the lowest available price. You see it as punishment for me, I see it as steps one and two towards my reward.
Absolutely not. That's why I won't negotiate with you. You get one shot at my money. And I guarantee I won't stand out at my car waiting.
"I'll agree that playing that stupid game is a decent way to get your realistic offer accepted without being 'bumped' to pay more"
Bingo - we have a winner! Serious question: why do you call a tactic that gets a realistic offer accepted quickly and without being bumped "stupid"? I'm happy to stop playing a game you think is stupid, when your dealer stops putting meaningless prices on the sticker.
These are the people who grind a dealer down to nothing and then feel they deserve the royal treatment. Umm, not where I work.
Edmunds, KBB, NADA? It's interesting that when I offer to sell a pre-owned car at book prices how the customer balks at that too. If the books work in THEIR favor, the cust is all in....if it works against them, well sir, they want more for their trade and less for mine. Please. You don't think we deal with this crap everyday? You wanna walk? Walk.
I don't come to the place of your employment and knock the hamburger off the spatula, don't even think you have any power to get the best deal...WE decide what the best deal is; you don't. It's a hard lesson, yet it is the truth.
Now new cars is a different animal..many dealerships will whore out their new cars at invoice or less just to get the numbers up and keep their holdback...I don't sell new cars..no real money in it.
If you think your offer of $17, 220 is the proper offer on my used car AND the "so called" "I saw the same car down the road" ..well; guess what? I've yet to see the same used car on two different lots.
Any salesman will tell you Mr. Civilian, it's the (GRINDER) who almost always gets the shaft, NOT the person who paid me a (FAIR) profit.
Here is one of my all time favorite quotes I hear from time to time from customers trying to exercise their power over me..LOL
"I can get this car at the auction for $xxx."
My response "Oh, you have a dealers license? or "Well sir, sounds like you better hit the lanes early"
My response "Oh, you have a dealers license? or "Well sir, sounds like you better hit the lanes early"
I felt the need to comment on this one because the response I often get annoys the hell out of me, too.
First, though, I don't say "I can get." Mine is typically "this car goes for $xxx at auction" or "wholesale on this car is $xxx." Now, mind you, this is an absolute last resort for me. I don't like having to share that I have this information. And my fair offer is typically $2k-$2500 over this number.
So, after a while of back and forth, the dialogue is something like this:
me: "Ok. $17k for your car."
sales: "I can't do it. I have more into it than that."
me: "But similar cars are only getting $15k at auction."
sales: [indignantly] "Well I'm not in the business of selling cars at auction prices!"
me: "Yes, I know, which is why I offered you MORE THAN auction value."
But, almost inevitably, when the conversation has gotten to this point, it is over. They obviously aren't hearing me and I've obviously offended them.
Of course, that's not always how it goes. More often, I don't have to mention it at all. Occassionally, when I do bring up that information, they appreciate I know and I've made a fair offer.
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Amusement really comes from comparing car sales to surgery! That is really amusing.
1) I sell over 300 cars a year (top 1%). I would say that the number of people that got me to sell them a car for a number so little I was embarassed to tell my manager or the owner the next day, has to be less than 10. There were a FEW. Those few people controlled me and won, yes. Those are the bad days. The days I was wore out, tired, stressed over something, and Id also say busy with other customers at the same time. I ran out of emotional energy, and mental energy, and just said "Fine! You win... let me go tell the boss theres nothing else, and Ill get it approved." I go to the boss and say "This offer is stupid.. Im sorry.. I cant get him to pay more right now.. Ive got someone else outside, a better customer.. but I really think this is all I got from this guy.." And if the manager likes me, knows Ive been working hard lately.. Ok hell do that deal. Thats the FEW cases a year a customer controls the price. All 290 other people paid ABOVE the price I knew I could sell it for, because I convinced them.
2) A better and more entertaining statistic is what we track, 'Bump' and 'Super Bump". It's when you have an offer to buy, total done deal at that number, but you go back in for more. A Bump is when you NEED to convince a customer to pay more because his offer is too low. He wants the car but hes offering an unrealistic number. So our job is to 'bump' the dollar amount hes offering. We track that. I personally can get an interested customer that needs to bump, to bump MOST times. Im not at work so I dont have our excel spreadsheet, but its something like 70%. This is the guy that said 'Rick, Ill buy it.. just give me my number.'. He wants to buy and I turn him into a buyer at the price we want.
A 'Super Bump' is the high some salespeople live for. A customer makes an offer, and the offer is a number a salesperson knows is acceptable. Maybe you had to bump him to this number even, but that doesnt matter. You have a deal at $20,000. you know it and the manager knows it. The salesperson goes BACK and bumps the customer for MORE. Do you know how hard that is as a person to do, that was raised in our musshy feel good pretend to be nice school system and society? Maybe if I was Indian and learned to haggle at the bazaar since age 7 back home, it would be another thing (hey thats not racist, its a real damn thing). But anyway, we track that percentage, and once again some salespeople have a decent percentage for that score. My dealer tracks it and gives perks based on top percentage of bumps.
I would say if a salesperson can walk in and get a customer to pay more than he knows the owner will accept, I'd call that person in control. Yes the customer has to give the final OK and go ahead, but thats part of the process that we just lead you to.
*On a note to avoid all crazy replies, realize that nobody has ever bumped a customer to OVER MSRP, or over asking price. It all starts with a customer asking for a discount (I guess we could call that their control part..), at which point its just our part to limit the damage that a customer wants to inflict on us.
Apparently YOU have no problem going from dealer to dealer (testing) the waters and wasting salesman's time. You are known as "The Stroker" in the biz.
I'd love to see how many here make an offer on a home purchase w/o earnest money?
You don't think a pro can recognize your non-commitment to do business now?
People like you sir really believe you have the only check book in town. Secret: You don't.
..and to the ones who claim to know the value of a car at auction, you must have special access to Manheim. You must know exactly what reconditioning costs the dealership incurred. Surely you have done the title search yourself..no, not carfax.
Price control? You have no more control over vehicle cost than you do over the daily swings in gasoline cost. Yep; you CAN control what YOU spend on gasoline...just start peddling yourself to work every morning.
I know; you would love to think you do control the process. I will allow you your self deception..and I will continue to cash my commission checks.
I, as a buyer, do control whether I will buy or not buy. That is the essence of control!
My car buying process starts early. Initially I identify several vehicles I would like to buy. I continually access Edmunds' Prices Paid forums to determine when those vehicles are selling at a discount. When I find a good time to buy I begin to develop a price.
I start at invoice for the vehicle I want to buy and work backwards removing any incentive, both to the buyer and to the dealer, as well as the holdback. I then add a few hundred for the dealer's profit. I research the interest rate or money factor for which I qualify. I then compute a monthly payment, which is most useful for the trip to the box, Finance and Insurance.
I access True Car to arrive at their target price. This confirms whether my selected vehicle is selling at a solid discount. I recognize the True Car price is overstated, at least by the $300 dealers pay for any sale through True Car.
I then contact several dealers via internet. I select one dealer which has provided a fair price quote to purchase. I try to reward the dealer which provided the most informative and responsive response to my inquiry.
I visit the selected dealer and begin the negotiation. Since that dealer has already provided a price, the first pencil, I tell them the price I am willing to buy. Knowing they will bump, I have offered a price which is a bit lower than my goal.
I have used this process for years and I have always been able to purchase a vehicle at my price or perhaps a couple of hundred higher. Surprisingly, this method usually requires very little time. Usually the longest wait is to get the vehilce ready for delivery.
And lastly, the only word I say in the dealer's box is NO! I refuse to allow a good deal to go bad in the Finance and Insurance office.
I do my research, know what incentives the dealer currently has, know the holdback numbers on said manufacturer, and then I email dealers within a 100 mile or so radius then only work with those high volume dealers that responded with the best price and seem the easiest to work with. And I go straight to the internet sales manager at this point.
And I don't buy any accessories or add-ons unless I heavily negotiate those, and have at least two finance deals lined up through local credit unions or bankrate.com
No paint protection, wheel locks, alarms, etc.. The dealer is most often than not fleecing you on those items too.
I also try to wait until end of month and end of quarter when many high volume dealers are trying to hit sales quotas. I just bought a vehicle and negotiated to the invoice price, minus the $1000 dealer marketing incentive, minus $600 of their $847 of holdback. I had 1.9% financing lined up but the dealer beat it with .09% financing. Zero accessories or add-ons (I can get those online for about 1/2 the price of what the dealer quoted for the exact same OEM parts). I also take the vehicle to my local mechanic for all maintenance that is not covered and they follow the owners manual for servicing. About half the cost vs the dealer typically and they don't do some of the ridiculous service that the dealer tries to push on you even though it is not outlined in the manual.
Know what incentives are available. Know your credit rating. Buy the right car at the right time, a car with manufacturer incentives. Buy a car with a solid reliability record eliminating the attraction of an extended service contract.
And always, say no to any and all overpriced products presented by the dealer's top sales person, the overly friendly one in the finance office. Regardless of how friendly that person may seem, that person has only one goal, to increase his profit and your cost.
You don't think a pro can recognize your non-commitment to do business now?
People like you sir really believe you have the only check book in town. Secret: You don't.
Lol, very true. 99.9% of the time I could recognize when someone in the showroom is full of it and has absolutely no intention of buying based on what's coming out of their mouth.
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