Help me buy a new car (and what about cars and gender?)

never read the Amazon books, so I don't think they could go to my head. I was only using the value of the used car as an example. I agree no one should pay the sticker price on a new car. But the truth is, there is not a lot of markup (on a percentage basis) on a new car compared to a used car. A good used car will make a dealership drool. The example I gave, in which the person paid sticker price, less $5k extra given on the trade on a $40k car is probably about right. But, just an example. Some $40k cars may have a lot more than a $5 markup, and some less.

Again, it was only an example.

Yes, negotiating a deal and pulling the trade is also something you can do. There are a million ways to do a car deal.

But if you "bait and switch" by pulling a trade from the deal, the dealership will usually counter with a similar move. Most sales managers have seen it all. And have countermeasures up their sleeves. I believe (maybe I am wrong) that being straight and forthcoming usually will work out pretty well. Everyone appreciates honesty. The dealer is going to make a profit on every car. They will rape you if you let them, and they will give you a fair deal if you are straight with them and hold your ground. It's that simple.

Personally, since I lease, I don't have trade-ins. But I have in the past, and I know how they can be used for leverage. But if you disagree, Max, then that is fine with me.

You buy your used cars the best way you know how, and I will lease my new cars the best way I know how. And we will both be happy. There is nothing to argue about here. Sorry if that disappoints you.

Peace,
RS

 

Not if the deal has been commmitted to paper. When you decide to simply substitute the trade with cash, it's awfully hard for Mr. Dealer to admit that what he put on your trade isn't really what he said it was worth.

You think the public perception of dealers includes the word "honesty?"

Gosh, thanks.

Damn, another sleepless night, this time it's fretting over RSX.X's car deals.

 

Actually, I think Max's suggestion of substituting cash for the trade in is pretty clever.

nitro

I shoulda tried this on my bimmer purchase

 

Nitro, here's the reality.

A dealer will virtually never "under-allow" on your trade, and then lower the price of the new car accordingly. It is of major importance for the dealers to show a "top line" high price on the new car. If, for example, a new car lists for $40k. Your trade is worth $20k. The dealer gives you only $5k for your trade. And then knocks $15k off the price of the new car. Now the deal is written up showing you paid $15k less than (the going rate..whatever that is...that is what is really negotiated). Now, you go and show your friends you paid $15k LESS than the "going rate".

You think the dealer wants to explain to all the people who come in knowing you paid $15k less than normal how he made that deal? Not in the real world.

However, even assuming such a deal could be made...a deal is not a deal until all aspects are agreed to in writing. So pulling a trade negates the agreement as written anyway.

Don't give Max so much credit. If you want lessons on how to be argumentative, antagonistic, hostile, combative, contentious, and confrontational, then he's your guy. But imagine being a car salesman and having him for a customer. Or being a car buyer, and having him as the sales person. He mentioned the "dealers nightmare"....it isn't being outsmarted by Max. It is just having him in the showroom

While there is definitely a stereotypical used car salesman type; generally found on "slug lots" where you can buy a car for $899 that has been sold, repossessed, resold, repossessed and resold numerous times , ("easy credit...everyone qualifies"), did you find the people at the BMW dealership to be at all slippery or dishonest? They are just business people trying to make the best deal they can. If you are reasonable, they will be also. They just want to sell cars. New cars are pretty easy to figure out. As a customer, you just need to acknowledge that they need to make some profit. They already know you want to pay as little as possible.

Used cars are a whole different ball game. Max is right about that. You really never can know what a dealer has in the car. But you can bet that any late model car you see on a dealer's lot has a lot more profit in it for the dealer than a new car. If not, the car would have been wholesaled out. They don't need space taken up with some junker they can't sell (while paying interest on it as well). Those cars end up on the "slug lots" and get sold by the guys with greasy hair and plaid pants. Longshot most likely being one of them (if he is employed at all).

Peace,
RS

 

Anyone ever bought a car at CarMax? Their prices seem a little high but there is the big convenience factor, some degree of security that it is not a flood car, plus not having to deal with a dealer used car salesman. Also they have a huge selection.

The stock has done well.

 

The numbers you use, even though as an example, are ridiculous. Your argument is specious, but you are factually correct “A dealer will virtually never "under-allow" on your trade, and then lower the price of the new car accordingly.”

The dealer generally has a minimum he’ll let the car go for. Using a 5 series BMW, the profit margin is about 9%+ the hold back of around 3%. (Not so long ago, it used to be about 17-20% + the hold back. The factories are now taking a bigger cut to stop price whoring and now reward the dealers in other ways for volume).

The 5 series, forgetting options, is about 37,500 sticker and 34,400 invoice, a $3,100 margin to play with. Do you think a dealer really cares who knows what he sold a car for? For one thing, a dealer will never even get in a negotiation to that low level. He doesn’t sell cars below his minimum. If anyone who bought at the lower threshold of that $3,100 range, caused a potential customer to walk in the showroom, ya think the dealer is upset bout that? Of course not. Similarly, with an under-allowance on a trade, there is not going to be the $15,000 as in your “example.” But it could be anywhere from a $100 on up to several thousand, generally. Now, if this trade can really be robbed, why does the dealer have to knock it off the new car? You are focused too much on “you take from here, ya gotta give there.” Ain’t necessarily so. In the case of the excessive under-allowance the salesman/NC Mgr simply takes that extra money for that deal. Here’s a scenario that does happen.

Customer has a trade. The salesman takes the trade to the Used Car Manager for appraisal. The UC Mgr gives the salesman an ACV figure, Actual Cash Value. This is the figure that the car is worth to the dealership and will be put on the books as the cost of that inventory unit. BTW, how the UC Mgr arrives at the value of the trade is one of the key components of the entire retail automobile business.

Now, salesman has the ACV for the trade. Do you think he simply just shows that to the customer? Generally, absolutely not. That figure is for the salesman and the manager to do with as they please. They can show the car to be worth more or less, on paper, depending on the situation.

Let’s say the customer says his car is worth 25K. The UC Mgr, who obviously is not made privy to that information, has ACV’d the car at 26K. If they can arrive at a new car price that flies, that extra 1K goes into the deal as pure profit. Sometimes the salesman/NC Mgr just take a shot, if it doesn’t work, it’s “Let me talk to the UC Mgr and get more money for your trade.”

Now, occasionally, a sharp customer on the new car pricing will grind the salesman/NC Mgr down, but not be so savvy on his trade in price (a number of reasons why this can occur). The salesman will try to make it up on an under-allowance on the trade. Of course this possibility is to be determined at an early stage in the process.

More frequently, but not so much these days with the short profit margins, the customer has to be over-allowed for the trade. Many times because of payoff figures or simply because he argues the point that “I saw Kelly Blue Book on the Web and it said my car was worth X.” Some of this is defeated as the customer shops around. In a big metro area with several BMW dealers, he’ll soon find out what real numbers are. A mistake in the ACV figure by the one of these dealers can be a headache or a boon to the next dealer shopped, one of the many variables in arriving at the all important ACV figure.

Really? Remember, the customer is simply substituting cash for the trade. So what reason does the dealer give the customer? “I’m sorry sir, no deal, I let you work the new car price down too far because I was stealing your trade.”

First, the second chance financing market is a huge factor in used car sales. But the truth is certain games have to be played simply to pin down the ever wavering customer. Read Chapter 7 of Steinbeck’s Grapes of Wrath to find out how this negativeness about dealers got into the public psyche.

Not in every case. And there is another factor, the “short” side of the used car lot. The potential losses are a lot greater, not every car is a seller. Dealers can and do make mistakes in that all important ACV and can be buried in a trade. Unseen repairs, inspection costs, etc can eat away at what was once a unit that was “on the money.” The old used car proverb, "There is an ass for every seat." is simply an excuse for a bad trade. The more correct version would be: "There's a price that will create an ass for every seat and sell this car that I have had in inventory for over 90 days." A General Manager will run a daily list of the used car inventory; always sorted, "days old, highest to lowest."

 

Highest-fuel-economy vehicles by class, according to the U.S. Environmental Protection Agency:
EPA Class Vehicle MPG (city/highway)
Two-Seater Honda Insight 61/68
Minicompact Car MINI Cooper 28/37
Subcompact Car VW New Beetle TDI 42/49
Compact Car Toyota Prius 52/45
Midsize Car Honda Accord 26/34
Large Car Chevrolet Impala 21/32
Small Station Wagon VW Jetta Wagon TDI 42/50
Midsize Station Wagon Ford Focus Wagon 27/36
Pickup Truck (tie) Ford Ranger 2WDMazda Truck 24/29
Passenger Van (tie) Chev Astro 2WDGMC Safari 2WD 16/20
Minivan (tie) Chrysler Voyager 2WDDodge Caravan 2WD 21/27
Sport-Utility Vehicle Toyota RAV4 25/31
Source: U.S. Environmental Protection Agency

 

These car makers must be in collusion with the EPA. To me, it looks like the list of "Most Boring Cars on the Road"....with the possible exception of the Mini. The Rav4 is an SUV??

RS

 

Ahhhhh, finally the deed is done!

I am the proud papa of a BMW Z4.

Absolutely love it!!!

(should have been quicker to realize BMW was the way to go..after all, Nitro drives one, as does my baby brother).

Cool car. Fast, tight, and oh that exhaust sound!!!

Handling is sick. Has something called Dynamic Stability Control, which makes the car basically impossible to lose control of. Really amazing. I know all BMW's have it, but until now, I had no clue on how incredible the system is. Really is a "futuristic" car to a great degree.

Highly recommend this (or any BMW) to anyone. Only have driven it 50 miles (got it late today). I have had more expensive cars, but this car so far seems to be the very best at what it does of any car I have ever owned. And certainly of the cars I have been test driving for the past few weeks.

It truly blows my mind that my Saab cost more money. Not half the car this BMW is. (Well, bigger, with a Rube Goldberg convertible top, that was an amazing contraption, but did not drive ANYTHING like this Z4).

Peace,
RS

 

Chris Bangle should be shot at dawn; no blindfold, no cigarette.