Sunday, February 27, 2011

Buying a new car in 2011.

Buying a car has changed since my wife and I bought our last new car ten years ago. I'd like to pass on the tips we learned along the way. These may be something you already know but maybe you don't so here goes.

My plan was to Evaluate->Price->Understand Finance and Incentives ->pull the trigger

1. Stay out of the dealership. 

Car dealers only want you in the dealership to put the full court press on you. They know that most people are intimidated with face to face negotiations. They will do everything in their power TO GET YOU IN THE DEALERSHIP.

Now there are valid reasons for going to the dealership since they have the actual cars and so you need to plan a dealership visit like you left your wedding ring in an occupied bear cave.

First, there should be two reasons to visit a dealership: Test drives and to drive a car home.

Your test drive needs to be planned and pre-arranged. Do not just wander into a dealership without a plan. That's what we did for the first two visits that ended badly. Also, dictate the terms of your test drive up front. Tell them you plan to drive on a variety of road conditions including highway. If they refuse, they are off your  list and move on.

If it's been a while since your last new car purchase or this is your first one, I would pick a practice dealership first as reconnaissance. Pick a "dark horse" brand and "geographically undesirable" dealership for your first visit. If there are two dealerships in your area and one is a little further away, start there.

Finally, don't be afraid to walk out. There is nothing funnier that a car salesman frantically looking for you in the parking lot.(Also, don't show them your present car in the lot. It's none of their freakin' business and it makes the whole "where the hell are they" experience that much more fun).

Remember: The dealers are sharks and you have a shark cage: your home. Do not leave the shark cage unless you have to.

2. Get informed. 
Consumer Reports was the best $40 I spent for this adventure. They have everything from videos and head to head model comparisons to blueprints for how to make your purchase. They also have a build and bid function that I'll get to later. Study the functions and feature of each make and model. In the end, we had several makes we would have been equally happy with and CR helped us understand the differences of each.

I also found truecar of value.  Edmunds was good too.

Part of this is to plan ahead as well. Target the final negotiations for months end. 

3. Start chumming.
The internet has revolutionized the car sales business. Use it to price your car.

I had a two forked approach: email local dealers and use a service to put out bids. If you email local dealers, send them a specific list of options, features and at least two colors. Ask for a price on specific vehicle and not a generic internet price. Ask them to disclose any and all fees in their response. Tell them that any post production options such as pin striping, mud flaps, trunk liners and other expensive BS is not part of the deal up front. Tell them that if it is already on the car, it's at dealer expense and do not include in the price.  

Most are going to ignore everything in your email and send a canned response luring you into the dealership. DO NOT ENTER THE CAVE. Politely request an answer to everything you asked and if they ignore you again, scratch 'em off the list.

Here was a typical response to my request for a price on specific car and all disclosures:
My request:
Thanks for taking the time to meet with us on Monday.

We've now driven all the vehicles and are requesting quotes from dealerships for the following:

Your Requested Vehicle

2011 Hyundai Tucson AWD 4dr Auto Limited
Your vehicle
Exterior:Cotton White
Interior: Black
Options:· PREMIUM PKG 3 (03)
MSRP as configured:$30,340
Invoice as configured: $29,004
None Selected

Please provide a quote for a specific vehicle on your lot or obtainable through a dealer trade.

Please explain any terms for the pricing such as "Internet Cash Price" etc

Please disclose any additional fees your dealership typically charges such as documentation fees, advertising fees, tire fees, etc

Please do included any non-requested post production options such as window etching, pin striping and mudflaps. We are not interest in them and if these are already on the car, they are at dealer expense.

And their response:
We will gladly work with you at our invoice price on any in stock vehicle.
Please let me know when you can come in.
Thanks in advance,

And...... We are done.

I responded that unless he could follow my request, we were done. I never heard back.

It's like asking a question and getting a non-sense answer.

The other way to start negotiating with dealerships is through a service like Consumer Reports. They have a "build and buy" button right on the price tab of their web page if you are a member. This allows your to enter your make and model, add your options and then send bids off to "local dealers". These "local dealers" turned out to be in PA (20 miles away) but that ended up being a good. thing.

American Express, AAA and other vendors have a similar service. Use it to get started and then follow up as you did with the local dealers. Email them the same form letter and ask the same questions after the service responses roll in.

I found all the overall responses fell into three categories:

1. Total BS. They will tell you why they are different and why they are the best dealership ever but they never give you ANY kind of price. One sent me this BS about a "value package":

   *Full tank of gas at delivery
      *Full detail at delivery
      *Shuttle service (8 mile radius)
      *Loaners w/ scheduled service appointment
      *Express service/19 point inspection/$21.99 w/ scheduled appointment
      *Referral Program $100
      *Over 800 vehicles to choose from - new and used

Total XXXX Honda Advantage Package Value: $1500.00

This alone is blog gold. How this is "valued" at $1500 is way beyond me. Are they charging YOU $2 a vehicle for every vehicle on their lot?  Or, let's say gas cost $40 a tank. $1500 buys 37 FREAKIN TANKS.  This leads me to my value axiom:

If a dealership uses the word "value" to describe any package, feature or function, they have their hand in your pants. 

This particular dealership won my "saying a lot without saying anything of value" award. The send me emails EVERYDAY telling me how great they are and never gave me an actual price.

2. Dealers that give you prices, but you are not sure exactly what it's price of.

These dealers give you their "Internet Cash Price" or the "Internet Manager's Special tmp Cash price" what ever that is. I'm not buying Internet, I'm buying a car. Make sure you have them define terms.

3. Dealers that give you what you asked for.
Out of the 15 dealerships across 4 makes I interacted with, exactly two did what I asked. 2. Luckily they were the same make.

One last tip for dealing with dealers over the Internet exclusively: Stiff arm them at the telephone. Give your home number and not your cell or work number. Screen your home calls. This worked well for us since neither of us are home and the kids avoid the home phone like they are superman and it is kryptonite. 

4. Close the deal over the Internet
Do all price comparisons over the internet and make sure you have at least two dealers in the final price negotiations. Don't be afraid to go out of state. We found that Toyota dealers were aligned regionally with NJ aligned with NY and CO and PA was aligned with MD and DE. PA Dealerships were offering 0.0% financing and NJ wasn't. This ended up being the differentiator for us.

Don't be afraid to switch to the phone and text in the final negotiations. I finished our deal while attending a Temple University visit with my wife and youngest son via text.

Be patient at this point too. We almost jumped the night before the final deal on what we thought was a good deal but waiting saved another $1000.

And that's it.

my final tip "Don't be drunk". You know who you are.

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