Tips for negotiating on a NEW vehicle

Previously, I gave you a list of Do's and Don'ts for interacting with your salesperson. Those tips were geared towards building a positive working relationship with your consultant. What you're really looking for, I gather, are tips on how to negotiate the best deal. Negotiation is an art, and a skill. You have to practice in order to be good at it, but once you are, you will be able to create a financial masterpiece with nothing more than a few choice words and an open mind. 

Let's dive in.

1. Understand that car sales is a business. 
It's helpful to remember that dealerships are in the business of making money. They aren't in the business of giving you a car for free. In a more practical manner of thinking, if you spent hours grinding the poor schmuck you bought the car from into a fine powder, is he (a) going to want to help you again, or (b) going to have any money left over to take care of anything you might need? Don't think so.

2. Don't look at Kelly Blue Book for your trade.
Hopefully you read my 10 Do's and Don'ts list, and you told your consultant that you had a trade in the first place. Kelly Blue Book is totally inaccurate. It's at least 60 days behind the market. Most banks use NADA values, anyway.

3. If you have an employee discount, tell your consultant.
Most customers who are looking to buy an American car qualify for some sort of official employee discount. If you are one of these folks, it takes a lot of the work out of the negotiation and makes things go a lot smoother. If you don't have an employee discount, most dealerships will give you one anyway. Most of the time there are special incentives to dealers if they sell a vehicle for an official discount, so a lot of dealerships are willing to give you one.

4. New cars with special finance rates usually don't qualify for additional rebates.
Normally, you're required to waive any cash rebate if you take advantage of a special finance rate (ie, 0% financing). It's pretty rare for a manufacturer to offer cash rebates as well as a finance rate. 

5. Usually, the only tangible difference between dealers is inventory. 
All dealers have access to the same rebates and finance rates, and can make you the same deal. The only real difference is inventory and the consultant that you're dealing with. If you find a good consultant, be loyal to him or her and they will do their best to take care of you. 

6. Most of the time, your dealer is not hiding anything.
Yes, there are advertising dollars that the manufacturer can kick in to aid a dealership in their marketing efforts. You are not entitled to that as a discount. Your dealer uses that money to fix any issues that you might have with your vehicle if they don't use it for advertising. Some unscrupulous dealers will withhold your factory rebates, which is why it's important to have a dealer you can trust. (See Test-Driving Your Salesperson)

7. If you don't get an official discount, do your homework.
Get price quotes from a couple (no more than three) dealers. If you go more than three, you will have trouble keeping track of who said what. Go to Edmunds.com and check out the invoice prices. You should not expect a dealer to breach that invoice figure before any rebates are factored in, and if one does, be assured that you're getting a great deal. 

One quick word about import makes (BMW, Mercedes-Benz, and Porsche, especially). Most of their models are built in America. Don't believe any horsecrap about currency exchange rates as being a reason why they can't do better on a price. Their MSRPs already have the exchange rate figured in. You should always be able to score a deal, regardless of where a vehicle was built. Another note, most import brands don't put cash rebates out on their vehicles, so don't expect huge discounts on best-selling models. Take the invoice price, and try to get as close to that as possible. 

One way import manufacturers try to win customers without huge discounts is by offering sweetheart leasing deals. For some customers, leasing works. For most, it doesn't. I'll cover that more in depth in another article.

8. Start low, but be ready to compromise.
Making a low but reasonable offer close to the invoice price is a sign that you're serious. Being ready to compromise means you have self-respect and respect for your consultant and dealer. Giving a low but reasonable offer can cut through a lot of the back-and-forth that your consultant will have to do, because the counter-offer her or she comes back with will be very close to the absolute best price the dealer is willing to do. 

9. Don't be afraid to walk. 
Walking out is your number one weapon (I hope this doesn't come back to bite me). If you think, after doing your research, that you are making a fair offer and the dealer doesn't want to budge, walk. The chance of a customer coming back into a dealership after walking out are less than 25%. We dealers know this. If you look like you're about to walk out, most dealers will try to sweeten the pot to get you to stay. They might not lower the price, but they may throw in some accessories or a few free oil changes. Remember, dealers have to make a profit, but they don't make any profit if you don't buy.

10. Do not make an offer if you are not willing to purchase.
For the purposes of this article, I've been assuming that you want to purchase the vehicle and are ready to do so. If you aren't, let the sales consultant know as much before talking numbers. He or she will probably be bewildered (especially if you took a demo drive), but a moment of confusion is much, much better than getting down to an acceptable deal for both parties and you walking out anyway because you weren't ready to buy.

Take these tips into consideration when shopping for your next new vehicle. And please remember, dealers and sales consultants are people, just like you. We have families to feed. 

Happy hunting!


10 Do's and Don'ts of Car-Buying

1. Don't be a dick.
This is Rule Number 1, obviously. If I don't like you, I'm not inclined to bend over backwards trying to please you. In fact, I'm more likely to try and rip your head clean off. I'm a pretty easygoing guy, and you have to be a real prick to get on my bad side. So, let's avoid all that and just be polite.

2. Don't grab anything away from me.
I had a customer that snatched a paper out of my hands. Don't do that. I hate that. Of course, this kind of goes hand-in-hand with not being a dick.

3. Do let me know that you have a trade-in before we start working numbers.
Every car-buying advice website out there tells you that in order to get the best deal, don't tell the salesman that you have a vehicle to trade until you've agreed on a price for a car. That's bulls***. First of all, I get screamed at if I don't know you have a trade-in before I go in to get a deal for you. Second of all, I know I've asked you if you had a trade, and if you said no, you just lied to me. In more practical terms, if we are oceans apart on the price of the vehicle, I might be more inclined to work the manager to give you more for your trade if I like you.

4. Do disclose up-front if you have financial issues.
I know it's embarrassing. But please tell me if you have financial problems (poor credit, short time on the job) before you ask me to show you every car on the lot. It saves me so much time, and you don't get your hopes up for a vehicle you can't afford.

5. Do be a "price-shopper".
It's a LOT easier to be a "price-shopper" as opposed to a "payment-shopper". I don't like to talk payments, because your credit is your fault. If it's good, it's good because you made it that way. If it's bad, it's because you made it that way. I can help you secure a loan with favorable terms, but it's easier if we have agreed on a price, first. But remember Rule Number 4. Tell me if you have financial issues before we start.

6. Do have a general idea about what you want.
My job is to make you want to buy a car, and to lead you through the process in an easy and comprehensive way. My job is not to make a decision for you in regards to what car you actually buy. You know if you want a car, truck, or SUV. It makes my life a lot simpler if you clue me in.

7. Don't come to the dealership if you don't have time.
One of my biggest pet-peeves is people that come into the dealership and don't have enough time to get anything done. You can access the Internet almost anywhere now. If you come in and tell me you only have 5 minutes and you want my best price on a vehicle, I'm going to ask you if you want to set an appointment to come back.

8. Do allow me to accompany you on the test-drive.
Generally speaking, I don't talk a lot on the test drive; it's not like I'm going to be in the car with you when you're driving it day to day. But, it is easier to answer any questions you have about the vehicle if I'm in the car there with you.

9. Don't bring your kids.
Buying a car is a long process. The shortest amount of time I've ever done a car deal in is right around 2 1/2 hours. It only takes one obnoxious toddler on a leash to take your mind off what you came in to accomplish. It's more beneficial to everyone involved if you leave the kids at Grandma's house.

10. Don't be impatient.
Like I said, 2 1/2 hours, minimum. You're about to make a decision that is going to cost you a significant portion of your income for the next 5 years. 5 more minutes of me squaring your deal with my manager isn't going to kill you.

It takes all kinds...

One of the big things about the car business is that we salespeople get to interact with tons of very interesting people. Actually, let's concentrate on the word "interesting" for a second. You could replace "interesting" with words like crazy, whacked-out, insane, out-there, empty, or downright creepy, and you'd be 100% right.

Here's a list of the "interesting" people that I've dealt with over the course of my career:
- A wheelchair-bound woman with a degenerating disease whose family looked like they came straight out of Appalachia
- A man with verbal tics so annoying and hilarious I couldn't keep a straight face
- A man that refused to show any emotion for fear that I might use it against him
- A couple that had a 24-year age difference (the woman was older)
- A lottery winner (ok, he was just interesting)
- A man who cursed God because he couldn't qualify to buy a car
- Countless people who were "supposed to be getting a  cash settlement any day now"

I could go on and on, but you get the idea. We salespeople get such a unique cross-section of humanity. I've sold cars to college football coaches, grade-school teachers, college professors, college students, civil servants, lawyers, cops, political lobbyists, and one extremely grateful woman that even hugged me after I delivered her used car.

That poor woman had been having trouble with her son. Of course, by that I mean her son was having trouble in school and with the law. I attempted to help her once before; her son was being such a tool that I couldn't get anything done with her. A couple of months later she came back, without her son. After the perfunctory questions, we settled on a car and a deal. Since there's normally an hour between an agreement on terms and a person leaving the dealership with their new car, we began to talk. The woman was ragged; hammered by life. The years of worry had left their scars on her face, and the pleading words she had been giving her son manifested in a weary voice.

She talked.

I listened.

I talked.

She listened.

She talked about her son and the issues she was having with him. I talked about my mother, who had passed away. From those two seemingly unrelated subjects, two people came to an understanding. I had given her hope for a new beginning with her son, and through that, she gave me a chance to see what it was like for my mother when things weren't always going the way they should. I had never given my mother much problem (that job was reserved for my sister), but from the flicker of light that came from that woman, I could tell that she was never going to give up fighting for her son. I saw that same light from my mother.

After finishing the paperwork, I led her out to her car. She gave me a hug. She drove away, and I haven't seen her since. Sometimes I wonder what happened to her and her son. Hopefully, they patched things up. Maybe they didn't, and he's in a juvenile hall somewhere. I've seen enough to know that there isn't always a happy ending.


Mooks in Training

So, they gave me another guy to train. Sigh. I've done this before, and it didn't go too well. One of my charges got popped for crushing the side of a pickup truck into the front of another pickup truck, and the other trainee went AWOL after 2 weeks. I don't have a really stellar track record as a trainer.

I'd like to point out that our dealership is different from most other dealerships that people have worked at. The work environment is overwhelmingly positive, at least for the most part. There generally isn't any grousing, no salesmen fighting over ups, no bickering between managers. Everyone is usually on the same page. When we get new salesmen that have come from other dealerships, to a man they remark about how well all of the guys get along and support each other. We've all been in the business for a while, so we all know exactly how the business works. The core group of guys have been there for years, so we all know each other's buttons to push for motivation, empathy, and a little harmless needling.

There is a little bit of an initiation process that all of the new hires go through. New hires are the butt of the most jokes, have to take a ridiculous golf cart driving exam, and are tethered to a more experienced salesman. It is this last part that is the most crucial.

When a new hire is in training, he will take a majority of the ups and bring them directly to the trainer, who will then go through each step of the process with the new hire observing. Slowly, the new hire will be allowed to have more and more leeway and input, until they are finally released and set upon the world. Most don't make it.

It's noteworthy that this is usually the only time that a car salesperson is working on a salary instead of a purely commission-based pay plan. The reason for this is the new salesperson has to split all of the deals that he or she has been working on with the trainer, who is taking precious time away from his own deals to work with the new hire. Remember how I said that my time is more important than everything except the money? Good thing trainers are given half of the new hire's commission, or you'd never get anyone to train anybody.

And with that, they've given me another mook to train in the ways of the car salesman. He, unlike the first two, actually has recent dealership experience. This is both a gift and a curse, because a salesperson who has already done the job at another dealership is already used to how that dealership does business. We aren't like most dealerships. Our process is so tied into the computer and the Internet that if our computers ever went down, we'd be completely useless and would probably be better off leaving.

But he (yes, it's another guy; 3 1/2 years of doing this, and I've never had a female salesperson colleague) must be taught our way of doing things. That's what we're working on now. It is an interesting situation, because I gave him so much rope when we first started that he nearly hung himself with it, which put my butt  in hot water with the General Sales Manager. Not good. I reined him in a bit, and now he's been productive. He's a good guy; he'll probably be around for a while.

I said all that to get to this: I'm not teaching my mooks to be sales vampires that suck the lifeblood of children in order to coerce their parents into buying a car. Far from it. What I teach the most, the most, is how to deal with the day to day rejection that you encounter when you work in this industry. I encourage my trainees to involve me in their deals, to not only prevent costly mistakes, but to help them deal with difficult customers and difficult situations. I'm there to help them vent, to help them deal with being told "no" 80% of the time. I help my guys get used to rejection, and to help them build up that alligator skin that is utterly necessary to survive in this game.

They say that the best way to make sure you know how to do something is to teach someone else how to do it. That's becoming increasingly true. I'm remembering the little things that I stopped doing because I was cutting to the chase a bit faster that I should have been. So who's really training whom, I wonder?