Negotiating on cars

[kaisen]

Do you enjoy negotiating on cars? When you buy? When you sell?

Or rather, do you negotiate at all?

Twenty or fifty years ago, sellers started artifically high, buyers started unrealisitically low, and after a period of negotiation, they agreed somewhere in the middle. You never really knew whether you got a great deal, but since both parties gave a little, it seemed relatively fair. If it didn't, the parties walked away from the table and hoped they'd find a better deal elsewhere.

Does it still work that way today?

I say no, it doesn't. As a seller, I do not negotiate. I do my research, price things fairly, and that's that.

What do you think?

[cantdrv55]

I'm in the market for a new car right now and I fully expect to negotiate. I'll base my desired price on consumer reports and Edmunds minus 10% to start with. I don't know any other way. Some dealers will start and end at MSRP depending on the car. Most will have their own lower price sticker right next to MSRP to show they're giving a discount but they rarely stick to that, IMO.

[masraum]

If I'm trying to sell something like a car or items at a yard sale, I usually price up to allow folks to haggle down. People seem much more likely to buy if they can talk you down. I've had folks at yard sales want to haggle on stuff the was marked $.10.

When I'm buying I car, I don't want to haggle. I assume that I'll need to, but I don't put much time or energy into it. If it's going to require lots of time and back and forth then I'm out.

What I really prefer is someone who is asking what I think is a fair price up front.

Some folks live for the haggle. I've known a few.

[kaisen]

@CD55. So if the dealer had the new vehicle you were interested in priced at what you realistically planned to pay anyway, but wouldn't negotiate, you wouldn't buy it?

[stomachmonkey]

I think the majority of people assume that certain items, like cars, have built in wiggle room.

In some cultures it's considered an insult if you don't haggle.

THere's also the perceived value, it you price ant X and sell for X-Y then people fell they got more than what they paid for, makes them feel good, provides an ego boost.

[cbush]

The key is perception of a fair price. And from the threads I have read here, there is a pretty big gap between what customers expect to pay- wholsale price, and what dealers ask- retail price. Unless the dealer can demonstrate the value difference, I don't see how the customer is going to be satisfied. At least if they negotiate some is helps with the perception.

Big difference between new and used cars of course. I could not get the dealer to negotiate, so I found a buying service that gave me a price a little over invoice, and I perceived that I got a good deal and bought the car.

If I asked you to find me a used car, and you found me a very nice one in the right price range, I would trust you since you seem very reasonable in your posts. With a local dealer--I would not trust them on a used car.

I think if you said- this is what I paid for the car, this is my markup, and thus I can sell the car for this, you would make the customer feel like they were in control. I don't begrudge a dealer on a profit, I just have a perception from years of experience, that used car salesman are trying to take me for all I've got, and laugh behind my back when I leave.

[rnln]

I hate to negotiate but I have to. Not sure how it is and where you are, but that is the reality here in CA. When I sell, I will post a little higher to have room for people to bring down a little, if I know the fair price. When I buy, of course I have to negotiate because most people are doing the same.

[cairns]

When I buy new I spec the car I want and send that to local dealers asking for their price. Works great. You'll get a few who won't play ball (frequently calling back after you've already bought the car) but I've gotten excellent prices and don't even have to leave the house. The last car was delivered on a flatbed and the paperwork was done in our kitchen.

The last used car I bought was priced very fairly (the Seller was leaving the country) and I didn't really have to negotiate- I was afraid somebody else would get it first. I had the seller do a PPI for me at a place I picked, I flew to Texas to look at the car with the check in hand and drove home.

I would never walk in a dealership and let them put me at their mercy- haggling over a price, hear them say they're going back to their manager, sending you to the F&I guy etc. All BS. Went through it when I was young and naive, now I know better. If they want your business they will come to you- and they do.

[Seahawk]

Interesting question. I don't mind haggling at all but in today's world it is so much easier to get the data, collate it and come up with a fair value range I'm comfortable paying.

Like much of life, the purchase price is only the threshold price...

The hard part is fair disclosure on the sellers part, that is were the haggling starts

[Jandrews]

I HATE haggling, both buying and selling. When buying, I would MUCH rather find the car I really want at a "fair" price, and just write the check. However, it seems that just about everyone selling (at least the cars I am looking at), has them marked up anywhere between 10-20%. I.e. a "true" $40K car is advertised for ~$47K.....a "true" $50K car is advertised for $59.9K, etc... This means that I HAVE to be prepared to haggle. This is also why finding Kaisen has been SO educational and helpful for me. I have not pulled the trigger yet on a car, but he really helped me understand what "fair" means. He indicated that some cars were probably truly going to cost me MORE than I expected or wanted to pay, and also indicated multiple times that certain cars were grossly over-priced. This is very helpful "behind the scenes" information, on cars that vary GREATLY in price.

All that said, the big variable/concern for me is similar to what Seahawk was talking about, i.e. Seller's disclosure. Or worse, something generally "unknown" in the condition. I drive Kaisen crazy with this, constantly drilling into "condition" and mileage.

And then when I sell, I simply put a VERY fair price on my items, and they invariably sell SUPER-QUICKLY. I sometimes wonder if I am giving my stuff away, but I don't waste a lot of cycles second-guessing it, and my buyers always leave satified.

JA

[kaisen]

Paul, you're absolutely right about fair disclosure, which is also very relative. Some people have pretty low expectations for their cars, others are realistic, and still others expect a ten year old car to be perfect and will be truly upset when it is not.

As sellers, all of those people will disclose or describe based on their personal expectations. Someone will say a car is nice and you get there and, in your view, it's trashed. Others paint a bleak picture and you get there and wonder what the heck they're talking about.

[Oracle]

If you don't get at least a "no" then you paid too much or your asking price was too low...
Always negotiate..

My wife got annoyed that I negotiated with some local guys in Cabo Sanlucas for some crafts.. In my head they could've said no so it was a win-win, they sold me some items and I got a better deal!

[kaisen]

Originally Posted by Jandrews

.....when I sell, I simply put a VERY fair price on my items, and they invariably sell SUPER-QUICKLY. I sometimes wonder if I am giving my stuff away, but I don't waste a lot of cycles second-guessing it, and my buyers always leave satified.

^^This is my philosophy^^

A little about my business, and why I do business ^^this way^^

I only 'sell' about a hundred cars a year through my little shop. That is, vehicles that I bought to resell, not bought on someone's behalf. I will usually purchase less expensive vehicles when nice ones come up, as they are impossible to buy 'on demand'. It doesn't cost me much to have them around, unlike a three year old GT3. But if a previous client needs a car for their college kid, I usually have a good one.

When it is time to sell them, I research the market, and put them on the money. I do not negotiate. They usually sell within a week, usually to the first person that comes out. Now these aren't typically people who already know, like, or trust me. These are people who found the car on Craigslist. I'm very thorough in my description and disclosure. Why not? I don't have to present a perfect car, just one that is priced accordingly. I make investments to make sure they're mechanically sound, about $600 on average. I'm only open to the public two hours a week (Fridays from 12-2, posted on my door). The rest is by appointment. I'm very selective when setting appointments, and dissuade people if it doesn't sound like the right fit. So no one comes around just to kick tires.

After a couple decades studying the market mechanisms, I do not negotiate.

First, times have changed. The average used car buyer does research online before stepping foot out their door. With sooooo many vehicles to choose from, most sort by price. If you aren't in the ballpark, maybe even on the first page, you'll never get the opportunity to negotiate. So the 'start high' strategy simply doesn't work.

Second, time is money. For me, as a business, I look at cash flow and turn time. If I can make $800 selling a $3000 car and it takes me 10 days total, that's $2400 profit each month on a $2200 investment as I turned my money three times. If I tried to hold out for $3200, but it took me 15 days, I'd only make $2000 turning my money twice. So what seems like more money really isn't.

Third, time is money. If I sell a car to the first person that comes out, that's a lot less work. Showing a car three or four times to sell it wastes a lot more of my time. I'd rather spend time preparing a car for sale than showing, negotiating, or making excuses for why something's not right and fixing it for the next showing. Most of my time is spent buying the right car in the first place.

Fourth, happy customers are great advertising. I spend next to nothing on advertising. But in the industry, advertising is a huge expense. When I ran large franschised dealers, my ad budget was as much as $60,000 a month. So we figured that each unique new visitor cost us $200 just to walk through the door. Closing one out of four opportunities (industry avg) meant that it cost $800 to sell a non-repeat, non-referral customer. So retaining them was the key. And their referrals were gold. At least that's how I see it.

So, negotiating plays a large role in how happy people are with their purchase. In several studies, negotiating was the least liked component of the car buying process. By far. So eliminating it allows people to avoid the conflict. Statistically, they are twice as likely to return.

Non-negotiating dealerships have healthier bottom lines. As a negotiating customer, that may be all the evidence you need to avoid them. But you'd be wrong. Their gross profit per car is less, but they spend less on advertising, turn cars faster, and have happier customers that return for service and future purchases. For those of you who live in the Mpls area, I helped Morries and Walser transition from negotiating stores to one-price stores. All thirty stores are more profitable and sell more cars. Some stores went from #3 to #1 in their franchised brand within the region. I also managed Tousley Ford which hasn't negotiated since 1992, also the #1 Ford dealer in region. I also ran stores for Rydell (there are some in California too) and Grossman, pioneers in non-negotiating stores. I've also run some big negotiating dealerships, and I can tell you that both work.

But I think the future is non-negotiation. Even for private parties selling their own cars.

I'm interested to hear what you all think.

[rcecale]

I actually enjoy haggling a little...even if the price asked ends up being the price paid (either as the buyer OR the seller).

My issue, when buying, is having to deal with "the middleman". We work out something and he/she says, "Okay, lemme go run that by the boss." Understand it's the way things are done (for the most part), but, what the heck...[I'm "the boss" on MY side of the table, why won't the other side seat their boss at the table? It's MY money for crying out loud!

Randy

[VincentVega]

That sounds exactly like the way I prefer to do business. Problem I see is most sellers dont price their car reasonably. Thankfully when I'm car shopping, like right now, I can be patient and wait for the right deal. Checking Craigslist and ebay gives a pretty good idea of market prices, it's pretty simple today.

On the other hand, I am known to buy a few toys once in a while. If it's something I dont need but like I'll try to knock down the price. If I dont get it no big deal, I find something else.

Eric,
Do you keep your inventory on line?

[kaisen]

Originally Posted by Mark Wilson

Eric,
Do you keep your inventory on line?

I used to! And I likely will again. I'm having my website rebuilt with a different host. My old site took a day to upload inventory and make live. By then the car was already live on other sites (Craigslist is instant), and sometimes already sold. Then it would take another day to remove, and I'd still get calls. So I just stopped. No one visits my website directly anyway, they see the cars on listing sites. My new website is much more about the buying services as people have a lot of the same questions and it might be best to point them there.

Again, although I've got all the licenses, I'm not really a retail dealer in the conventional sense. You could drive by my place and never know we're a dealer, and that's okay with me. It's a nice office warehouse, everything is inside, and the only sign is on the door. No salespeople, dancing air clowns, lights, or streamers, sadly

Right now I have 11 cars in inventory, only two are ready for sale, the rest are getting the mechanicals sorted. That's pretty typical. By the time the two sell, two more will be done, and it keeps rotating like that. I only sell a car or two a week. Quite exciting huh?

Sounds like you have put together a nice program. I typically don't mind the haggling process, but don't like the feeling of being slimed and asked the inane series of questions that some salespeops go through. Do you do specific searches for cars that a customer may request?

[McLovin]

lol, well played.

[Christien]

At our dealership, we add $1000 to pretty much every car for negotiations. I don't think I've ever sold a car at full ask, unless it's been a sub-prime finance deal, where they don't have the leverage to negotiate. Every single person that comes in wants a deal, and expects that there's lots of profit margin to haggle down. I know how much I have to put in my pocket for each sale, and it's not much, and I'm not willing to cut into that. Unfortunately, at least 50% of the people who come in are completely unreasonable with regard to price, and expect me to sell them a car at cost.