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This weekend my wife and I went shopping to replace our beloved minivan. Negotiating car prices is a fascinating experience. I'm not good at negotiating because I've never taken acting classes. I find it hard to get into character. When the salesman asked me how much I wanted to spend on our chosen vehicle, I only had one response ready: "I'd like to spend zero, you boiled turd. Just give it to me. Or did I misunderstand the question?"

Okay, I didn't say that. But I did laugh at him in a mocking sort of way. Obviously the question is designed to determine how dumb the customer is. You pass the test by not taking out a copy of your bank statement and saying, "I can't read. Can you tell me how much money I have?" The sales guy bowed out of the negotiations and introduced us to the General Manager. The GM went into his ridiculous spiel about how he was willing to sell this vehicle for less than he paid because he wants the manufacturer to give him a higher quota of that model next month. Apparently his business plan involves having a greater inventory of cars that no one is willing to buy for more than his costs. The general manager looked me in the eye to see if I believed his absurd lie. My wife and I just glanced at each other with mock disappointment. The game was on.

It was time to get into character. I played the part of the husband who insists on doing endless research, thus providing the dealership with no hope of closing the sale today. I said, "I want to spend some time doing research and then I can give you an offer. Maybe I can get that done by tomorrow."

Sales people hate two things: Informed customers and postponement. This was the worst case scenario for the dealership, and my ploy was designed to make the general manager "negotiate with himself," as the saying goes. In other words, we wanted him to keep offering lower prices before we made our first offer. That brings down the ceiling price and prevents us from accidentally offering more than he would have asked for.

Then the general manager goes into his canned routine about some sort of dealer incentive or other ambiguous pot of money that he could reluctantly dip into, thus offering an even lower price. He said that if we accepted this offer his children would have to wear clothes made of plastic grocery bags or some damned thing. I wasn't paying attention to the details.

We acted unhappy and asked for his business card. "We'll do some research and get back to you," we said.

Later that evening, an hour before the dealership closed, Shelly sent a text to the general manager offering a glimmer of hope. Shelly took on the part of the "good cop." Her character wanted the car but she needed a way to convince her stubborn husband to stop researching. She told the general manager by text that she needed another $1,000 off the price he offered to make that happen. He offered half of that. We accepted.

Before we made our offer I did my research only to discover that there was no way to figure out a fair price for this particular vehicle. There are plenty of sites that seem to offer that sort of information, but not credibly, and usually not for this model. I assume the car-buying sites are in the pockets of the car dealers or have their own scams going. In the end, we were flying blind and probably got screwed on the price. But that leads me to my favorite part of the negotiating process. No, we weren't done yet. Once you have an agreed price, the dealer keeps negotiating, but more cleverly this time.

The next step in the negotiations - if you can call it that - involves a fill-in sales guy making a "mistake" that lists the price on our paperwork far higher than what we agreed. By the time you get to this stage of the process, you're worn out from looking at all of the numbers, and you're tempted to sign whatever they slide in front of you. But I've been through this process enough times to know that the first version is always the "mistake" paperwork. I asked to see what price he had on his forms before he went too far, showed it to my wife, and explained to her the "mistake" price ploy. The sales guy apologized for the "mistake" and corrected it.

The sales guy introduced us to the finance guy for the rest of the paperwork. This is the final phase of our negotiations. The finance guy goes into his transparently phony act of amazement that we convinced the general manager to give us such a good price. He acts as if the price is so low it might be a mistake, or some kind of once-every-hundred-years situation. This is total bullshit, of course, and every finance guy at every dealership says the same thing to every buyer. But it still feels good, which makes me feel dirty.

The finance guy goes into his sales pitch about how we need some sort of invisible coating of magic protection for the exterior of the car. Without that protection a midsized bird can shit right through the hood and halfway through the engine block. We also need some invisible chemicals to protect the interior of the car because otherwise we are just wasting our money. Oh, and we need a more comprehensive warranty to cover all of the many, many things that will be breaking on this car. Apparently we had negotiated a terrific price on a car that was highly vulnerable to the elements. I kept craning my neck to see if it had dissolved into the parking lot behind me. All of the invisible and magical products he offered totaled several thousand dollars.

I declined all offers, but the finance guy wasn't done. He poured water on a sample of floor upholstery that had allegedly been coated with magic protectant. The water beaded and rolled like a marble. It was cool. But I turned it down.

As I assess our performance in this process, I want to believe we got a good price and that we cleverly declined offers for useless add-ons. The reality is that we are amateurs and we were dealing with professionals. The rational part of me knows that somewhere there are customers getting better prices on this same vehicle, which causes me to hate both the car and the dealership. And thanks to the finance guy, I have to worry that my car has no magic protection. I've afraid to exhale in its general direction.

Today we will take the car back to the dealer to find out why it is leaking so badly. It might be water from the AC, but it's a non-stop stream. I just hope we don't run into the finance guy at the dealership. I don't want to hear how the magic protection would have stopped this leak.
 
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+9 Rank Up Rank Down
Aug 21, 2012
"I don't understand why car dealers still negotiate this way. "

Simple: Because they employ car salesmen.

Car salesmen live for one thing only - telling all the other salesmen how badly they screwed the last customer.

They're scum, don't play their game. The best way to get a good price is to say "this is bull" and walk out at the very first sign of 'salesmanship'. Really walk out. Leave them standing there.

Remember: They keep you sitting around the office on purpose so you get bored/tired/frustrated/ready to sign. If they start with that stuff then walk out.

Never, EVER buy the same day. No matter what their offer, get it in writing then walk out of the dealership and sit on it for a couple of days before deciding. They'll be on the phone with better offers, guaranteed.
 
 
-5 Rank Up Rank Down
Aug 21, 2012
Dealing, the thing we lost habit a few century ago. Generally speaking they might be professional but you still can get the bigger side of the stick. They aren't the only fish in the sea and they know it. As long as you remember that you are good. You can even go and negotiate for the same car at two different place. That will give you a general idea where the line is for the right price.

As for all these stupid warranty, if thing got too big, ask frankly if their car is so bad that it's going to breakdown the second you are out of their yard. They'll suddently panick as you could decide to not sign. Why would you buy a bad car in the first place?

And American car tend to be the worse in both liability and fair price. Not always, they just tend to do so. Let say you should never buy an American car just because it's an American car. If it's the best, well great, but you better check with Honda, Toyota, Hyunday if you are after a good price for a decent car. I'm pretty sure a lot of customer in North America got very bad deal because they are too pride to go and shop a bit out for Asian's car. Not giving them a chance block a lot of your option, and less option you have, more power the salesman gain on you.
 
 
+12 Rank Up Rank Down
Aug 21, 2012
The first time a salesman told me what bid to submit, then rejected it, I walked out and went straight to Carmax, even though the closest one was in the next state. You look at the price tag, decide if you're willing to pay, and pay it. That's so much more psychologically satisfying than this adversarial process of !$%*!$%*!$% yourself.

You're totally rich, Scott. Why bother negotiating at all?
 
 
Aug 20, 2012
p.p.p.s. One of the ways to avoid the "mistaken paperwork" ploy (which is unethical - if this happens to you, you have every right to walk out of the dealership and report them to the BBB) is to always negotiate for an out-the-door, all-inclusive price. They hate to do this, because they can't fudge any of the numbers - the number at the bottom is all that matters.

It also keeps them from "nibbling," which is coming back and saying something like, "Oh, the number we gave you didn't include tax, license fee, dealer prep and our we-feel-like-we'd-like-more-money-out-of-you fee." You can always nibble yourself; for example, after agreeing on the price, you can then ask for freebies. For instance, you can say, "Of course, you include free scheduled maintenance during the warranty period, don't you? Oh, you don't? BMW does. I guess I should look there before deciding."

Ethical? Borderline, but you can rationalize that it's payback. Nibbling can be fun - "You know, I really like that $300 auto logo designer jacket and ball cap. How about throwing that in?" Hee, hee.
 
 
Aug 20, 2012
p.p.s. One more thing I just recalled. Once, many years ago, I was negotiating a used car buy at a dealership for a girlfriend of mine. I asked if they warranted the car. The salesperson said no. I then asked why not - was the car in bad condition? He said no, the car was in perfect condition. Then why, I asked, didn't they offer a warranty?

His reply: "Because we don't know how you drive." Honestly, that's what he said. So I replied, "If I bought one of your new cars, would it come with a warranty?" He said that it would. I said, "Why? You still don't know how I drive."

Deer in the headlights best described his look. I told him he needed to come up with a better excuse than the one he'd been using, because it didn't make any sense. He smiled, nodded and left the office. He never came back.
 
 
+18 Rank Up Rank Down
Aug 20, 2012
Some cultures go through these types of transactions on *every* purchase. Despite this BS, I'm glad I live in America.
 
 
+10 Rank Up Rank Down
Aug 20, 2012
The first time they ran the "mistake paperwork" on me was when I bought my first car. I found the mistake only because I was so nervous, I actually read through every line. It was actually lucky it happened with my first car buying experience, because now I always check -- and I've found "mistakes" during two other car buying experiences.

I've only had one good experience going the "email me your best price" route, and that was about 10 years ago. Now it seems all car dealerships run the same scam -- quote you a great price to get you in the door, then tell you unfortunately that price only qualified for one car and wouldn't you know it, that car was just sold a few minutes ago, but we have this car that is similar, only so much better, and only costs a little more...
 
 
Aug 20, 2012
@tinyhands

You're correct - don't worry about the true price of the car; just discover what the best price is you can fetch.
 
 
Aug 20, 2012
@sortova

Focusing on "dealer invoice" and MSRP is exactly what the dealers want you to do. They know the average guy just wants to boast about his superior haggling skills by bragging about what he paid vs. invoice or MSRP, so they'll just shift their profit from the top line down somewhere lower on the bill, such as with warranties, magic coating, and other sucker add-on fees. Best to know what it costs to drive it off the lot, quoted to the penny, and let them worry about the accounting.

When I employed the Fighting Chance approach, it was hilarious when one dealer tried to convince me that I should buy it from him because the discount he was offering off dealer invoice was bigger than anyone else's, even though his bottom line price was higher than several other quotes.
 
 
Aug 20, 2012
I think you're only setting yourself up for disappointment if you try to determine going in what the "true" price of the car is. The dealer may not know it either but his goal is to get you to pay as much as possible, regardless of the true cost. Most people think their goal is to pay as little as possible, regardless of the true cost. If you go in with what the car is worth to you, which actually has no relation to the true cost, then you'll be ok. It's hard to give up the "game" but playing it only leaves the players bitter, as the other comment here attest.

It's kind of like negotiating for a salary. The worst thing in the world, for your mental health, is knowing what other people make.
 
 
+3 Rank Up Rank Down
Aug 20, 2012
The easiest car buying experience I ever had was helped by a friend of mine who bought a lot of fleet vehicles. He put me in touch the the commercial salesman. I told that guy exactly what I was looking for and he sent over a couple of invoices and told me "$150 over invoice" and he also offered to handle the financing at a rate lower than my bank was offering.

I picked out the vehicle I wanted, went over, signed some papers and drove it off the lot. No car wash. No box of chocolates. No hassle.

While I know the dealership gets money above and beyond invoice, the difference wasn't worth the additional time I would have to spend. I'll always approach the commercial salesman in the future.
 
 
Aug 20, 2012
what is that?

"personal r.e.a.s.o.n.s" in my post tripped the profanity filter?? sigh.
 
 
Aug 20, 2012
This is why I refuse to buy a "NEW" car.

I'm a car enthusiast, and I'm usually the "go-to" car guy who all my friends call up when they need a new car.
I come with them, help them evaluate the cars and point out things they need to know etc.
I also always try to dissuade them from buying at dealerships, or - heaven forbid - USED CAR dealers.

Many people who buy "new" cars, do so with the argument that they get more choices and such.
Not true. You buy one of the pre-configured choices someone else made and put on a lot.
The only way i'd buy a "new" car is if i could do it the same way we buy cars in Germany.
I pick out the EXACT color, specs, down to the thread of the stitching on my seats. Then put in an order, and get it 5 months later. - That would never fly with the "instant gratification" American attitude.

Oh, and new cars have fewer problems. Sure. Ever heard of the "bathtub curve" of burn-in testing?
I prefer someone else to shake out the initial lose bolts and problems (Radiator leak, Scott?)

My usual preference is to buy a 2-5 year old car from a PRIVATE party who has to sell the car due to "personal !$%*!$%*!$%*!$% Bought a Porsche, now the wife's pregnant - I gladly take that off your hands.

Until dealerships offer the same level of actual service to actually configure a car from scratch - I see no reason to work against professional negotiators who are bent on separating me from my hard earned money.
I prefer to take my risk with private parties which puts me at least at equal footing.


Oh, and let me share this anecdote: While shopping for a Mustang with my friend, i tried to dispell the myth that it's a Sports Car. The sales associate was not going to admit it has a "solid rear axle" (the same you find in your truck).
He put it on a lift to show me..... the solid rear axle. oops.
He then insisted that the electronic gadgets make it handle much better now, not all the problems they were known for in the past....
... Well, i took it out for a drive, and when I did a full 360 donut at the first u-turn he finally gave up trying to sell this turd and asked me politely to get out of the car and never come back.

oh well. fun was had!
 
 
+7 Rank Up Rank Down
Aug 20, 2012
@gerrychampoux is right. When buying a car, you need to negotiate up to and beyond the point of "aggressive" conflict. Your process went too smooth. You smartly declined on some pitfalls and were partly prepared, but you still left money on the table. They were steering the negotiation, not you.

I suck at this role play myself, but my father masters it. Here's what he would have done differently:

- First, find out the true value of the car. If you can't find it reliably on the web, find a car expert, everyone has one in the family. Without that valuation, you're negotiating without direction.

- Know upfront about all the add-ons, warranties and scams and use them against the dealer. Discredit the extras to lower the value, try to lower the price for not wanting them, or demand you get those for free as part of the negotation. Remember, these add-ons are low-cost, it's in their room of negotiation.

- Be aggressive in your first bid. Your first bid tells them how much you know about cars. If it is too high, they will know that subsequent bids can be negotiated down. Let them negotiate it up, rather than you negotiating it down

- As you get closer to final bidding, create the conflict, even if you're close to your desired price. Threaten to leave or actually leave, creating the impression that the sale is off and that you will never return. If they bite, you will have your price. If they let you leave...come back 2 days later and accept the prize. This last part is what few people can do. It requires you to be shameless. It requires you to be like them.

All in all, realize that they have multiple layers of margin. They will let you peel off one or two to give you the idea that you're "killing them". Most people give up at that point. In reality, that's where the negotiation begins.
 
 
Aug 20, 2012
p.s. Yes, I read Scott's comment about networking dealers. That's why you end up saying you're going to a different manufacturer. Sure, they're networked; but guess what? They still want to beat their competitors.
 
 
Aug 20, 2012
What a great article!

My background is in sales, but in a different type. Quick sales primer: there are four types of sales. Think of a four-square grid. Label the area above the top two squares with the letters "T" and "I". Label the vertical left-hand squares with the letters "I" and "G". Then, combine the intersecting letters into the four squares. You will have the following four combinations: "TI," "TG," "II" and "IG."

Now, to break the code. The letters T and I stand for Tangible and Intangible. The letters I and G stand for Individual and Group.

So you now have representations of the four types of sales: Tangible to an Individual; Tangible to a Group; Intangible to an Individual, and Intangible to a Group. I won't bore you with the other three types (I hear sighs of relief); I'll just concentrate on the type Scott experienced.

What Scott was experiencing was the first of these types of sales, the Tangible to an Individual. I know that the sale was to both Scott and S h e l l y (yes, I remembered that the bad-word detector thinks Scott's wife's name is a bad word), but they were functioning as an individual. They needed something tangible; that is, the purpose they needed to be filled was directly related to what they were buying.

The "TI" sale is probably 80% of all sales. Whenever you buy something for the exact purpose you need it, you're engaging in this kind of sales, whether you realize it or not. This kind of sales is what gives people a bad taste in their mouth for salespeople, because they use sales tactics as those described by Scott.

The worst part of the experience is related to the discount. As Scott said, discounts never make people happy. They start off upset because they know the price they're first being offered is purposely too high; the second reason is that no matter how much of a discount they get, they'll walk away (as Scott did) thinking that other people got a better discount than they did.

I don't understand why car dealers still negotiate this way. It makes no one happy, and it just wastes huge amounts of time. The art of negotiation (at least in the US) is generally an attempt to get a win-win situation where both parties have their needs met. This is never the case with a car buying experience. They use every trick in the book: nibbling; something for nothing; upselling, etc.

Don't go through what Scott did. Here's how to buy a car: find all the dealers in your area who carry the type of car you want to buy. Go on the manufacturer's web site to pick all the options you want; most web sites will then cost the car out at list price.

Pick a really low number. Send emails to all the dealers' general managers with a low-ball offer, say 70% of the list price. When they email back your offer, keep resending the emails, reminding the dealers that they won't have to pay salesperson's commissions if they sell directly from the owner to you. Play one of them off against the other; this puts the shoe on the other foot. They're no longer negotiating against you - they're now negotiating against each other.

End the negotiations by telling all the dealers that you have been unable to reach a reasonable price with any of them, and that you're going to look at a different manufacturer's models because they have been unreasonable on price. Thank them for their time, and then walk away. Unless you walk away from a negotiation like this, you'll never get the best price.

All sales are not like the TI sale. Not all salespeople are as concerned with beating the customer into submission as is the car dealer. I think the Saturn model was much better: here's the price; compare with comparable models, and if you like it, buy it. Ta da.

Less is more when it comes to car sales. Don't play their game, and you'll get a better deal with a lot less stress.

 
 
Aug 20, 2012
I remember reading about a scam a local car dealer was pulling which involved "Sign this blank piece of paper here and then we'll put it through the printer which will print out your contract." There was some !$%*!$%* excuse why they couldn't print out the contract first before the buyer signed it.
 
 
+3 Rank Up Rank Down
Aug 20, 2012
I've found edmunds.com to be a good source of car buying info. A couple of enlightening articles are http://www.edmunds.com/car-buying/pricing-basics-for-new-car-buying.html and especially http://www.edmunds.com/car-buying/dealer-holdback/

I've found that you have to go in with a good sense of what a good price is and what you're willing to pay and to be adamant about not going along with their other snakey nonsense. You just have to accept that someone else may do better than you but that you did the best you could.
 
 
-1 Rank Up Rank Down
Aug 20, 2012
If you had bought that extended warranty, it might have covered that A/C leak.

In the future, if you act moderately interested in some of the magic coating, but balk at the price, you can usually get it for half. The $299 magic coating usually costs the dealer about $10 in materials and labor.

You made a good decision to turn down the theft protection/gps locater, because your best bet now may be to have the vehicle stolen, so someone else can deal with the bird in the engine block.
 
 
+17 Rank Up Rank Down
Aug 20, 2012
You needed financing???
 
 
 
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