If you are buying a new run of the mill car and are not picky about colors/options, you are basically buying a commodity - every new car of the given make and model is just like the next. If you also happen to live in the U.S. near a metro area, chances are that there are a ton of dealerships nearby willing to compete to get their high-value inventory off the lot.
You can turn the tables around quite easily and stress free (and have some fun in the process). Here is a car-shopping tactic I learned in a negotiation class some four years ago, used when shopping for a new car a few months later, and got a significant discount to the original ask. It really works well.
Shop towards the quarter-end. If you can help it, shop as close to the quarter-end as you can. If it's raining - even better. It's incredible what sales guys will do to get one more car out of the lot before quarter-end on a rainy day with no one in the showroom.
Get Consumer Reports Wholesale Price report. This gives you a good approximation for what dealer pays to get the car.
Compile a list of dealerships in 20-50 mile radius. For some brands you can even see their inventory online, which is fantastic.
Call dealers one by one. Be very professional, polite and don’t get emotional. Here is the script -
- I need to buy a new car. I am paying cash and can buy today.
- I am looking for $Make and $Model in $Color and I see you have $N cars like that on the lot. I've checked the Consumer Reports Wholesale Price which lists this vehicle at $X. The additional cost for $Options is $Y, which makes the total cost to dealer to $Z.
- Please call me back and tell me the best price you can offer out the door [1]. Do not include taxes, title, or tags which I will handle on my own.
As you get quotes from the dealers, thank them for their time and inform them of the lowest quote you currently have. They will sure call you back. Be prepared that some dealers will get really pissed and emotional, but just remain professional and polite. There is really no need to lie or waste anyone's time, the process works itself out beautifully. You’ll get a great deal before you even step foot in the dealership.
If you are leasing or financing, it doesn't work as smoothly (more levers to pull), but it is doable. I also don't think it would work as well for high-end brands with fewer dealers around.
[1] This is part of car dealer lingo and for some reason it resonates really well.
Couple of things. Dealers know you're doing this, so they'll try to confuse/bamboozle you to regain their advantage in information asymmetry. You have to be 100% sure of what you want, and why you want it. The slightest hesitation, and they'll have you.
Secondly: this tactic works even better near the end of the month. Salesmen have sales goals; if s/he is a little short of that goal (or the next tier), you bet they'll do everything, including throwing in their grandma, to clinch the deal.
For those with a trade-in - my uncle, a former car salesman, adds this:
"Pick out a car, negotiate your best price, take your time. The day you're supposed to pick it up, call them up and say, "I thought my vehicle was worth more, I think it's worth $1000 more."
In their mind, that car is sold, the manager counted it, the salesperson is counting their commission already, and the minute you turn it around on them, they will not let that sale go. If they can give you another $500, trust me - they'll do it."
This is how I've bought my last two cars and I'm generally a huge fan. One question for you, though: Why do you exclude tax, title, and tags? My understanding was that "out the door" price included everything required to get the vehicle on the road. Especially tax - can a dealer even legally sell a car without collecting sales/excise tax?
As strange as it may sound - I ask them to exclude all taxes and fees to reduce variability and have more of an apples to apples comparison. Taxes & fees are well defined, but in my experience, dealers try to sneak in a decent "service fee" in there. One guy tried to sneak in as much as ~$600 I think, which I found amusing. It just helps to reduce noise and focus on a single number; they'll do all the DMV work for you for free.
You can turn the tables around quite easily and stress free (and have some fun in the process). Here is a car-shopping tactic I learned in a negotiation class some four years ago, used when shopping for a new car a few months later, and got a significant discount to the original ask. It really works well.
Shop towards the quarter-end. If you can help it, shop as close to the quarter-end as you can. If it's raining - even better. It's incredible what sales guys will do to get one more car out of the lot before quarter-end on a rainy day with no one in the showroom.
Get Consumer Reports Wholesale Price report. This gives you a good approximation for what dealer pays to get the car.
Compile a list of dealerships in 20-50 mile radius. For some brands you can even see their inventory online, which is fantastic.
Call dealers one by one. Be very professional, polite and don’t get emotional. Here is the script -
- I need to buy a new car. I am paying cash and can buy today.
- I am looking for $Make and $Model in $Color and I see you have $N cars like that on the lot. I've checked the Consumer Reports Wholesale Price which lists this vehicle at $X. The additional cost for $Options is $Y, which makes the total cost to dealer to $Z.
- Please call me back and tell me the best price you can offer out the door [1]. Do not include taxes, title, or tags which I will handle on my own.
As you get quotes from the dealers, thank them for their time and inform them of the lowest quote you currently have. They will sure call you back. Be prepared that some dealers will get really pissed and emotional, but just remain professional and polite. There is really no need to lie or waste anyone's time, the process works itself out beautifully. You’ll get a great deal before you even step foot in the dealership.
If you are leasing or financing, it doesn't work as smoothly (more levers to pull), but it is doable. I also don't think it would work as well for high-end brands with fewer dealers around.
[1] This is part of car dealer lingo and for some reason it resonates really well.