buying a new car advice
Dec. 15th, 2009 11:38 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
drewkittyMy response to a person expressing surprise that they are "openly lied to" by car dealers about availability.
The specific lies ranged from "There aren't any of this kind of car in the state" when they've already test-driven one, through bogus and inflated quotes including fake Costco quotes, and the lie direct when asked if a specific make and model is in stock. "They say 'Yes! We have one left! What color do you want?'" The person's response is to actually go down to the dealership to discover, to no one's surprise but their own, that this car is not in stock. D'oh! Then they get mad. "Fuckers. I am literally angry with rage again just thinking about it!"
I replied, "The fact that you intend to leave after being lied to is IMAO proof that you have not done your homework on the car buying process as distinct from selection of vehicle, etc."
I provided links to homework on Amazon, including 1, 2 and 3. I strongly encourage anyone to read at least one, if not all three, of these books before signing any vehicle-related contract. You may save many thousands of dollars. I did.
In later feedback, the person explained, "I expect to be lied to in the same way I was lied to before, which is about whether they have the car I want. I didn't walk away in a snit, I walked away because they did not have for sale the car I wanted to buy."
I replied, "By the standards of a car dealership, bait and switch is a time honored elementary tactic. At many dealerships, a salesperson who answered honestly that a car was not in stock would be at least yelled at, if not disciplined. The telephone is nearly useless as a presales tool precisely because lying on the phone is easy and expected. I heard the same lie a number of times before I learned to stop asking.
"In fact any dealer can lay hands on any car if there is enough money in the deal. At most it takes a few days to buy from a wholesaler. Stock trades between dealers all the time, even competitors."
"The modern American car dealership is a battlefield littered with the corpses of consumers who think they know what they are doing. Most of the automotive industry still thinks that consumers like to be lied to, played with, and upsold. I will play the game to get a good enough deal, but I plan accordingly as it is an all day process full of fail. There are a number of good books on this. An unprepared consumer will be completely shafted by a dealership. You do this every few years at most; they do this every day. I will add that many unscrupulous industries use covert audio monitoring equipment during the sales process.
"Here's the bypass for those who don't have the time or negotiating skills to play hardball.
"If you know exactly what make and model of car you want, and it's not hard to get, talk to the fleet sales manager. Ignore all other salespeople. Have a preapproval (not prequalification) letter from your lender (credit union!) in hand (or cash) and be ready to buy. Typically they will charge a few hundred over dealer's invoice, which is far less than sticker. Either the fleet manager has what you want on the lot; can get it easily from another dealership; or will order it from the factory for you. Many credit unions have a car buyer service that gets you the same basic deal for a lower surcharge.
Costco members can also use this trick to great effect through a Costco program. (The person complained that they were quoted a "shitty, shitty price" ostensibly by Costco. I pointed out that Costco warns its members to only talk to the Authorized Dealer Contact and to only get prices from them, and that in my experience this price is only accessible in person, in the ADC's locked office and held in their hand for fear you might steal it, after showing a Costco card.)
"With this sometimes-exception, of course the dealer are going to lie to you, early and often, to test whether or not you know what you are doing. If you show any emotional reaction which is not feigned, you demonstrate a vulnerability which will be exploited. They are also rapidly screening (using broken and flawed criteria) for whether you are a credible buyer or a time-waster. If the latter, rude treatment which they can later deny is the fastest way to get you out of the way so they can go make some money. This can include punting qualified and educated buyers to more effectively exploit suckers, turning down a few hundred in profit to make thousands.
"I have purchased three new cars in my life and helped friends with several others. On the first, I put together a bundled deal on a "his and her" two car purchase, which caused the dealer to drool enough to forego adequate caution and push one car below cost. I signed the first contract and changed my mind on the second. Dealer lost money. Sales manager tried to unwind contract the next morning, unsuccessfully. Time in dealership: 1000 to 2300 (13 hours). It is hard to play on one of the most common cars in California, the Honda Civic.
"On the second I purchased a "loss leader" which had been advertised in the newspaper. Dealer is required by law to honor the loss leader price. I not only withstood all upsell attempts but made them install a two-touch alarm system at that price, as a specific contract provision. Time in dealership: 0900 to 2000 (11 hours). Final purchase was over $6000 below invoice, paid for out of the dealer's advertising budget. (Invoice was padded as this was a Ford, but I had a contact at the dealership look it up two years later, out of curiosity. His words: "How the hell? Oh, loss leader.")
"On the third I didn't have time to play so I polled fleet managers for the specific make and model only, no pricing, to verify availability on lot -- then picked the smallest and hungriest dealership. I also used favored supplier discount program to give the dealer some modest profit via dealer kickback, not directly out of my pocket. Time in dealership: 1500 to 1830 (3.5 hours). Purchase price was fleet price with no markup; there just isn't much margin on the cheapest pickup truck in America.
"I am not addressing one's choice of vehicle, one's budget or one's desired purchase price. I am talking about two separate transactions which the dealer conflates to confuse the buyer:
1) the price of the new car you are going to buy
2) dealer financing, which is looser but more expensive than credit unions and is often preferable to banks (who are often part of the bidding anyway)
"Notice that I left out the trade-in value, this is on purpose. A disposable vehicle can be used as a hammer on price, but a trade with any significant value should be sold any other way than taking it to a dealership.
"Sources of dealer profit include:
1) any amount paid over dealer's invoice
2) 1% to 3% of amount below dealer's invoice
3) dealer kickbacks from manufacturer programs, rebates and incentives
4) wholesale value of trade in versus credit given against purchase
5) loan origination fees
6) points on financing secured through the dealership
7) additional items sold with the vehicle (options, accessories, warranties, ad nauseum)
8) other miscellaneous fees and charges
Oh, and there's some good discussion here, which provoked this post. Another good link is here.
Perhaps I should have just linked this person to "Car Buying For Wimps" and left it at that.
The specific lies ranged from "There aren't any of this kind of car in the state" when they've already test-driven one, through bogus and inflated quotes including fake Costco quotes, and the lie direct when asked if a specific make and model is in stock. "They say 'Yes! We have one left! What color do you want?'" The person's response is to actually go down to the dealership to discover, to no one's surprise but their own, that this car is not in stock. D'oh! Then they get mad. "Fuckers. I am literally angry with rage again just thinking about it!"
I replied, "The fact that you intend to leave after being lied to is IMAO proof that you have not done your homework on the car buying process as distinct from selection of vehicle, etc."
I provided links to homework on Amazon, including 1, 2 and 3. I strongly encourage anyone to read at least one, if not all three, of these books before signing any vehicle-related contract. You may save many thousands of dollars. I did.
In later feedback, the person explained, "I expect to be lied to in the same way I was lied to before, which is about whether they have the car I want. I didn't walk away in a snit, I walked away because they did not have for sale the car I wanted to buy."
I replied, "By the standards of a car dealership, bait and switch is a time honored elementary tactic. At many dealerships, a salesperson who answered honestly that a car was not in stock would be at least yelled at, if not disciplined. The telephone is nearly useless as a presales tool precisely because lying on the phone is easy and expected. I heard the same lie a number of times before I learned to stop asking.
"In fact any dealer can lay hands on any car if there is enough money in the deal. At most it takes a few days to buy from a wholesaler. Stock trades between dealers all the time, even competitors."
"The modern American car dealership is a battlefield littered with the corpses of consumers who think they know what they are doing. Most of the automotive industry still thinks that consumers like to be lied to, played with, and upsold. I will play the game to get a good enough deal, but I plan accordingly as it is an all day process full of fail. There are a number of good books on this. An unprepared consumer will be completely shafted by a dealership. You do this every few years at most; they do this every day. I will add that many unscrupulous industries use covert audio monitoring equipment during the sales process.
"Here's the bypass for those who don't have the time or negotiating skills to play hardball.
"If you know exactly what make and model of car you want, and it's not hard to get, talk to the fleet sales manager. Ignore all other salespeople. Have a preapproval (not prequalification) letter from your lender (credit union!) in hand (or cash) and be ready to buy. Typically they will charge a few hundred over dealer's invoice, which is far less than sticker. Either the fleet manager has what you want on the lot; can get it easily from another dealership; or will order it from the factory for you. Many credit unions have a car buyer service that gets you the same basic deal for a lower surcharge.
Costco members can also use this trick to great effect through a Costco program. (The person complained that they were quoted a "shitty, shitty price" ostensibly by Costco. I pointed out that Costco warns its members to only talk to the Authorized Dealer Contact and to only get prices from them, and that in my experience this price is only accessible in person, in the ADC's locked office and held in their hand for fear you might steal it, after showing a Costco card.)
"With this sometimes-exception, of course the dealer are going to lie to you, early and often, to test whether or not you know what you are doing. If you show any emotional reaction which is not feigned, you demonstrate a vulnerability which will be exploited. They are also rapidly screening (using broken and flawed criteria) for whether you are a credible buyer or a time-waster. If the latter, rude treatment which they can later deny is the fastest way to get you out of the way so they can go make some money. This can include punting qualified and educated buyers to more effectively exploit suckers, turning down a few hundred in profit to make thousands.
"I have purchased three new cars in my life and helped friends with several others. On the first, I put together a bundled deal on a "his and her" two car purchase, which caused the dealer to drool enough to forego adequate caution and push one car below cost. I signed the first contract and changed my mind on the second. Dealer lost money. Sales manager tried to unwind contract the next morning, unsuccessfully. Time in dealership: 1000 to 2300 (13 hours). It is hard to play on one of the most common cars in California, the Honda Civic.
"On the second I purchased a "loss leader" which had been advertised in the newspaper. Dealer is required by law to honor the loss leader price. I not only withstood all upsell attempts but made them install a two-touch alarm system at that price, as a specific contract provision. Time in dealership: 0900 to 2000 (11 hours). Final purchase was over $6000 below invoice, paid for out of the dealer's advertising budget. (Invoice was padded as this was a Ford, but I had a contact at the dealership look it up two years later, out of curiosity. His words: "How the hell? Oh, loss leader.")
"On the third I didn't have time to play so I polled fleet managers for the specific make and model only, no pricing, to verify availability on lot -- then picked the smallest and hungriest dealership. I also used favored supplier discount program to give the dealer some modest profit via dealer kickback, not directly out of my pocket. Time in dealership: 1500 to 1830 (3.5 hours). Purchase price was fleet price with no markup; there just isn't much margin on the cheapest pickup truck in America.
"I am not addressing one's choice of vehicle, one's budget or one's desired purchase price. I am talking about two separate transactions which the dealer conflates to confuse the buyer:
1) the price of the new car you are going to buy
2) dealer financing, which is looser but more expensive than credit unions and is often preferable to banks (who are often part of the bidding anyway)
"Notice that I left out the trade-in value, this is on purpose. A disposable vehicle can be used as a hammer on price, but a trade with any significant value should be sold any other way than taking it to a dealership.
"Sources of dealer profit include:
1) any amount paid over dealer's invoice
2) 1% to 3% of amount below dealer's invoice
3) dealer kickbacks from manufacturer programs, rebates and incentives
4) wholesale value of trade in versus credit given against purchase
5) loan origination fees
6) points on financing secured through the dealership
7) additional items sold with the vehicle (options, accessories, warranties, ad nauseum)
8) other miscellaneous fees and charges
Oh, and there's some good discussion here, which provoked this post. Another good link is here.
Perhaps I should have just linked this person to "Car Buying For Wimps" and left it at that.
