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The Slickdeals Approach to Negotiating the Price of a New Car (Updated July 22, 2010)

thelnel52 2,295 2,553 March 26, 2010 at 01:29 PM
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Last Edited by thelnel52 July 22, 2010 at 11:44 AM
<p style="text-align: center;"><a title="car-photo" href="http://slickdeals.net/blog/wp-content/uploads/2010/03/car-photo.jpg"><img class="attachment wp-att-1232 centered" src="http://slickdeals.net/blog/wp-content/uploads/2010/03/car-photo.thumbnail.jpg" alt="car-photo" width="500" height="332" /></a></p>
By: Alex Craig (SD User: thelnel52)

<em>Preface: There have been numerous threads in the past (on this site and on others) that have dealt with the topic of buying a new car. The approach that follows is the author's (who worked as a car salesman for all of a summer) suggestion, based on personal experience, advice from elsewhere on the web, and basic econ theory. We plan to update this article periodically if users have suggestions for improvement. Although it is a work in progress, it has been verified to work and is more effective than what the majority of new car shoppers end up doing. Also, stay tuned, as more "Slickdeals Approach to..." posts are coming, covering other auto topics (selling/buying a used car, financing a car) as well as other general financial topics...</em>
<!--more-->
<del datetime="2010-07-22T18:35:55+00:00"><strong>March 26, 2010</strong></del>
Updated <strong>July 22, 2010</strong>

<em>NOTE: The article originally featured <a href="http://www.carsdirect.com">carsdirect.com</a> as the first source for information. A user pointed out that <a href="http://www.truecar.com">truecar.com</a> actually does a better job- I gave the site a try and found that (1) the prices seem to be lower for a number of different cars and (2) there is much more information, including holdbacks, average prices paid, etc. That's why, in the update, I changed the links. Also, I reached out to TrueCar.com and a representative of the company will be here, in this thread, starting Friday the 23rd of July to answer any questions that you guys might have about TrueCar specifically or car buying in general.</em>

Some people know offhand how many lb-ft. of torque a Mustang GT has and how long the Prius' battery is under warranty. Without even thinking, they know the tissue on a 3-series, what a money factor of .00015 translates to in terms of APR, and when the Hyundai Genesis is due for a redesign. They know how to find if a dealer is close to a volume bonus or if he's struggling to pay his lease, and they know how to figure out how many days a particular car has been on the lot. Armed with this information (and tons more), these people can walk into a dealership, stare into the dealer's soul, and get the absolute best price. If you're one of these people, skip to the end of this post, because it will bore you, but please stay around to answer some questions below.

For the rest of us, the Slickdeals approach to negotiating the price of a car, although not as effective as the soul-reading approach, is beautiful in its simplicity. I worked as a car salesman, and about 95% of the people who bought from me could have done better if they had followed the approach outlined below. The overriding goal is to get the dealers competing with one another for your business; there are only three steps.

<strong>1. Find a Starting Point</strong>
Once you know the model and the options you desire, go to www.truecar.com, build the car, and SAVE THE PRINTOUT (this will be handy for the rest of the negotiation)

<strong>2. Get Them Bidding</strong>
Send a message to every dealer of that make within a 100-mile radius (this can be done by going to the brand's website and searching, most of the time there is a "contact us" button) that includes:

a salutation (better if you can find a specific name, but "Fleet Sales Manager" is ok)
the specific model and options you desire,
the date you will purchase the car,
an indication that you are soliciting "bids" for two days
an indication that bids should not include taxes or dmv fees, but should include everything from the dealership (including destination charges, etc.)
the TrueCar price,
your phone number and email address,
your name
(use the letter below as a guide):

Dear Fleet Sales Manager,

I am planning on purchasing a new '10 Ford Edsel EX, with the comfort package. I am indifferent to the color. For the next two days, I am taking bids- please contact me with your price for this car, with these options, inclusive of the all fees except for tax and dmv fees. If you have the lowest bid, I will come in on Monday morning at 11:00 to take delivery. As a starting point, I have a bid from TrueCar of $21,324 on a car with an MSRP of $24,333, including destination charges.

I can be reached at 909.234.5678 or by responding to this email.

Sincerely,

Mr. Slickdeals

<strong>3. Declare a Winner</strong>
Wait two days- Save emails, and if a dealer calls, be polite, but as direct as possible. Ask "what is your bid and what is the MSRP of that particular car?" and write the numbers down. Next, ask "what is your name and do you have a direct number?"- write that information down, too. Also note the time and date that the call took place.

Once all of the bids are in, hopefully there's one clear winner. If no one could beat TrueCar, then just go with TrueCar dealer. If you end up going with a dealer, email the fleet manager and say "Your offer of x for y with z options was the lowest. Please let me know the VIN and I would like to come in Monday to take delivery". When you come in, make sure to have a copy of this email and his response (or your notes from the phone conversation), just in case there's a "misunderstanding".

Note 1: The 100 mile radius suggestion is applicable if you life in an area that isn't particularly densely populated, such as the central valley of California. If you live in an area with car dealers every five miles, then you can probably reduce that number. If you live in North Dakota, then you might expand it to 250 miles.

Note 2: You can also include more than one make/model with your note. In fact, it's preferable that you do. Just think- if you're buying a 52" LCD tv, you don't just go out looking only at Samsungs. You probably find prices for a Samsung, a Sony, a Panasonic, an LG, and a Vizio. It's tough to tell what the best deal is until you know what the prices are relative to one another.

If you have a better method, or suggestions to make this method better, please post below.

Thank you Andy Newson for the image above

<a href="http://www.freedigitalphotos.net/images/view_photog.php?photogid=5">Image: Andy Newson / FreeDigitalPhotos.net</a>

Community Wiki

Last Edited by jbloggs September 27, 2011 at 07:04 PM
NOTE: The article originally featured carsdirect.com as the first source for information. A user pointed out that truecar.com actually does a better job- I gave the site a try and found that (1) the prices seem to be lower for a number of different cars and (2) there is much more information, including holdbacks, average prices paid, etc. That's why, in the update, I changed the links. Also, I reached out to TrueCar.com and a representative of the company will be here, in this thread, starting Friday the 23rd of July to answer any questions that you guys might have about TrueCar specifically or car buying in general.

His name is Lee Morrel, and he has been in the automotive industry for over 18 years in a number of different capacities- retail, PR, media, etc. Obviously, he has an agenda (promoting truecar.com), but I think that having someone who really knows what he's talking about will be interesting for all of us.

Following is post from MrBlackpcs2 from FW thread
Quote :
---------------------------------Formula-------------------------------------------
MSRP= Sticker(includes Dest. Charge)
Invoice= Can be found on Edmunds.com(include options)
Rebates= Can be found on Edmunds.com
Holdback= Can be found on Edmunds.com
Est Tru invoice= Invoice - Rebates - Holdback
tax= ?% x True Invoice
Tags= whatever your states charges
Low ball offer= True Invoice + tax/tags - $2,000
Target Price= MSRP - rebate or Sale price - Low ball offer / 2 + low ball offer(this is basically the formula I use)
---------------------------------Formula-------------------------------------------

---------------------------------------per request---------------------------------
Confidence is your biggest asset! If you dont believe you are going to pay invoice they will smell your fear like a pack of wild dogs. The car business is hurting right now. Dealers are happy with their "holdback". Its the salesman that are starving. STOP NEGOTIATING WITH THE SALESMAN! Its a fact that the average car salesman only sales 8-10 cars per month. Its also a fact that a "flat", the money a salesman is going to make on a new car sales with no profit(invoice) is $50-$100. So do the math thats only $800-$1000 in commission per month. Thats why dealer are always hiring salesman. Its also why salesman are constantly getting fired.
GET THE SALESMAN ON YOUR SIDE! Tell him up front he's not gonna make any money on you, this will be an invoice deal. Tell him you'll slip him a $100 after the deal if you get your price. So when he goes up to the "salesdesk", he's fighting for you. When the salesman comes back to you with numbers on the paper, they call it an "a" sheet. Cross it out with a big "X", flip it over right your number on the back, next to it write "T/T out the door", then underline it. The first number you write should be at least $2000k below invoice. His manager will either send someone over or come his self. This is a good sign it shows that you werent talking to a "closer". He might even write a note, asking where r you getting your numbers. If this happends, write "I was thinking the same thing about you numbers".
Typically his second number will be $2000 above invoice. If it is, you write," Split the difference, with T/T, out the door" They usually will jump at it.

What I am telling you is based on 5 years in the business and personal purchases.

Tips:
DONT BE SCARED TO WALK AWAY.
CONFIDENCE IS KEY.
DONT DRIVE THE VEHICLE FROM THE DEALER YOU ARE BUYING FROM.
DONT DISCUSS CREDIT, FINANCE, INTEREST RATE, ETC BEFORE YOU GET INVOICE PRICING.
(THESE ARE BUYING SIGNALS, THEY WILL SMELL IT LIKE BLOOD TO A SHARK)

DONT LISTEN TO YOUR FRIENDS. EVERYBODY CLAIMS THE GOT A GOOD PRICE. MOST DONT KNOW WHAT INVOICE IS.
DONT ANSWER ANY QUESTIONS DURING NEGOTIATING FOR INVOICE.
(YOU MAY GIVE AWAY A BUYING SIGNAL WITHOUT KNOWING)

SHOPPING DURING THE LATTER PART OF THE MONTH CAN WORK TO YOUR ADAVNTAGE.
(DEALERS HAVE A PROJECTED SALES IN UNITS THEY NEED TO MEET, SO DO BANKS. THEY TYPICALLY WILL WORK BETTER DEALS AT THIS TIME TO MAKE THEIR MONTH)

IF YOU SUBMIT YOUR EMAIL ADDRESS TO A DEALERS WEBSITE LET THEM KNOW "NOT TO CALL YOU, NOT TO NEGOTIATE, YOU WILL ONLY ACCEPT INVOICE W/TAX&TAGS, IF THEY DO CALL YOU, YOU WILL NOT DEAL WITH THEIR DEALERSHIP, IF THE EMAIL YOU ANYTHING OTHER THAN INVOICE, YOU WILL NOT DEAL WITH THEIR DEALERSHIP" THIS IS THE MOST EFFECTIVE WAY TO NEGOTIATE, AS OPPOSE TO IN PERSON.

THEY KNOW IF YOU NEGOTIATING THIS WAY YOU ARE A SERIOUS BUYER.

THEY WANT YOU IN THE DEALERSHIP SO THEY PLAT THE "GAME" WITH YOU. ITS SET UP TO WORK AGAINST YOU. LIKE A CASINO THE HOUSE ALWAYS WINS.

MOST DEALERS HAVE THE "NEGOTIATING" TABLES IN THE MIDDLE OF THE DEALERSHIP OR OPEN OFFICES.
(THIS CREATES A "BUYING FRENZY")

IT HELPS TO HAVE YOUR FINANCING ALREADY DONE BEFORE YOU SHOP FOR THE CAR.
---------------------------------------per request---------------------------------
*THIS IS SERIOUS PEOPLE. READ THE THREADS FULLY BEFORE YOU POST TO THIS THREAD. IT REALLY SHOWS WHEN YOU POST WITHOUT READING THE THREAD FULLY.*
SAMPLE EMAIL To Send to Dealership
Quote from ilikebtmoney_from_fatwallet :

Ok, this is assuming this is sent to dealers two days prior to expected closing date.


Hello,

I have decided that I would like to purchase the following car:

2010 Hyundai Genesis 4.6L
05 - Technology package
CT - Cargo tray
IC - iPod cable
Black Noir Pearl

Of these features, the only ones I would be willing to accept a purchase without is the cargo tray. Otherwise, please be sure you have, or can obtain this car quickly through a dealer trade.

My zip code is 12345 for pricing calculations, and I will be paying cash for the car. Please provide me with an out the door quote today as I will be purchasing the car by tomorrow to obtain the $1,500 Valued Owner Coupon that is offered, and to give you enough time to ensure a dealer trade if it is necessary on your part.

Also please provide me with your phone number so I can call you once I receive the quote. To be fair, I am requesting pricing from various dealers so please be sure to obtain authorization from your manager if required before quoting a price. I do not wish to waste anyone's time and I would appreciate a confirmed offer on your part as well.

If necessary, you may reach me at the following number.

Thank you, and good luck!

Take care,

John Doe
cell: 123-456-7890

512 Comments

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#286
Quote from thelnel52 View Post :
Quick update- last weekend, I stumbled across a site called "CarWoo [carwoo.com]!" It seems to hold your hand through a lot of these steps. Basically, you enter what car you're looking for, add your own personal info, and then choose to reach out to different dealerships in your region. The pricing isn't instant, but within a day or two, dealers start emailing you offers. From there, you can counter-offer, ask clarifying questions, etc.

I tried it out in Las Vegas for a 2012 Mazda CX-9, and within a couple days I had two different offers (both from Southern California dealers). Both offers were a little better than what you can see from TrueCar. I didn't get to the counter-offer, point, but it's very cool that you remain somewhat anonymous throughout the process.
Did you have to provide information over phone?
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#287
Quote from themoleculoman View Post :
Did you have to provide information over phone?
No, there have been no phone calls so far. As I understand it, all the dealers have is my first name. It's only if I accept an offer that they get my phone/email, etc.
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I'm giggin' on these deals, treat them like dominoes. I flip them on they back, and tell them vamanos.
#288
Quote from thelnel52 View Post :
No, there have been no phone calls so far. As I understand it, all the dealers have is my first name. It's only if I accept an offer that they get my phone/email, etc.
Oh, I meant from the website Smilie
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#289
Thanks for everyone insights!
I was thinking about doing this email bid approach but including trade-in. I think the dealership profit potential is larger on this part of the transaction as the price they could pay for a used car might be more squishy than flexibility for new car. I am looking at Subaru and Honda cars which are extremely common and don't seem to have much variance below invoice price on truecar.

Has anyone tried emailing dealerships asking for an OTD price for new car given a specific trade in?
How did this work for you? Any tips?
I think the bid request email would have to detail new car desired with options plus mention trade in make, model, mileage, vin with request for total out of pocket price.
I assume a couple pics are needed by dealership to give best estimate. It is likely this will be conditional on an inspection.
It doesn't sound like anyone is lumping these two car transactions into a single request via recommended bidding email approach. It is just hard to get a dealership to give any kind of quote for a used car (without detailed in person inspection)? What is the drawback to trying to get a single quote for the difference in cars?

My general impression:
Selling used car:
sell directly on craigslist = most profit
sell to Carmax = not near me
trade-in when purchasing a car = 3rd most
sell to used dealership = 4th most

My work schedule makes it difficult to arrange time to sell a car directly. Current car is a 2003 Jetta GLS 1.8T so I have moderate expectations on value. I was thinking targeting:
truecar price below average for Honda CR-V 2WD EX-L - KBB value for average condition 03 Jetta trade in
Is this reasonable? What are drawbacks to this approach?
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#290
Quote from greatjuan View Post :
Thanks for everyone insights!
I was thinking about doing this email bid approach but including trade-in. I think the dealership profit potential is larger on this part of the transaction as the price they could pay for a used car might be more squishy than flexibility for new car. I am looking at Subaru and Honda cars which are extremely common and don't seem to have much variance below invoice price on truecar.

Has anyone tried emailing dealerships asking for an OTD price for new car given a specific trade in?
How did this work for you? Any tips?
I think the bid request email would have to detail new car desired with options plus mention trade in make, model, mileage, vin with request for total out of pocket price.
I assume a couple pics are needed by dealership to give best estimate. It is likely this will be conditional on an inspection.
It doesn't sound like anyone is lumping these two car transactions into a single request via recommended bidding email approach. It is just hard to get a dealership to give any kind of quote for a used car (without detailed in person inspection)? What is the drawback to trying to get a single quote for the difference in cars?

My general impression:
Selling used car:
sell directly on craigslist = most profit
sell to Carmax = not near me
trade-in when purchasing a car = 3rd most
sell to used dealership = 4th most

My work schedule makes it difficult to arrange time to sell a car directly. Current car is a 2003 Jetta GLS 1.8T so I have moderate expectations on value. I was thinking targeting:
truecar price below average for Honda CR-V 2WD EX-L - KBB value for average condition 03 Jetta trade in
Is this reasonable? What are drawbacks to this approach?
The first step I would take is taking a look at clearbook.com. That shows an expected trade-in price that apparently factors in the black book, which is a better indicator than blue book. Then, there's no reason that you can't include your trade-in on the emails, but I would really push to keep things itemized. If one dealership is willing to give you $5k for your trade-in but is $2500 more on the new car, while another is $4k on the trade-in with the lowest price on the new car, you can always just sell the car to the first dealership and buy from the 2nd. You could also use those prices against the various dealers. They all look at the same black book and go to the same auctions, so they should all theoretically be fairly close to each other when it comes to the price they're willing to pay for your car.
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#291
Quote from thelnel52 View Post :
The first step I would take is taking a look at clearbook.com. That shows an expected trade-in price that apparently factors in the black book, which is a better indicator than blue book. Then, there's no reason that you can't include your trade-in on the emails, but I would really push to keep things itemized. If one dealership is willing to give you $5k for your trade-in but is $2500 more on the new car, while another is $4k on the trade-in with the lowest price on the new car, you can always just sell the car to the first dealership and buy from the 2nd. You could also use those prices against the various dealers. They all look at the same black book and go to the same auctions, so they should all theoretically be fairly close to each other when it comes to the price they're willing to pay for your car.
That first dealer won't buy your car for 5k without you buying one of their for $2500 more unless that's Carmax. I think they offer yo 5K with their profits from the 2500 higher price figured in.

TheInel, have you tried costco pricing for the Mazda cx-9?
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#292
Quote from Superocean View Post :
That first dealer won't buy your car for 5k without you buying one of their for $2500 more unless that's Carmax. I think they offer yo 5K with their profits from the 2500 higher price figured in.

TheInel, have you tried costco pricing for the Mazda cx-9?
I didn't try Costco pricing- have you had pretty good luck with them?
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#293
Quote from thelnel52 View Post :
I didn't try Costco pricing- have you had pretty good luck with them?
They were pretty good and found a dealer in so cal for subaru $300 under invoice. If the vegas dealers don't have good costco pricing check utah az and so cali especially since there's not many mazda dealerships. Also each area of the state may have different costco pricing. NOt all costco prices are the same, The northwest had different prices than the so cal subaru dealers.
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Last edited by Superocean July 22, 2012 at 01:04 PM
#294
Okay Slickdeal folks I got an offer to buy a Camry SE fully loaded (leather+ nav+convinience packg + PROTECTION PACKAGE + PREFERRED ACCESSORY PACKAGE + PWR TILT/SLIDE MOONROOF)
for 27K OTD. Is this a good price to go for ? by the way I am SoCal.
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#295
Quote from rocco24 View Post :
Okay Slickdeal folks I got an offer to buy a Camry SE fully loaded (leather+ nav+convinience packg + PROTECTION PACKAGE + PREFERRED ACCESSORY PACKAGE + PWR TILT/SLIDE MOONROOF)
for 27K OTD. Is this a good price to go for ? by the way I am SoCal.
What's the MSRP? I tried to build about that car and it looks like it's about $29,300. If that's the case, then $27k OTD sounds very good.

If you haven't done so already, it couldn't hurt to check out truecar [truecar.com] and carwoo as well.
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#296
Quote from thelnel52 View Post :
What's the MSRP? I tried to build about that car and it looks like it's about $29,300. If that's the case, then $27k OTD sounds very good.

If you haven't done so already, it couldn't hurt to check out truecar [truecar.com] and carwoo as well.
The MSRP was $28835 and I got this offer through carwoo. Thanks
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#297
Okay im confused so what number do we to go buy when buying? invoice? and what should you offer..example invoice says $15000 on truecar...whats a good deal?
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#298
Quote from aaba78 View Post :
Okay im confused so what number do we to go buy when buying? invoice? and what should you offer..example invoice says $15000 on truecar...whats a good deal?
invoice is a rough estimate - it depends on the car/demand/incentives/hold-backs - you shouldn't offer, you should make the dealers compete with each other and have each of them offer you the lowest price that they are willing to sell for instead.
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#299
Quote from aaba78 View Post :
Okay im confused so what number do we to go buy when buying? invoice? and what should you offer..example invoice says $15000 on truecar...whats a good deal?

It really really depends on the car, specifically the market for the car. If the car is hot and the dealer is selling them as they come on the lot, there won't be much room in the price. If it's close to a redesign, selling slowly, etc, there will be more room for negotiation. That's the value of services like carwoo and truecar [truecar.com] (and Edmunds, etc.). With Truecar and Edmunds, you can see what the cars are selling for in your area and get a very good idea of a starting price. With Carwoo, you can receive offers and actually negotiate.
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#300
Is there any way to avoid this from happening. I had this email conversation today and it wasted my entire evening

3pm:
Quote :
I have one 2012 Odyssey EX Left in Celestial Blue and I can sell it for $23,209 before tax and license.
I asked him for a timetable for when that price would no longer be available (it was well below any other price i had seen so i was skeptical)

he responded
4pm:
Quote :
I can only offer that price until the end of the day.

Out the door you will be looking at $25,559 plus or minus $50 or so, its should be on the high side.
this was quite a drive (2 hours away), but the deal was great. on the way we were in touch over the phone multiple times, he started filling out the paperwork with our information so we could get it right when we got there, because it would be close to closing. about 30 minutes out (around 7pm) we get a call from him telling us that he made a mistake and it was really going to be 28k+ and when i spoke to the manager he said that his employee was wrong and that wasnt the price and there is no way he is going to honor it
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