In December 2001, we were expecting our first child to arrive in March, so we decided that the time had come to upgrade our old 2-door Daihatsu Charade into something more family friendly. We ultimately ended up buying a 5 door Renault Scenic. It was our first significant car purchase. This page contains some information that we gained in the process. References to Always, and each time etc are all derived from our one experience of buying a car from a dealer. They're just hyperbole included under poetic licence.
Unfortunately I didn't write this page up early enough! Now I've forgotten
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Thanks for hanging in there through that, now the meat in the sandwich.
Don't buy on impulse
One of the dealers we went to picked us for noobs (newbies) almost instantly and started pressuring us. They said most people make a car buying decision in 3 days. This is utter rubbish. A few weeks after they told us this I saw some statistics in a newspaper on how long people take to buy cars (eerie huh?). Most people take weeks, if not months to make a decision on buying their car (that said, some friends of ours made their decision in about 10 days, which knowing these people means several weeks for the average human being). Don't take any schtick about most people making up their minds in x days. This is just another high pressure selling tactic.
This one came from George, the sports car driving sales person that we voted number 1 in the slimiest sales person award. George taught us a lot about how people are manipulated into selling cars. He was a valuable learning experience.
Research the market and be ready to do a deal.
I assume you've already researched the market and have some idea about the prices which are out there. The US sites have detailed mechanisms for telling you exactly how much to offer a dealer. I was not able to find a site with similar information for Australia. So I reverse engineered their figures a bit to come out with the following assumption: their RRP (excluding on roads) is marked up by 14% and that they are willing to accept only a 5% mark up.
This gives the following formula:
Target Price = On Roads + (RRP *105/114)
You can approximate the on roads by deducing the on road price from the RRP (however I understand that a component of the on roads is calculated by reference to the sell price of the vehicle, so this won't be exact). Equally this Target Price is just that. It might be overly ambitious, but it gives you some idea of what to expect, which is a damn sight better than total ignorance. In our case the target price given by this formula was $200 higher than the best offer we received, so it's accuracy was acceptable - certainly acceptable enough to form the basis for a dummy bid.
Don't Negotiate till you're ready to buy
As much as I was unimpressed by car sales people, don't jerk them around if you're not ready to buy. Not only is it not nice, they won't take you seriously when you are ready to buy.
Keep your cards close to your chest when you're test driving the cars. Don't tell them prices you're prepared to pay because they then know how far they can go to sell you (this is almost always nowhere near how far they're really willing to go). They can also try to push you into a different (more profitable) model. Always be vague, give broad ranges for prices.
Negotiate on the phone *DO NOT NEGOTIATE AT THEIR OFFICES*
It's very important not to go in and talk turkey with them. Do it by phone. Always. No question (I've only bought a car from a dealer once, so this "always" is always for the one time I've done it :) If you go in and talk to them to work out a price you've basically lost the battle. This is for a number of reasons - first you're on their territory, playing by their rules. Second, there's usually a number of people who are talking to you who can work you from different angles. Third, they can "need to pop out" into another room when they want to make you stew, or bring someone in to (again) work you. Fourth, if you're in their room you don't have the same opportunity to test their price in the market - they're there with you pressuring you to buy, and your access to a phone is restricted (if you've a strong enough character you could take your mobile and call their competitors from their office! :-) Finally, these people are professional sales people. They have black belts in making people buy cars. If you are within their physical reach they can exert a lot of pressure on you.
On the phone they don't have any of these tricks at their disposal.
They can't leave the room, they have to talk to you, they're less able
to play dramatic games and they're less able to effectively use emotional
ploys ("hey, ur breaking my balls here, I can't feed my children").
BTW - let them decide if they can feed their children. If they can't,
they won't sell you the car. It's simple. They can't pass you from
one person to another etc. etc. Phone is best. On the phone
you can also sit back and have a think about it, look at your finances,
agonise over it with friends and family. Why pass up that opportunity?
Bargain Hard and play them off against each another.
If they don't want to deal with you over the phone tell them another price that you've received (give them a price o/wise they'll stare you down, so to speak), and see if they'll match it. Eyeball the bustards and make them blink. Make up the other offer if you like. In my case I rang up to get a price, and the dealer skillfully arranged me into coming in to talk it over with them. I got off the phone and thought - "Hey! just a sec." I called him back and said we'd been offered x and he could match it or lose the sale. At one point he said a certain price was it and that was the absolute best price he could do. At the time I quizzed him a fair bit and he was adamant (this was when I got him to unbundle the price of the extended warranty - see below). No way he could go a cent further. In the end he did $600 better than that price and threw in a few extras. We had an offer on the table from another dealer for $800 better than this other fellow's best price. We probably could have pushed him there but decided we wanted a relationship with them so didn't push too hard. I don't know why though - I'm too much of a softie maybe?
Talk to a couple of different ones to get a feel for where they're willing to go. Identify one or two as non-starters and use them as a sounding board for how far to go with your other dealers (who knows, maybe they might be able to go the furthest?). For example, if your preferred dealer has gone to a certain price ($x), knock a couple of hundred dollars off and tell one of your "sounding boards" this is the going price you've found and ask if they'll match it. If they won't your dealer has probably given you their best price. If they will, your dealer isn't doing the best they can for you.
Finally, don't let any of them think they're your second choice. Otherwise they might give up. Think of a reason why you might end up preferring them (location, price, liked their sales person, good reputation etc) and explain to them that this is why if the price is right you want to do business with them.
Compare Apples with Apples
You need to be comparing apples with apples and get the drive away price. So you can say, "I can get model A with extras B, C and D for $x from somewhere else [don't say where]. What's your best price for that package?" for example. If you like get them to unbundle that package - "if you don't take the floor mats it'll be $y" but get a price on the bundle. Write down the components of the bundle and the best price so there's no mistaking it.
Ignore prices for extras that they offer you but look at the package. Ours told us we were getting a stereo system worth $1100. (Someone at the same dealership had earlier told us it was worth about $500). We checked the model at Strathfield car radios, and it was about $400. The dealer would, presumably be able to get an even better deal on it (If you're particularly devious and you know a particular accessory has been wildly inflated you could say, "ok, we'll go without accessory D, you said it was worth $y so take that off the price" then you can go buy it on the market later).
Extended warranties - treat these with a high degree of cynicism. Our dealer told us they would give us an extended warranty and all we had to do to get it was service the car at their dealership. We asked for him to unbundle the price - ie give us a price without the warranty. He did so, and was willing to reduce the price if we didn't take the warranty. Incidentally, if you do unbundle the price and you still take the extended warranty, this gives you a basis to evaluate the cost of the additional warranty cover. If servicing at that dealership is going to cost more than taking it somewhere else, then if your savings are greater than the premium for the extended warranty, on one way of valuing it you are still ahead.
In the Final Washup
In the end we went with a local dealer even though they were a couple of hundred dollars over the best price we could find. We did this because the sales person who dealt with us (Mr X) did put a lot of work in and appeared to be honest with us (we could tell this by evaluating his information against that given to us by his manager (Mr Y), who ... stretched the truth a bit from time to time). That said, Mr X did at one stage say we'd never get any money off the price of the car we eventually bought (he was pushing another model, which he said he *could* do us a great deal on) - and he ended up being way wrong on that one.
Do check on the internet. There are plenty of fabbo sites which will tell you how to buy a car in more detail than this one will. One thing that we did end up doing was putting together a car buying checklist. In the end this checklist was too much. It took like 2 hours to go through, take her for a short drive and return. If you're going to use our checklist as a base, maybe pick the eyes out of it and make it shorter. The things that we found because of the checklist approach were - the VIN was wrongly recorded on the contract (it was a spello), there is a small dent on the bonnet, a little bit of paint was peeling and the light in the boot was not properly connected. I don't think we would have seen these without the checklist. Indeed, the checklist was a good script for us to follow. I felt a good part of the checklist was going in to meet the service staff. Their Service Manager was particularly good to meet. I hope I feel the same way after the first service :-)
The checklist is here.