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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="/blog/wp-content/uploads/2010/03/car-photo.jpg"><img class="attachment wp-att-1232 centered" src="/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>
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<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

522 Comments

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#511
WOW. I never thought a post from 2010 can help me buy a car in 2016. Smilie Thanks to all the slickdealers who contributed to this thread.

With no clue where to begin, I came to my trusted slickdeals to see if there can be some guidance. Found it here. Was in a terrible rush due to personal reasons. Still was able to buy 2016 Honda Odyssey EX-L for 33.8K out the door in Central NJ. I guess if I had more time and waited till month end, I might have got a better deal, still, considering my need, I am happy with the price and Thanks to my fellow slickdealers. Specifically to Vyahoos posts. Smilie
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#512
Should I expect to pay more if no dealers in the area have the exact car I want and have to order it from the factory?
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#513
Quote from xxdexstarxx View Post :
Hey guys, just wanted to give my experience in buying a new 2016 Civic LX in the dfw area. I was able to get mine below Truecar est of 19,100 to 18,200 and about 19500 Otd.

A lot of the dealerships I emailed didn't even bother responding to the email but I only chose the ones within 30 mins of driving which may have been the reason. Costco pricing was 500 over invoice and another quoted 20050 Otd. The lady one just asked me straight up, what price I wanted to buy it for and they said OK, done deal.
I am also looking for Civic EX 2016 model. If you can share tips from your purchase, i will appreciate it
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#514
Alright. I'm about to buy a new car. I'd love to hear some feedback on my approach. I'm actually determined to buy a Subaru (impreza hatchback) because I must have 4WD, and I like hatchback for easy storage in the back. Unfortunately, there are only 2 Subaru dealers in my area, so not much competition. So, I'm thinking to send an email to a Subaru dealer the following message:

"Dear XXX,

It is time for me to buy a new car. I will be making my purchase before the end of this month. I am committed to buying a Japanese car, and I also like hatchbacks, so I am inquiring about sales from Subaru (Impreza), Honda (Fit EX), Mazda (3 i sport), and Toyota (Yaris or Scion). I will be negotiating price with those 4 dealers in the next few weeks and will decide on the best deal I can get. Will you please let me know any sales/offers you may have on your Subaru Impreza hatchback series?

Sincerely,"

They don't know that I'm already determined to buy Subaru Impreza, so I'm hoping that they may be inclined to make me an offer with this approach. What do people think? Any tips/advice would be appreciated.

Thanks,
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#515
Quote from animaletamer View Post :
Alright. I'm about to buy a new car. I'd love to hear some feedback on my approach. I'm actually determined to buy a Subaru (impreza hatchback) because I must have 4WD, and I like hatchback for easy storage in the back. Unfortunately, there are only 2 Subaru dealers in my area, so not much competition. So, I'm thinking to send an email to a Subaru dealer the following message:

"Dear XXX,

It is time for me to buy a new car. I will be making my purchase before the end of this month. I am committed to buying a Japanese car, and I also like hatchbacks, so I am inquiring about sales from Subaru (Impreza), Honda (Fit EX), Mazda (3 i sport), and Toyota (Yaris or Scion). I will be negotiating price with those 4 dealers in the next few weeks and will decide on the best deal I can get. Will you please let me know any sales/offers you may have on your Subaru Impreza hatchback series?

Sincerely,"

They don't know that I'm already determined to buy Subaru Impreza, so I'm hoping that they may be inclined to make me an offer with this approach. What do people think? Any tips/advice would be appreciated.

Thanks,
I doubt most dealers would even read the email. they will still ask you which car you want anyways. keep it short, I want a 2016 subaru impreza w XXX options. give me a quote.

you will get hammered with calls emails. most will be auto generated. then give the dealers a call back asking to beat XXX price.
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#516
Quote from jaqnabox View Post :
I doubt most dealers would even read the email. they will still ask you which car you want anyways. keep it short, I want a 2016 subaru impreza w XXX options. give me a quote.

you will get hammered with calls emails. most will be auto generated. then give the dealers a call back asking to beat XXX price.
I actually have a specific sales person's email, so I will be directly emailing him. (He helped me with the $50 test drive deal earlier this year, so I want to return him the favor). Also, I'm actually not going to email other dealers. I was just saying I was going to use that story to motivate them to give me a good offer Smilie
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#517
When 1 dealer ask you to show them the lower offer from other dealer, to make sure if u r bluffing or truth, do you show them the quote? or just move on?
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#518
ok guys great thread but I highly disagree with the OP. sending a vague email like that won't give you the best shot at the best price. most won't even respond and those that do aren't taking you very serious anyways. I'm on my mobile but will post how I've been able to always get the best deal on a car. I will say that I'm a business major and work with fortune 50 companies so waking into a dealership and dealing with the car salesman and the finance/sales manager (guy behind the desk that the salesman goes and talks to. This is the REAL guy you're negotiating with not the salesman) is easy work. I've bought several cars and just last month purchased a jeep grand Cherokee for wife at about 8k savings ! I'll try to post tonight!
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Joined Oct 2009
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#519
Someone's a tease!
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#520
Quote from kevin347 View Post :
When 1 dealer ask you to show them the lower offer from other dealer, to make sure if u r bluffing or truth, do you show them the quote? or just move on?
if its the truth (you have a better offer), just provide it and say im not looking for a price match. im looking for you to do better. if they can, ask for it in writing, then use your new lower offer on another dealership. repeat until you no one is willing to work with you.

i had a dealer say, I'll beat any quote by $500. So i saved him for the end. took my lowest offer that no one wanted to match and went to him. he trimmed $500 off without really looking at the details of my other quotes (military discount + new student - which i dont qualify for). He just needed something in writing from another dealership. Maybe i was lucky and they needed a sale.
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#521
Quote from ashcampbell View Post :
Someone's a tease!
sorry did not find the time to do it last night. I will post my opinions and what has helped me every time at the dealership tonight for sure!
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#522
Quote from jaqnabox View Post :
if its the truth (you have a better offer), just provide it and say im not looking for a price match. im looking for you to do better. if they can, ask for it in writing, then use your new lower offer on another dealership. repeat until you no one is willing to work with you.

i had a dealer say, I'll beat any quote by $500. So i saved him for the end. took my lowest offer that no one wanted to match and went to him. he trimmed $500 off without really looking at the details of my other quotes (military discount + new student - which i dont qualify for). He just needed something in writing from another dealership. Maybe i was lucky and they needed a sale.
or he was still make a great profit on you
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#523
Quote from kevin347 View Post :
When 1 dealer ask you to show them the lower offer from other dealer, to make sure if u r bluffing or truth, do you show them the quote? or just move on?
I wouldn't bluff about offers. If you are going to let dealers compete, it pays off to actually spend your time to get real offers from them. That's what I did. I gave detailed information about competitors offers (then, they know that you are serious and not just playing games with them). I made the final call saying, "This other offer is more compelling for economical stand point, but if you can do XXXXX, I'm willing to come in and take it off of you today." I just got myself an awesome deal with this approach.
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