Car Buying Process

[BCClone]

Resurrecting this thread since it has provided guidance during our car search, but wanted to vent for a bit.

Found a used midsize SUV that we liked that had been sitting on the lot of a high turnover dealer for over a month. Had a test drive, emailed our interest, got the initial offer from the dealer down about $800 below list, so we’re thinking the door is open to negotiate with a lot of factors on our side. Go in, have it inspected, went to offer, manager stays stubborn on their initial offer and tries to hand-wring like we’re raking them over the coals with their initial offer in the first place and they’re taking a $500 loss, so we ask what the wholesale price was...got nothing but a look of bewilderment and an “I don’t know; I have no way of knowing”...so we walked.

This isn’t our first rodeo, so we were definitely ok with getting out of there, but I’m more shocked at how stupid they think potential customers are that the dealer would only be taking a $300 profit at-list for a used car. It seems like no one really wants to haggle anymore...and I’m not sure if that’s because the general newbie car buyer is so feckless these days with KBB price, NADA, and TrueCar that the dealer doesn’t want to bother with anyone who even remotely understands what is going on in the business, or what. Don’t get me wrong, those are great tools, but you have to know how to read them and how it relates to the business.

Moral of the story, in most cases they are never making only a few hundred dollars profit at-list on a used car...it is more like a few thousand ($4-5). Also, any dealer who moves less than $1k and tells you they’re taking a loss, don’t be swayed...walk if they’re stubborn. All of this depends on the car of course, but your general average mass-market car applies.

In december I was looking for a new work car for the wife. Have a friend whose daughter and SIL own a dealership. Always chat with them and have even played santa for their daughter when they were back home, so we know them fairly well. So I checked with him on a car we were interested in. To cut to the chase, he said the new used car route for dealers is to be basically at their number and blow them out. Said its the only way to compete with internet sales. I hadnt bought anything but beaters for high school kids in about 5 years.

In regards to profit on cars, (I used to manage a car dealership). We would have our list price 2-3k over the price that we had in the vehicle. If we gave a true allownance of 10k for a vehicle, by the time it went through the shop, was serviced, inspected, any vital thing fixed, detailed and touched up or minor dings removed, we had 500-1k in vehicles. Now we would have close to 15% to 20% ( 1 out of every 5-6) where people would come back and complain about belts being worn, speaker covers having a small crack in it, and so on. All things that were there before the sale and they had ample time check it out. We would on several occasions weigh whether this would be a one time buyer or a longer term relationship. On longer termers, we would catch several of the 100-250 dollar jobbers so we knew we would be taking a 40-50 dollar spread out hit on vehicles after the sale.

 

[BigBake]

In december I was looking for a new work car for the wife. Have a friend whose daughter and SIL own a dealership. Always chat with them and have even played santa for their daughter when they were back home, so we know them fairly well. So I checked with him on a car we were interested in.

So is there any truth to the end of month/year best price theory?

 

[grangermotors]

So is there any truth to the end of month/year best price theory?

Depending on the dealership, there is some truth in this. We are a Ford & Chrysler dealership and if we are set sales goals by Chrysler and Ford for the month. They tie money to the goal which we miss out on if we don't get to our goal. So if you come to us with 2 days left in the month and we're a handful of cars away from our goal. We will get more aggressive on the deal.

Now if we are way past our goal or not close to hitting our goal, it won't really make a difference.

Most dealerships tend to get a little more aggressive at month end, but anymore you have to be aggressive all month long. The internet has changed a lot of that stuff anymore, which is a good thing for the consumer.

 

[Rods79]

In december I was looking for a new work car for the wife. Have a friend whose daughter and SIL own a dealership. Always chat with them and have even played santa for their daughter when they were back home, so we know them fairly well. So I checked with him on a car we were interested in. To cut to the chase, he said the new used car route for dealers is to be basically at their number and blow them out. Said its the only way to compete with internet sales. I hadnt bought anything but beaters for high school kids in about 5 years.

In regards to profit on cars, (I used to manage a car dealership). We would have our list price 2-3k over the price that we had in the vehicle. If we gave a true allownance of 10k for a vehicle, by the time it went through the shop, was serviced, inspected, any vital thing fixed, detailed and touched up or minor dings removed, we had 500-1k in vehicles. Now we would have close to 15% to 20% ( 1 out of every 5-6) where people would come back and complain about belts being worn, speaker covers having a small crack in it, and so on. All things that were there before the sale and they had ample time check it out. We would on several occasions weigh whether this would be a one time buyer or a longer term relationship. On longer termers, we would catch several of the 100-250 dollar jobbers so we knew we would be taking a 40-50 dollar spread out hit on vehicles after the sale.

Thanks for the insight. Makes sense with what we were hearing at a couple places. Had a couple dealers eventually tell us they’re trying to be like Carmax, which is great and all, but if you don’t advertise that way then in my opinion you can’t just reap the advantages of being set on a fee without the operation. Using the Carmax model as justification for your guaranteed %profit is not acceptable. And Carmax’s pricing model is a lot more broad, with set tiers that are more predictable, which seems like it could give you a better opportunity to find a good deal in the price range. Dealers still set the price individually.

After getting tired of haggling with brick-wall dealers this time around, we ended up going to Carmax actually...pricing was more fair and in-line with KBB/NADA, almost the exact same vehicle (different color) and nearly 5000 fewer miles. Still waiting on the car to be shipped in to complete everything, inspect, and test it out...but fingers crossed it’s the one, because this time it’s been exhausting.

 

[dmclone]

Thanks for the insight. Makes sense with what we were hearing at a couple places. Had a couple dealers eventually tell us they’re trying to be like Carmax, which is great and all, but if you don’t advertise that way then in my opinion you can’t just reap the advantages of being set on a fee without the operation. Using the Carmax model as justification for your guaranteed %profit is not acceptable. And Carmax’s pricing model is a lot more broad, with set tiers that are more predictable, which seems like it could give you a better opportunity to find a good deal in the price range. Dealers still set the price individually.

After getting tired of haggling with brick-wall dealers this time around, we ended up going to Carmax actually...pricing was more fair and in-line with KBB/NADA, almost the exact same vehicle (different color) and nearly 5000 fewer miles. Still waiting on the car to be shipped in to complete everything, inspect, and test it out...but fingers crossed it’s the one, because this time it’s been exhausting.

Even though it didn't work out for me, I have to say CarMax was very impressive. Less than 30 minutes to evaluate my trade, they found two small dings but said otherwise it was perfect, they offered me 17k . Showed them the model I wanted in Nashville and within a week it arrived. Once the car got here I loved it but it had title issues that was going to take weeks to resolve. They gave me back my money and asked if I wanted to bring in a similar model. I ended up buying one from a BMW dealership in Davenport and in the end the deal was about the same but the CarMax process is so much better .

 

[ianoconnor]

Even though it didn't work out for me, I have to say CarMax was very impressive. Less than 30 minutes to evaluate my trade, they found two small dings but said otherwise it was perfect, they offered me 17k . Showed them the model I wanted in Nashville and within a week it arrived. Once the car got here I loved it but it had title issues that was going to take weeks to resolve. They gave me back my money and asked if I wanted to bring in a similar model. I ended up buying one from a BMW dealership in Davenport and in the end the deal was about the same but the CarMax process is so much better .

You'd think they would iron out title issues before trying to sell a vehicle. What was wrong?

 

[dmclone]

You'd think they would iron out title issues before trying to sell a vehicle. What was wrong?

They said a very small mileage discrepancy but I'm wondering if there was some kind of lien on the title. Not sure but I wanted no part of it.

 

[SCyclone]

Not too long ago I thought about trading, I have a 2013 Ford F-150 XLT with just under 50,000 miles. I am obsessive about the condition of my vehicles, there are only a few minor spots (not dings, just places where a rock or whatever has chipped a bit of paint off). It is as clean as a five year old vehicle can be. Plus, after I bought it I added a spray-in bedliner (he also did the wheel wells too) and a top of the line tonneau cover.

I checked KBB, and average trade-in allowance was $25,000. The dealer I bought the truck from offered me $21,500. Needless to say, I'm still driving the 2013. I felt insulted, actually.

 

[VTXCyRyD]

In december I was looking for a new work car for the wife. Have a friend whose daughter and SIL own a dealership. Always chat with them and have even played santa for their daughter when they were back home, so we know them fairly well. So I checked with him on a car we were interested in. To cut to the chase, he said the new used car route for dealers is to be basically at their number and blow them out. Said its the only way to compete with internet sales. I hadnt bought anything but beaters for high school kids in about 5 years.

In regards to profit on cars, (I used to manage a car dealership). We would have our list price 2-3k over the price that we had in the vehicle. If we gave a true allownance of 10k for a vehicle, by the time it went through the shop, was serviced, inspected, any vital thing fixed, detailed and touched up or minor dings removed, we had 500-1k in vehicles. Now we would have close to 15% to 20% ( 1 out of every 5-6) where people would come back and complain about belts being worn, speaker covers having a small crack in it, and so on. All things that were there before the sale and they had ample time check it out. We would on several occasions weigh whether this would be a one time buyer or a longer term relationship. On longer termers, we would catch several of the 100-250 dollar jobbers so we knew we would be taking a 40-50 dollar spread out hit on vehicles after the sale.

I'm not following the bolded part

 

[Bobber]

Resurrecting this thread since it has provided guidance during our car search, but wanted to vent for a bit.

Found a used midsize SUV that we liked that had been sitting on the lot of a high turnover dealer for over a month. Had a test drive, emailed our interest, got the initial offer from the dealer down about $800 below list, so we’re thinking the door is open to negotiate with a lot of factors on our side. Go in, have it inspected, went to offer, manager stays stubborn on their initial offer and tries to hand-wring like we’re raking them over the coals with their initial offer in the first place and they’re taking a $500 loss, so we ask what the wholesale price was...got nothing but a look of bewilderment and an “I don’t know; I have no way of knowing”...so we walked.

This isn’t our first rodeo, so we were definitely ok with getting out of there, but I’m more shocked at how stupid they think potential customers are that the dealer would only be taking a $300 profit at-list for a used car. It seems like no one really wants to haggle anymore...and I’m not sure if that’s because the general newbie car buyer is so feckless these days with KBB price, NADA, and TrueCar that the dealer doesn’t want to bother with anyone who even remotely understands what is going on in the business, or what. Don’t get me wrong, those are great tools, but you have to know how to read them and how it relates to the business.

Moral of the story, in most cases they are never making only a few hundred dollars profit at-list on a used car...it is more like a few thousand ($4-5). Also, any dealer who moves less than $1k and tells you they’re taking a loss, don’t be swayed...walk if they’re stubborn. All of this depends on the car of course, but your general average mass-market car applies.

h

Am trying to figure out how this was a win win for anybody? Seems the dealer shot you a fair price out the chute, you balked, they said no, and you saved face by walking. My guess is the dealer sold it a week or two later to someone else a lot closer to his price than your price.

I get the whole trying to get a good deal argument. I don't blame dealers for sticking to their guns however.

 

[Knownothing]

It's so much easier to Negotiate now that you can do a lot of it via email.

 

[CloneFan4]

It's so much easier to Negotiate now that you can do a lot of it via email.

Even gives keyboard warriors a chance to negotiate without shitting themselves in person

 

[Knownothing]

I bought my car out of Illinois that I found online. I was able to pit a dealership out of Missouri with the same ride vs the Dealership out of Illinois that was the same ride. Slightly better. Told one how much the other offered for my trade in and it worked out really smooth. So not only could I basically make up the numbers I was not really offered. I didn't have to even look the guy in the eye and get my bluff called.

It ended up being pretty fun.

 

[BigBake]

Not too long ago I thought about trading, I have a 2013 Ford F-150 XLT with just under 50,000 miles. I am obsessive about the condition of my vehicles, there are only a few minor spots (not dings, just places where a rock or whatever has chipped a bit of paint off). It is as clean as a five year old vehicle can be. Plus, after I bought it I added a spray-in bedliner (he also did the wheel wells too) and a top of the line tonneau cover.

I checked KBB, and average trade-in allowance was $25,000. The dealer I bought the truck from offered me $21,500. Needless to say, I'm still driving the 2013. I felt insulted, actually.

Sounds identical to what I hit, even down to the vehicle. I have a 2012 Lariat w 92k miles and all the dealers have been below NADA/KBB and hardly budging on their vehicle price.

What is killing our value is the price they are putting on new trucks, they are very heavily discounted.

 

[ArgentCy]

Used car prices are falling and they will bring new car prices down somewhat.

 

[VeloClone]

Not too long ago I thought about trading, I have a 2013 Ford F-150 XLT with just under 50,000 miles. I am obsessive about the condition of my vehicles, there are only a few minor spots (not dings, just places where a rock or whatever has chipped a bit of paint off). It is as clean as a five year old vehicle can be. Plus, after I bought it I added a spray-in bedliner (he also did the wheel wells too) and a top of the line tonneau cover.

I checked KBB, and average trade-in allowance was $25,000. The dealer I bought the truck from offered me $21,500. Needless to say, I'm still driving the 2013. I felt insulted, actually.

I could use a pickup. Would you take $15,000 for it?

 

[Rods79]

h

Am trying to figure out how this was a win win for anybody? Seems the dealer shot you a fair price out the chute, you balked, they said no, and you saved face by walking. My guess is the dealer sold it a week or two later to someone else a lot closer to his price than your price.

I get the whole trying to get a good deal argument. I don't blame dealers for sticking to their guns however.

A little more nuanced than that...probably should have expanded. They were high on both list and their offer through email...not much of a fair price from my research. We saw it had been sitting on the lot (maybe because other people were thinking the same?) and thought maybe they'd be willing to bring it down to a fair range and maybe a good deal to get it to move if they actually had a buyer who was negotiating. I have no issue building in expected dealer profit to any offer I present, and would not balk at a fair price. I reacted more to their lack of transparency when I had multiple comparables that proved otherwise.

Car is still on the lot.

 

[dmclone]

Carmax offered me $17k for our 2013 Acura RDX and that's what the BMW dealership also ended up offering me. It's now on the lot for $19,500 and I'm guessing they will sell it for around $18k. Could be a lot worse but it makes me a little sad that we lost almost $16k in nearly 6 years of ownership.Someone is going to get a great vehicle for the $$$.

 

[SCyclone]

I could use a pickup. Would you take $15,000 for it?

Sure....just let me drive it for another 4-5 years, OK?

 

[VeloClone]

Sure....just let me drive it for another 4-5 years, OK?

No problem. My $1500 will be waiting.