Car dealership in US are in their own league. Coming from Europe it is difficult to appreciate at first. But when you see headlines like:
"Roma was purchased last month by Texas car dealership magnate Dan Friedkin, who is worth $4.1 billion."
Yes, that a Texan car dealership buying the AS Roma (soccer team, Italian capital).
When I came in US, I had no car, I saved money, went to dealership (Toyota) and pointed a used Matrix, test drive it, and said, I will buy it. The guy started to show me a long form (like 3 letter pages long form)... I said I do not want to make a loan. He looked at me like I came from another planet. I want to buy the car. He said that he can only accept a bank check. It was close to noon on Saturday, I asked if he could drive me with the Matrix to the nearest bank quickly, he reluctantly said yes. Maybe he thought I was going to scam him or something. He did stay in the car, while I asked for a bank check. He drove me back to the dealership. Unfortunately I had to leave the car, so they do a final inspection and prepare some papers. I came a week later to pick up the car.
If you show up with cash to buy a car, you're looked at like you're crazy. They push, and push to get you to take out a loan.
It no longer puts you in a better negotiating position to be a cash buyer, as they're making more money selling you finance than selling the car.
For all of Tesla's failings, car dealerships will die out. Millennials and Gen Z _hate_ being sold to and will do anything they can to remove salespeople from the process; even if it means paying more in the end.
> The UK is heading this way too, and I hate it.
> If you show up with cash to buy a car, you're looked at like you're crazy. They
> push, and push to get you to take out a loan.
With used car dealers in Germany it's a common thing to pay in cash. At least the down payment is usually in cash. However, having payed for my used car in cash, it still makes me nervous thinking of me taking a bus to the dealership with €11k in my backpack. And prior I had to tell my Bank in advance to order enough cash for me on that day. Even if I had used my debit card, I would have needed to tell my Bank to increase the withdrawing limit.
And I think with latest EU regulations cash transactions are limited to 10k nowadays. So all in all I think it is becoming more and more inconvenient paying in cash these days even in a cash driven country like Germany. Unless either customer to dealership bank transactions become a thing, or checks return in digital form or Bitcoin's taking off I would not even know how to pay for my next car in the future. Perhaps I should get myself a Tesla and a pile of debt after all. ;)
I wasn't specific enough, sorry. By "cash" I meant "not finance". It's very unusual to turn up to a car dealership in the UK with a suitcase full of £20 notes (and would probably ring alarm bells for money laundering).
Usually dealerships insist on a bank transfer. Although, pro tip, if you can agree to paying a deposit with a credit card then the entire car purchase should be covered under Section 75 protection if the car is not sold as advertised.
Anecdotally I've heard of people getting discounts from the dealer by buying on finance, then asserting the right to cancel within 14 days* and paying cash instead. AIUI the dealer doesn't have to accept the cash, and could take the car back, but then they lose the sale, so they generally just suck it up.
That wouldn't fly in the US, at least not with actual cash, i.e., bills.
Notes are legal tender and can't be refused if you're paying off a debt with them. And I don't think early loan payoffs are legal anymore, so you could take out a loan one day and then just pay it off completely the next.
Can't speak other than personally, but my step son falls into this category and doesn't hate being sold to. He and his partner have both bought a number of cars from dealerships. And he's not got that from me or his mum, we're both quite the opposite.
Maybe a cultural thing? Are you British? I don't know anyone under 40 who enjoys the process of going to a car dealership and doing the awkward dance of trying not to get ripped off.
Hey, if he doesn't hate it, and gets a good deal then good for him. I just can't believe that his feeling is commonplace.
> ...who enjoys the process of going to a car dealership and doing the awkward dance of trying not to get ripped off.
This. The point is, once you are old enough and have heared enough success-stories of extroverts going full "Grand Bazaar"-Style... you are just frustrated if you know that you are going to loose against all these dark-patterns. There´s a reason why they can buy italian soccer-teams without really "producing" anything.
I´ll gladly throw my money on anyone who is going to take these dealerships out of the algorithm. I know that just someone else will get rich... but hey, Tesla might at least use this money e.g. for product-development etc..
There's something deeply human in the whole 'awkward dance'. Not everyone is born a great dancer, but this doesn't mean that dancing is a stupid and pointless activity.
People have been trading with one another (and often tricking or getting tricked in the process) for millennia. The 'Grand Bazaar' you evoke stands for something timeless — a promise of wealth earned with wit. In a twisted way, our American love for capitalism and these sleazy dealerships are chasing the same ancient dream.
I live in a world where I do not have to trick or be tricked by other people. I surround myself with people whom I can actually trust to have my interests at heart, and I try to look out for their interests as well. This is not just the case for my friends, but has been in my communities, across multiple countries. I can happily go to the market and buy whatever at a listed price, confident that the market stall owner is pricing it at enough to make a comfortable living and no more. I can be confident that if my purchase is flawed, I can say, and be trusted with a refund easily.
This, to me, is a deeply human system. The idea that deceit and cheating are features of life just doesn't bear out for me. There are people that do that, and when I encounter them, I do whatever I can to make sure I never encounter them again. Unfortunately, the consolidation of large businesses makes it more and more common. I avoid those where I can also.
But dancing is fun. The act of dancing evokes joy, and happiness for people.
For most people, buying a car is a chore. I'm not here to be negotiated with. Give me the price of something that means you make your profit; if it seems like a good deal, I'll buy it.
Not every sales person is trying to rip you off so. That's not what sales is, despite some actually doing it. Most sales people so, are just doing their job in acquiring customers for their business.
Edit: Cars need service and maintenance. Dealerships can, and in Europe do with the exception of used car dealerships, provide these services as well. And that is something Tesla is really bad at.
Teslas (like all EVs) need a lot less service than the average ICE, and when you do need it, you can order Tesla's mobile service to come to your house and complete most servicing right then and there.
Most Tesla service horror stories I've heard about involve major accidents requiring repairs with long waits/high prices for parts, but you get a loaner to tide you over and any decent insurance handles the bill.
They are using manipulative techniques to extract as much profit from dealing with me as possible.
I understand that it's their job. But as a consumer, I _hate_ it and therefore would consider spending more money to avoid the uncomfortable feeling dealing with a car dealership gives me.
That's the value for me and I'm certainly not alone in that.
You are aware, that if someone manages to get you pay more by not having to deal with a sales person, it is them who are rippong ypu off? Quite literally at that.
They're providing me with, in my eyes, a premium product. "Come buy a car without the dance. Here's the price. Give us money, I'll give you a car. No strings."
I'll pay extra for that. I'll never win against an experienced salesperson, so why bother even trying?
Opinions differ. But then paying a premium means paying a higher price than just accepting whatever a sales person asks for initially... To me, that is kind of stupid. But the I never got the German obsession with panel gaps neither, so make of that whatever you will.
Dealership and sales people or not, you are still being sold to, aren't you? But yes, if you can extract more money from your customers by removing sales people, and the option to negiotiate, from the process more companies will do that.
I did that when I purchased my used Toyota a few years ago. I told the dealer to hold the car until I could get a bank check issued by my credit union (no physical branches in my state so I had to call during business hours) and he said I could drive off that day. I was surprised but he just printed a temporary registration and a week later I drove by to finalize the paperwork after the check arrived.
It was a small dealership started by some ex-Microsoft guys and I was working at Microsoft at the time which might have had something to do with it, but it wasn’t like they verified my employment or anything. I assume they felt safe doing that considering the alternative would have been a career ending grand theft auto charge.
Good salespeople excel at character judgement. They were confident that you are not the type that steals cars. But like the author says, by doing the entire transaction over email instead of in-person, you take a big part of their advantage away.
The thing tho, is that the car dealership aint going anywhere, while the customer (if a fraudster) could just up and disappear with the car with the dealership having no way to track it back down.
You can politely say no to everything they push on you, who cares about how their face looks like. I bought my car last year and while it involved a long wait (I went there in a busy day), once it was my turn it was basically a 30 minute process to buy the car without a loan.
Thank God my cantankerous old uncle was the one who taught me how to buy a car and get the OTD price and then the best price, and not my parents. Basically, he taught me to just say 'no' to almost everything, and get up and walk out if they're jerking you around. My parents are wonderful people, but they're just too polite to do something like that, and too trusting of authority figures (car salespeople like to project that they are the ones that are experts at all things involving automobiles).
Bought my first new vehicle in fifteen years. Here are the steps that I took.
1. Test drove four different brands
2. Went to six banks and found out the lowest interest rate I could get. Everyone told me that it would be at a credit union but instead it was a brand new bank that apparently was hungry to get new business
3. Emailed every dealer for the brand I chose within 225 miles.
4. You want to do one thing at a time. I wanted the price out the door. I avoided talk about trade-ins or financing. But I did state I was open to financing the vehicle with them if they were competitive.
5. Be very patient. The vast majority of the dealerships in the first round either never answered the email or quoted me over MSRP. I would engage with everyone who wrote me back. I would reiterate that I was ready to buy a new vehicle to whomever gave me the best deal. As time went on I responded with specific price I was willing to pay. There are forums for most brands where people share the prices that they were paying. So I had a pretty good idea what might get accepted.
6. I was getting ready to start shopping for my second choice. It came down to a single salesman who sent me dozens of emails. All the sales guys want you in the dealership where you're on their turf. This guy kept dropping the price $500 at a time. He asked me what it would take for me to visit the dealership. I quoted him $1000 below his last offer - and he accepted! I made it clear that wasn't a price I would accept, just enough for me to visit him. I wanted $1000 more I when visited the dealership.
7. I got a bunch of prices for my old vehicle online so I had an idea what it would bring. They quoted me on the high end of what I would receive but they wouldn't budge on the new vehicle price. Eventually they agreed to add $500 to the price of the trade-in which I wearily accepted. Only to have them give me $400 of free mats so its obvious that I probably could have gotten them lower. However they had factory financing that was 1.25% lower than the best bank rate I received so I financed the vehicle with them.
Going online is the only way to purchase a vehicle. December I learned later is a really good time to purchase.
You must be buying a seriously expensive luxury car if they can knock a couple grand off before you set foot on the lot. I don't think a Corolla (sort of my standard for reliable A to B transportation) even has that much margin at MSRP. Different strokes and all that, but I doubt this process would work for me and most buyers.
I just purchased a 2021 Camry Hybrid LE for USD$19,900 [I am 2nd-owner, it has just over 92k miles]. This was my first purchase from a dealership (five lifetime car-buying experiences, total), and it was actually surprising how much leverage you get by asking for "price out the door" [includes TTL] on a beat up high-mileage vehicle that they initially listed for $23,500... when you literally have cash-in-hand (no financing).
I allowed them to offer me financing, but told them "anything higher than 0%, I won't pay" [so I paid cash].
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This car is an absolute sleeper — much quicker (not faster) than my turbocharged Subaru. Just brilliant to drive. I'm pretty sure I got a great deal on this one, and the hybrid system still has a few years of warranty left (unless I hit 100k, first — likely).
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Other tips: go at the end of the month; ask for "out the door" pricing; BE OPENLY WILLING TO WALK AWAY ("I don't give AF about anything" attitude); don't be afraid to negotiate^† — they certainly are.
I love my new (to me) Camry Hybrid. Instantaneous electric torque is incredible, as is regenerative braking.
†: I literally rejected their first number by saying [after a long pause]: "Look: I understand that this is a business and that businesses need to make money; however, I was really hoping the out the door price started with a one... if it can, then I will pay for it right now." And then it did [$19,900]
Jesus. I just went on autotrader, found one that looked good that I could afford to buy 3 times, went to bloke's house, stuck my head underneath, unscrewed the oil cap, shook hands, did a bank transfer, taxed it online and drove it home. Took me a day.
When you buy a used car, even one that's less than a year old, you have no way of knowing if there's something wrong with it. So buyers offer lower prices. Then a seller who has a car that they know is good says "I'm not selling it for such a low price, I know it's worth more." So the only people who sell used cars are the ones where something is wrong with them. A kind of race to the bottom.
I wonder how much this is affected by the prevalence of leasing. Something like 1/3 of new cars in the UK start off as leases. At the end of the lease period most/all of them hit the second hand market. In this case I think even the seller doesn't know if it's a lemon or not and, in any case, they will always want to liquidate the car as soon as possible, even if it's a peach. So they would factor the market price into the lease deal and sell all cars at market price regardless.
Concerns over reliability? Some car issues can be erratic and you may not find out about them until some time later. If you buy used, there's a level of risk regarding what the car's been through with previous owners. If you have a family and/or work with a tight schedule and/or park in areas where you wouldn't like to be left stranded, you may really value reliability.
You've never heard of a brand new car going wrong? A used car that's been on the road for 10 years with a full maintenance history gives me more hope for reliability than a brand new car that hasn't had time to reveal its problems. You can always pay someone to insure you against unlikely events and they don't care at all whether the car is new or not. It's up to you to decide how much risk you want to take.
I think for buying reliable cars, new is the way to go. They cost way too much used and the first person got all the best miles out of it. Unreliable/niche cars, used all day.
>that depreciates by 30% the very second you drive off the dealership
Nobody would underwrite loans for new cars with low down payment and low interest if this had been true. Also we would see the year old cars with low mileage selling with >30% discount, which is also not the case.
The reason I buy new cars is customization: I get exactly the car I want with colors/materials/options I selected.
This whole thing is so annoying. I would much rather purchase my car from Toyota corporate and not have to buy a car with some random guy's name stickered onto it because it sat on his lot and he got commission from the sale. I don't care of the sales money evaporates out of my local community, it's not worth the hassle.
Yeah, negotiating a price is a loosing battle on average. why ? Because you're always on the defending side: the salesperson tries to max the money he gest from you and then you have to make a rather big effort to just get the fair price.
Granted, when talking to big company, you can't even negociate.
I'd find myself in a pretty awkward position if my goal in a professional relationship was to make the other side loose.
I think I'm just economically rational: the only thing I look is the price, nothing else, in a situation where there's no competition.
So as negotiating is about trading price for something else, well, I don't have much to negotiate...
But the whole issue I have with negotiating is the one of "value". We don't put the same value on objects. For example, for me, the value of a car is the cost that is needed to produce and sell it. The social status thing has zero meaning for that. So I'd be glad to say to the salesperosn "hey, drop that social status option and let me pay a bit less" :-)
The text mentions Seymours' Cray algorithm for buying cars, if you're rich enough. However, it's deleted from the linked page. To save you the search, here it is:
1. Go to nearest dealer,
2. Sit at nearest salesman’s desk
3. Buy nearest car
4. Go back to designing computers.
Keep in mind that going through this strategy will take you hours and hours, and with Software Engineering salaries it's quite probable that you should instead rather be working on stuff that you're actually good at with this time.
Or then you outsource this whole process to someone else and pay them a slight premium, which is what I would do. My time isn't worth an email battle and spreadsheet acrobatics to save $3k.
Yeah, take that SE salary and buy a Costco membership and use their auto program.
All they really do is email a bunch of dealers for you but they got me a lower price then actually going in person to a handful of dealerships and getting the "employees discount" offer.
Are there any good email-negotiation LLM agents one could employ here? :) Admittedly underhanded but as echoed in this thread, the dealerships aren’t really playing fair either.
Perfectly legit and wise use of time on a buyer's down time after dinner. I wouldn't mind spending the time on this over the course of a week if, at the end of the week, I wound up with the car of my choice at a fair price. I think it's time well spent.
I think it’s ok to do it when you are not in a hurry, like if your current car is getting high on mileage and you know you will need a new car in a year or two.
> You do not want to use financing products that dealerships offer - they are worse than the ones you can shop around for. Get preapproved with your bank or and other bank and get the preapproval letter ready before step 5.
That seems unlikely to me, though this depends on which car company you're buying from.
Take Ford for instance. A significant amount of Ford's business is banking/financing. Much like how the Dealership wants to sell you a car, Ford actively wants to be your financier and they're competing against the banks to get your business.
Furthermore: Ford is known to sweeten the deal and offer financing-credits rather than straight $$$ off of a car. For example, you might find that Ford can offer 5% right now, when typical banks are going to be offering 8%. This is effectively Ford choosing a "shadow-discount" in the form of financing-incentive. They're willing to lose money on the finance but gain a customer. Its a hidden negotiating tactic on top of all the other offers they're doing to you. You might as well give the sales-guy the opportunity to offer you a financing deal.
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But Toyota doesn't have as big of a financing arm, and its more of an (expensive) service to the customer. You'll probably lose money on Toyota financing compared to a regular bank.
I think its a good idea to be pre-approved. This means that you know what the "fair" % interest rate should be right now, and get a good idea of what "shadow deals" various car manufacturers are doing.
I know I've seen 1.9% APY deals in the market today. Financing is seriously just another step in this annoying negotiation process you have to normalize and account for.
Many car dealers work directly with banks to provide financing for customers. In these cases, the car dealers take a cut, so a customer who walks into the same bank might be pre-approved for a lower interest rate. (This doesn't always apply to big institutions like Chase and Ally that have huge, separate direct and indirect auto lending arms that never talk to each other.) But this profit is totally arbitrary - dealers can choose to make no profit (or even lose money) on financing if it helps them to make a sale. Most people don't realize this because you can't walk into your local credit union and negotiate the terms of an auto loan. That being said, even at $0 profit it's hard for dealer financing to beat a direct auto loan, because you (the customer) get your pick of the world's financial institutions, whereas the dealer is restricted to the lenders they happen to partner with.
Relatedly, it is significantly more convenient to accept dealer financing because you don't have to act as a middleman between the car dealer and your bank.
The point is that dealer financing is usually a rip-off (because it's fundamentally another axis along which dealers try to extract money from you), but it can still occasionally be a good deal.
> That being said, even at $0 profit it's hard for dealer financing to beat a direct auto loan, because you (the customer) get your pick of the world's financial institutions, whereas the dealer is restricted to the lenders they happen to partner with.
You're underestimating the power that the car-based financial institutions have.
For example:
> (This doesn't always apply to big institutions like Chase and Ally that have huge, separate direct and indirect auto lending arms that never talk to each other.)
Speaking of Ally bank... have you ever looked at their name before 2008?
GMAC: That's General Motors Acceptance Corporation. You're literally talking about GM's piggybank for financing deals.
Ally bank has changed a lot over the last century. But they still have tight connections with GM.
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It depends, it very, very strongly depends on the dealership, the auto-firm (ex: GM can get a very good deal with Ally bank... and Ford can get a very good deal from *Ford Motor Credit Company*, the in-house bank).
Toyota... not so much. Ford / GM? Yes. It depends.
I used to work at a big car dealership making indirect auto loans, so I don't think I am underestimating the power of in-house financing. And I definitely know Ally's history! ;)
,> The point is that dealer financing is usually a rip-off (because it's fundamentally another axis along which dealers try to extract money from you), but it can still occasionally be a good deal.
Last time I bought a car the dealership was offering a loan backed by my credit union with identical terms and rates.
Made my getting pre approval from my credit union a waste of time.
Yup. Car companies (well, sometimes their importers) subsidize financing for dealers through financing subsidiaries.
The caveat is that you usually have to have very good credit to get the top tier rates, which might be why the github user wasn't aware of this.
If the loan is below inflation, the loan is actually making you money...as long as inflation stays higher than the loan rate for the length of the loan, that is.
> If the loan is below inflation, the loan is actually making you money...
Inflation is at most indirectly relevant here. What's important is the opportunity cost, ie what else you could do with your money.
Of course, you'd hope that there are other investments that can at least beat out inflation. But there might be much, much better investments available. (Or on the contrary, sometimes eg government bonds yield less than inflation. Yet, some people still buy them. Though much of that demand probably comes regulation all but forcing certain parties to invest in government bonds.)
For example, Subaru has 1.9% APY on Outbacks right now, and Ford has 0% on Mach-Es. Whether the car itself is a good deal will vary, but if you already have plans to get a specific model or would come out ahead of your other preferences after counting the interest savings, it would be silly not to take the deal.
2. Realize a fancy new car is like $2-3k per MONTH (financing, insurance, etc).
3. Decide that there are about a million better ways to spend 2,000 a month (e.g. a $200 dinner every 3rd day, personal uber chauffeur, house-cleaners, etc)
Some of the tech in newer cars is just downright impressive.
* Toyota's hybrids can achieve close to 40 miles per gallon on an SUV while achieving 200+ horse power and completely eliminates all timing belts and chains. No more digging into the engine bay to replace those. Just fluid replacements and inspections of the electrical connectors.
* Anti lock brakes are way better today then systems from the late 90's. A 1990's car I could brake more effectively then ABS could no problem. Mid 2010's cars and onwards? No contest, ABS just beats me consistently. The controller can release brake pressure from a single wheel loosing traction while the others maintain maximum braking force, something impossible to do with just the brake pedal. It's also what makes modern traction control so good; a 6 year old can correct a minor loss of traction in milliseconds, long before the driver even realizes there's a problem.
* Seatbelt pretensioners are now tied into the car's communication network, meaning in the event of a crash they can take up slack far more quickly and reduce whiplash injury.
* Assuming that the headlamps are properly sealed, LED lights should never need replacing.
* Reversing cameras with guidelines tied to the steering wheel angle is just pure cheating when parking in tight locations with a large car.
* Adaptive headlights
* Having a keyfob is super convenient. Not having to dig your keys out of your pocket to start the car is nice; not essential but I'd rather have it then not, even with the risks involved.
And purchasing a newer car typically means reduced chance of abuse from a previous owner. Is it really that surprising that there's people that don't want to put the kind of effort needed to dig into and repair an older car?
> Is it really that surprising that there's people that don't want to put the kind of effort needed to dig into and repair an older car?
This is weird to read having grown up in a family that has never once bought a car new. My parents don't know a damn thing about cars and it's never been a noticeable issue. Buy the car with 40-60k and drive it to 200k, repeat. They're usually not American cars but there were some Ford trucks in there.
Timeframe does matter: if you bought Japanese cars in the 1970-80s your experience on what you needed maintenance-wise was night and day different from American cars. My family in Southern California bought things like Honda Civics which made it to 200k with basically only routine maintenance; we had friends with GMs who had a hobby keeping them working and never kept them as long.
Lot of it is luck of the draw, the odds of which are influenced by environment. My own data point is with used motorcycles but all of them have had varying degrees of issues that grounded them for some period of time until I could fix the underlying issue. But many people I know have stories about older cars breaking down and leaving them stranded on the side of the road.
I don't doubt at all that there's good used cars out there. But for a lot of folks, it's worth the extra money for the peace of mind comes with a new off showroom floor new car with a completely known history with a manufacturer backed warranty that includes roadside assistance.
I know this is going to sound stupid but I bought my Subaru at 200k kilometers. Thing is, everything that breaks in these cars was recently replaced. All the other repairs are usually below $100. What would those 200k even matter? Even more that it was so cheap I could buy a new one whenever I want.
I know very little about our old car and cars in general. When there is a issue I just call my Subaru guy and so far $150 or less fixed every issue we had.
However those things sure sound impressive, but it doesn't sound it's worth a $50k price tag and the most impressive point only applies to one brand. Also reverse cam, magic keys, LED front lights are all cheap upgrades I can easily do myself.
I want adaptive cruise control, reversing camera, android auto, but I'd never buy a new car or use credit to buy a car so maybe I'm just a bit less weird than you.
Camera and proper radio is a $100-$300 upgrade for any car tho. At least with those older cars where you can still DIY and use standard radios instead of the original.
That's a very generalized statement. We leased a brand new fiat panda before and now have a 20 year old Subaru. Ive seen videos of both crashing and there is nothing better about the fiat.
In the UK last time somebody tried the hard sell with me was around 2012. I was in a Mazda dealership for a £20K car (~$25K USD today), after 45 minutes of pressure I told them if they weren't going to give me what I'd asked (a more than fair quote for my old car) I'd buy elsewhere.
A day later I bought a better equipped Hyundai for the same price and a decent trade in.
2 days after that I get a call from the Mazda dealer asking was I still interested and they could work a better deal.
I had great pleasure in telling them I bought the Hyundai, best decision I ever made as it turned out the Mazda model I was interested in had windshield stress design defects causing them to crack and issues with the gearbox.
I still have the Hyundai and it's survived 2 accidents from people driving into me :D
I have gotten into the habit of asking myself of any company "What is their actual business?". This is invaluable in the IT world, but a useful tool in the real world too.
I know nothing about the car business in the states, but it seems to me after reading these comments and the article that the actual business of car dealerships is most probably - selling financing, and the cars are the 'vehicle' for this.
I worked in a camera store/photo lab in the mid to late 00's while in college. I learned pretty quickly that the cameras were low-margin items and the goal was mostly to attach ridiculous warranties to them, and to a lesser extent some high-margin accessories. I think I actually tried to avoid selling anything because I mostly got dinged that my warranty rate was so low (I wasn't a salesperson but anyone could sell so they tracked all of us). I could have had fun talking about cameras and selling them all day, but sadly that really wasn't the job of a salesperson. That chain (Ritz/Wolf Camera) is long gone now, and I'd love to say it was because of these tactics, but I doubt that; it was more due to the loss of film processing, another high-margin business.
Auto dealers sell to commercial customers as well and I'd like to think they don't play this stupid game with them. Does anybody have any tips about how to pretend to be a commercial customer to maybe get better deals?
I'm pretty sure they do, and they make even more money because the guy buying the car for the company isn't using his own money. Lots of tradesman in Australia drive enormous shiny blingmobile trucks maxed out with every available option, because they can be written off as a business expense.
> At this point you may start noticing a difference in dealer behavior: some of them are more open to negotiation that others. One of the reasons for that is that some of the cars are sitting on the lot for too long and they would like to get rid of them quicker to avoid burning money (keeping the car on the lot costs some amount each day due to insurance, parking space etc etc). This event is more likely in the end of the month or in the end of the calendar year (this post assumes that you cannot pick at what time of the year you buy a car. If you can choose, buy close to the end of December - there will be more inventory dealers will want to get rid of due to model line replacement).
(emphasis mine)
This part is buried in the whole document, but is probably the most important.
If you have some temporal wiggle room, go on the last day of the month. Not the second to last day, the very last day. Possibly after lunch if you can. You are going to get a much better deal.
How is depreciation for cars calculated correctly when the dealers are adding this random markup and/or cross subsidizing finance deals?
I originally started thinking about this due to stories about EV depreciation that make no mention of $8k plus federal/state subsidies that the buyer received.
Is it as simple as some average second hand price vs MRSP?
Depreciation is a way to allocate the cost of a physical asset over it’s useful life.
So in this case, the cost is whatever you pay after credits / markups / etc. MSRP (Manufacturer Suggested Retail Price) doesn’t really matter - the cost to you is what you paid for it.
And then the value after using the car for sometime is whatever you could sell it for at that time.
So I get EV for $50k after credits.
I drive for 1 year and sell for $40k, then I would have $10k in depreciation.
If your goal is to understand how much of money you are actually spending that’s it.
Sometimes you want to play games for tax / accounting purposes. Then depreciation becomes this funny made up number that is a mix of depreciation rules and what works well for you. Eg most of the cars value is lost in years 1-3 but I might ‘take’ an even amount of depreciation over 5 years.
Are you seriously buying cars like this? Create strategies for "financing them"? It's like someone is about to buy a knife but opens facebook and falls into japanese-superchef-damascus stell kitchen knife rabbit hole. Or am I the one who falls straight into the claws of kind of people who later buy AS Roma?
I find a knife to be a much lesser financial burden than buying a car, especially if I think about buying a brand new car. The price of the average new car in the US is what, $48,000? I imagine it's quite a bit lower for knives.
Last time I bought a car, I just messaged my credit union's Auto Buying service with the make/model I wanted. They told me the best price they could find and the dealer drove the car to my workplace once I set up the financing.
If your bank offer this service, you still have to figure out which car you want and what the fair price for it is. But those are minor roadbumps compared to haggling at the dealership.
There was no payment for the service or obligation to get the loan through the credit union. I did finance through them anyway since I intended to pay the car off pretty quickly.
TLDR: investigate if your bank offers a car buying service.
First Tech Federal (WA, OR and CA). The service itself was autoland, which seems to still be around. Not sure if there are advantages to going through your own bank vs directly to them.
Not sure who needs to hear this, but you can buy a nearly new car used and save 1/3 to 1/2 of the cost. One big benefit is you let somebody else find out if new models are lemons. Another benefit is you don't need to haggle, as there will be many different options at different prices and you can quickly find out if the price is reasonable by checking KBB.
You grossly increase the chance of a lemon with your strategy.
Why would anyone sell a near-new car for 30%+ off *unless* they knew the vehicle is crap?
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Buying lightly used (~3 year or ~5 year) cars is likely the superior strategy. There's a set of rich buyers who want to keep up with the latest trends. This leads them to leasing vehicles for 2, 3, or so years. Other times, they have enough income that they can just buy new entirely but sell within 5 years when nicer technology comes out.
There's likely nothing wrong with a 3-year-old car. Its just that the lease is up so they're moving on.
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In contrast, think of the kind of person who buys new at like $40,000 and then turns around and immediately tries to sell the vehicle 6 months later for $25,000. There's probably something very wrong with that car.
Anyone selling just a few months after buying is someone who actively regrets their decision to buy.
>Why would anyone sell a near-new car for 30%+ off unless they knew the vehicle is crap?
Change of life. New kids, divorce, relocation to a city, got a UTV that needs something to tow it, lost a job and need the cash, died, started carpooling, etc.
If you don’t need a car anymore and are very certain you won’t, there is no point in dragging out the ownership. Taking a big loss immediately is better than waiting 2 years and also paying insurance and registration the entire time.
Many states have lemon laws and actual garbage has to be taken back by the dealers after X number of repairs. The people selling at a steep loss don’t have a lemon in those states.
You’re a lot less likely to get a lemon buying near new than you imply.
To me this seems to reflect a lifestyle where certain people always want a shiny BMW or Mercedes and have to trade up every 2-3 years to maintain it. Seems like leasing would be a better approach though.
I love leasing! Well, not to lease myself, but the cars returned from a 2-4 year leasing contract are usually great value to buy used directly from a brand dealership, come with guarantees from the manufacturer comparable to new cars and are usually, at least, acceptable milage-wise.
I talk about Germany specifically so.
Once, I bought a car new. Will never do it again, used (somehwere between one and four years) is the way to go.
Somehow, I have a bad (unfounded?) association with lease drivers and car-friendliness, and I can't help but wonder how they've mistreated or abused the car mechanically in those 2-4 years. Things like full acceleration with a cold engine/turbo, and violent gear shifting and clutch abuse..
On a side-note, do you have any company or website you would recommend for ex-lease vehicles buying in Germany? Or do you simply go to your local car dealers and ask for their second-hand offerings?
In Germany I'd go directly for the manufacturers websites. They have a dedicated offer for "approved" used cars that come with warranties and such, and went through QA after being returned.
Jaguar Land Rover is pretty decent, they offer two year warranty. Prices are OK, if you have time to shop around or wait, since the value loss is, for whatever reason, higher than comparative German Premium brands. Service costs are reasonable as well (compared to Ford, Peugeot and free garages). You basically get a lot of car for your buck, plus you don't see those a dozen time between ypurbplace and the supermarket every day.
One heads-up so: Jaguar Land Rover dealerships are independent (some kind of frnachise system would be my guess), so experience can, and does, vary a lot between dealerships.
Another source would be exihibition cars and those registered for a single day (done to drive numbers, so propably not a thing at the moment, I haven't checked in a while).
Asking for a leasing return cars at ypur local brand dealership for sure is an option as well.
In America at least, most cars are automatic transmission now, and a lease requires 6-month maintenance to stay in good standing.
So you know over the 3 years of leasing, there were ~6 maintenance visits, and without manual transmission there's no worries that someone else burned out the clutch.
I've never leased before, and IIRC leasing agreements differ from dealership to dealership. But the overall expectation is "free maintenance", but "required maintenance". You have to come in if you want to keep the lease in good standing, otherwise you have to pay a penalty later.
Is that still true today? I know in years past it was, but used car prices are so high right now. I've seen many 2 year old cars selling for nearly as much as new lately.
Yeah. It probably depends on the brand, but I was just looking to buy my first car in quite a while and had to update my thoughts on this. Previously I'd be all for buying used. But I was looking at the prices for 2 to 5-year old Toyotas vs. new and the difference was shockingly tiny unless there was something wrong with the car or it had ridiculously high mileage.
Depends on wait times. I know someone who buys a new fancy sports car every year (Porsche etc.). The wait time is usually around a year between ordering and getting the car. A year later he can sell his previous car that he drove that year for the full price, because buyers are willing to pay for not having to wait.
Also you put yourself after the first leg of the defect curve. Buying used is a stressful experience with no guaranteed outcomes, but I'd never buy new
It should be a human right to be able to walk places. Unfortunately in most places you have to give way to cars. If you don't they'll kill you or at the very least destroy your body. This makes walking deeply unpleasant. You'll start to hate cars and the only way to escape them is to get a car.
10 years ago I walked in a dealership to buy a used car and employed a negotiation tactic that I had recently learned online. The problem was that the technical price negotiation worked so incredibly well that I basically got (politely) thrown out of the dealership.
The tactic was simple: disarming empathy. It was a method presented by a hostage negotiator via this NPR podcast: https://www.npr.org/transcripts/167802325 Basically you agree with the salesman that whatever price they are offering is actually very fair, and in a normal situation you would accept it... but you apologize profusely saying you just can't spend this much because it is too expensive for you. When he says such and such product quality justifies the price, you wholeheartedly agree with him... but you can't afford this.
So that day I had identified a specific car I wanted, online, at a dealer in my area. I went in to see it in person. I explained I was ready to buy it today, got sat down at a desk with one of their salesmen. And he starts by presenting his price. I explained it's a really good price, but I really can't afford that, and asks if there is anything they can do to reduce it? After a while he says, sure, OK, what about this new number? And basically I keep doing the same thing over and over. I profusely thank him for reducing the price, but explains it's still too much. Over a span of 20 minutes, he cuts the price down 5 or 6 times, up to a point where I finally say we've reached a price that I am able to afford. I don't remember the numbers but I think we had started around $19k and got down to $16k. The salesman is mildly happy, but I distinctively remember him not being that enthusiastic. He said he's going to get the paperwork ready to finalize the sale. He leaves me at his desk while he walks way. And a few minutes later he comes back, with a very sad look on his face, and apologizes while explaining that the owner of the dealership refused to let the sale close at this price. He says there is nothing he can do for me, shakes my hand, and remains awkwardly silent, then apologetically stood up to make me understand it was time to leave. I kept thinking the guy probably had just been yelled at by the owner about he could have screwed up the negotiation so badly.
Obviously the salesman had made a mistake. He must have had a floor price, and accidentally went below it in the heat of that powerful negotiation tactic. And it was impossible to resume negotiation after that, as he had lost all credibility because he was negotiating price levels that he didn't have the authority to decide. What was he supposed to do? Say "forget about the $16k we just agreed on, how about $17k?"
This has happened to me, except there was a couple looking at the same car on the lot, and they didn't try to negotiate, they just took the higher price, while I was negotiating. So by the time I got the lower price it had been sold. I ended up later buying a different car for a lot more money than even the sticker of the first car.
Maybe I’m not the typical car buyer, but usually I do a ton of research beforehand and know the exact make and model and configuration I want prior to even making contact with dealers.
Then all I do is basically pick the dealer that is able to get me what I want, or as closest to it, at best price.
Sometimes this has meant traveling to a dealership in another state. Sometimes it meant ordering from the factory.
Then again, the cars I’ve always shopped for haven’t exactly been the likes of Camrys or RAV4s, so…
I called a dealership. Asked if they had X car at MSRP. They said yes. I waited for it to arrive. I went there (10 minute drive), paid via check and drove out with it.
The worst part of the experience was the lack of color options.
When I tried to buy a car that hadn't arrived yet, they reserved it for me but when it arrived they put on paint protection and tried to charge me for it. I refused to pay for the paint protection so they eventually removed the fee but said the paint protection won't come with the warrenty.
Dealers love to add expensive addons like GPS trackers, remote starters, or paint protection. It is hard to find a new car that doesn't have that garbage. Especially in a short time frame.
Unfortunately, in the US most of those sales are still funneled through a dealership, and even a "direct" purchase is still usually subject to dealer markups and similar nonsense.
I just bought a 80s pickup truck off Facebook marketplace a few days ago. Couldn't be happier. And probably more reliable than some cheap cars being sold these days.
CarMax also turns the transaction into just like buying something from the grocery store. Instead of paying people to argue with you about price they pay them to get you through the transaction as smoothly as possible.
I plan on buying a new car soon, likely a luxury brand, perhaps Lexus. It’s been 15 years since I’ve personally purchased a car. Are there services that will handle the process on my behalf?
Very genuinely—-I ask because my patience is thin, and I am likely to hurl expletives at the salesperson, especially if I detect tactics such as those described here. If the salesperson is slimy, then my verbal response is likely to be exceptionally offensive, as I’ll calculate for the most severe expression.
This is a good article which maybe is a specialization of a generic negotiations algorithm. Not that much different in concept from how you deal with a rent negotiation, or figuring out which dealer to buy your Singaporean bonds from.
A thing that will control your outcome a lot is the dynamic of the car market itself at that moment, and what's going on in the dealership. In my case, we bought our car in 2021 amid the chip shortages/supply chain issues. I called a good number of dealers and got the following response:
One dealer had the car coming in a few weeks and can sell it to me for the MSRP. One dealer said "we charge 1k OVER the MSRP for every car." The rest said "we don't have this car and won't have it anytime soon."
In that environment, knowing the dealer costs and all that other bullshit doesn't matter. You have one guy who knows he's got a car that nobody else has, and if he doesn't sell it to you there's gonna be someone else who wants it that same week. You have zero leverage to drive the price down. We bought it for the MSRP and considered ourselves lucky.
In another environment, getting consistent apples to apples quotes is your key to driving down cost. Basically you are putting dealers in competition. If Bob has more cars than he can sell, his best outcome is to sell to you for MSRP, but his second best outcome is to sell to you at all vs having you buy from someone else. What usually happens in this approach is you understand the range of quotes, pick your lowest quote and then ask the dealer you would rather deal with if they can beat it. "you are my local guy and I liked talking to you, would rather buy from you but you are a lot pricier than someone I can get from two towns away. Can you give me your best quote please?" can do wonders.
The reason you get a range of quotes is that dealers face different environments. Bob may have a lot of car X and not a lot of people asking about it, and John may have sold most of his X and has a lot of interest. This can be for totally arbitrary reasons from what their area is like, to total luck of the draw and in a few weeks Bob and John may have their situations reversed, but at the moment Bob's probably gonna be more open to giving you a deal.
A thing that also works is to make sure they know you're a thoughtful money conscious person who is doing his due diligence will make them give you a better quote. I say straight up "full disclosure, I am speaking to a few other dealerships to get a couple of quotes." That tells you that if they give you a high quote you will simply ignore it. If you seem naive and aren't going to be equipped to shop around, they might give you a higher quote to see what happens.
The article makes a good point that you should negotiate (as always) one thin at a time. So lock in the new car quote separately from financing and trade-ins. Better get one number down and then work on getting the next number up.
Finally and this is key - realize your situation and the leverage you do or don't have. If you don't need a new car right away, and dealers have more cars than they know what to do with, you can really work on this to squeeze out another grand out of the deal. If you are in a situation like I described above where I needed the car and literally nobody had one, don't feel bad paying the MSRP because that was the best price possible under that dynamic
I can also say in general that people undervalue and under-study how to negotiate. Negotiation is often a collaborative thing where both sides win (the dealer wins because I did the deal w them vs their competitor, I win because I paid less) and people often fail to negotiate because they assume negotiation is a confrontation and it scares them. If you are a person that lives in the world where you're not just ordering off a menu, taking a negotiations class or reading a book is a great use of time.
New cars are built out of plastic and are thus limited to a 10yr life span, fullstop. Every one of them. Then you add electric to the mix, and in 5-10yrs ur gonna need to buy a new one, no matter the brand, because your battery will fail. The lucky ones get a second under warrenty.
I dont know, i stopped buying new cars once computers were added. I own a 95` landcruiser with 300k on the clock and i beleive it has another 300 which will basically mean it will do me for life. And the advantage of buying and old car, and learning todo the maintence yourself, is that not only do you save money from every angle, your car is on the other side of the bell curve where they start to increase in value again. In the 10yrs ive owned it, my car has increased in value by ~40%. Its made of metal, and is held together with bolts not glue. It will not dry rot away, and rust is easily controlled with modern epoxy paints. It will not go out of fashion given the thirst car collectors of the future will have the past.
My plan is to swap a hydrogen motor in i guess once mature the tech and consequently ban diesel.
This is from someone who in 2005 bought his first ~50k$ car over the internet, one click style, without seeing it in person from a used car guy (it was 2nd hand, 10k on the clock, ~10% of retailm had 2yrs warrenty). Thats really the problem with buying a one-click these days though, the people who buy them are too risk adverse to be without a warrenty or buy second hand. So they crash the value of their own investments because the others know what to expect with seconds on a modern car. The reason people sell cars after 1 or 2 years is many, in my country, leasing cars like this is maximises your dollar vs tax.
Any moden car: ~50k outlay, 10yr useful life
vs
i bought a 2002 rav4 with 400k for ~2k, 5~ yrs ago. Ive spent roughly ~500$ repairing different things on it in that time putting on ~40k because they reused the same parts for this car across many different years and models which means CHEAP CHEAP. It means parts have been copied and mass reproduced on a scale that sees me paying $30 for a waterpump and ~1hr to install DIY on the side of the road not $600 ~ $2k labour for a moden car that requires half the car to be dissaembled to even just see the water pump. And since your modern pump is made of plastic, and all the pipes are plastic, and the pipes are have special numbers of propritiy fittings.... well yes, you see why modern cars suck in terms of investment ratio.
let me show you that math.
~2.5k outlay / 5yrs = ~500$ per year total cost. The car is now worth ~10-12k because people are so sick of modern cars and toyotas keep their value.
2nd hand, high milage, reliable cars (toyota/honda) > anything modern made in the last ~15yrs. The morphing from 1 or 2 modules per car, to 20-100 modules per car with tonnes more emmisions gear IMO is the worse thing to happen to cars since their inception. BUT it has given me a retirement plan ... im thinking about becoming a ECU/electronics repairer once i get sick of tech :D All those modules are pretty much the same, they just allow you todo things via comment instead of lever. Once you learn the basics, its like hacking on VB or JS.
> My plan is to swap a hydrogen motor in i guess once mature the tech and consequently ban diesel.
Good luck with that. Hydrogen in cars is dead, and even if it weren't, the tanks would take up so much space in a car not designed for it that you'd lose your boot.
I've had the complete opposite experience between my '09 Toyota Camry that burns oil faster than I can put it in and my '14 Mazda 3 that has every modern feature I could ever dream of.
Yes, that a Texan car dealership buying the AS Roma (soccer team, Italian capital).
When I came in US, I had no car, I saved money, went to dealership (Toyota) and pointed a used Matrix, test drive it, and said, I will buy it. The guy started to show me a long form (like 3 letter pages long form)... I said I do not want to make a loan. He looked at me like I came from another planet. I want to buy the car. He said that he can only accept a bank check. It was close to noon on Saturday, I asked if he could drive me with the Matrix to the nearest bank quickly, he reluctantly said yes. Maybe he thought I was going to scam him or something. He did stay in the car, while I asked for a bank check. He drove me back to the dealership. Unfortunately I had to leave the car, so they do a final inspection and prepare some papers. I came a week later to pick up the car.
Clearly the sales guy seemed a bit puzzled by the transaction. But there was no way I was going to drag a car purchase process like describe in https://github.com/kutinden/buyingacar/blob/main/README.md (13 steps !?)
Now I see the why Tesla sells online. US dealerships have been fat cats for too long.