A thread (name inspired by @Naval)
1. Start online. Research the car you want.
Edmunds, Cargurus, TrueCar, etc. There is a never-ending amount of information available online.
Most customers come into the dealership knowing more about a specific car than the salespeople do.
Chances are you will quickly find the car you're looking for at many dealerships with a quick, online search.
Dealers try to be on every listing site. FOMO is real!
If you don't, you should probably stop reading this thread as you won't have any leverage to negotiate :)
If you plan on trading in a vehicle to the dealership, don't forget to research your own car as well!
Trade-ins are one of the biggest moneymakers for dealerships.
You can get a real online offer within 5 minutes from websites such as Carvana and Carmax.
2. Get smart. Leverage online tools for the following:
Cargurus > Local Market Prices Carvana/Carmax > National Market Prices Kelly Blue Book > Suggested Retail Value Your friend the local dealer > Anecdotal insight Combine these data points. Voila, you're progressing.
3. Build up negotiating leverage. You can and should get creative here:
Product quality: Does the car have a blemish on the Carfax?
Redundancy: Does the dealer carry multiple units of this type of car?
Aged unit: Has the dealer had this car for over 90 days?
Double-dip: Do you have a sweet trade-in that the dealer can retail?
Speed: Can you make the purchase in the next 24 hrs?
Relationship: Do you know someone who works at the dealership in management?
Spiffs: Is it the end of the month/quarter? (franchise dealers typically get spiffs from the OEMs for hitting volume targets) And the holy grail of leverage... BATNA.
Best Alternative To a Negotiated Agreement.
Essentially, is there another car in the local market that is comparable and similarly priced to the one you're looking at?
If used correctly, this is the ultimate leverage.
Now, you're ready to make the offer. The fun part!
The cardinal rule: Always, always, always make an "all-in" offer based on your budget.
Meaning, offer a flat, out-the-door price for the entire deal (including tax, tags, and fees).
Why do this? A couple of reasons:
- Forcing function: The dealer will fight hard to figure out how they can discount the deal.
- Optics: General Managers and General Sales Managers - who report to ownership - may prefer to reduce fees or ancillary product margin before reducing the price of a vehicle.