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Chapter 6: Buying A Vehicle

Section Introduction:

This chapter outlines how to negotiate from a power position to pay the lowest price you can for a new vehicle. The knowledge you have acquired gives the power to get a good deal but knowing how to handle the negotiation can make the difference. Part of this knowledge is an understanding of the salesperson's strategies and pressures and these are explored here. If you have gone through the other chapters, have the information you need and are ready to buy, this is the chapter to read.

At the end of this chapter, "Buying your new vehicle", describes the process you should follow when you actually get down to business and talk to a dealership.

Good luck with your vehicle purchase!

Negotiate from a power positionBe well informed to negotiate from a power position

 As they say in Poker, "If you don't know who the sucker is…it's you!" Do your homework to avoid this. Knowledge will give you the power to be in control of the negotiation. So, before you walk in to the dealership, you should know the following.

  • The dealers invoice price of the car you are interested in. Bring in your information organized in a folder and freely show it to the salespeople that you see. Do this not only because they may not know the invoice price themselves, but also because they will treat you more seriously if they know that you know what you are talking about.

  • The presence of any dealer holdbacks, incentives, customer rebates or other special offers that can strengthen your bargaining position. Consider these factors before setting your points bidding target. Show that you are knowledgeable and refer to these and you will establish the validity and seriousness of your low offer.

  • The availability or popularity of the vehicle itself, its scarcity or oversupply. Be aware of the fact that the salesperson has more pressure than you do. You can take your money anywhere but they have a limited number of customers on any given day and specific sales targets to meet.

  • Your points bidding target. How many percentage points over the invoice price you are prepared to go and where you want to start the bidding. Refer to chapter two of this manual when deciding where you want to open the bidding, what you are prepared to pay and what you will absolutely not go beyond.

Be aware of sales strategiesBe aware of the sales strategies

 The salesperson's first strategy is to evaluate you as a buyer.

  •  Dress presentably. If your salesperson sees you as a person who is definitely going to buy from someone, he will feel more pressure to haggle.

  •  Keep the conversation on the vehicle at hand. Don't answer personal questions about your plans for the vehicle, your finances or yourself. The salesperson is just trying to gauge your need for financing, your willingness to accept add-ons and anything else that he can use to add to his potential for profit.

The salesperson's second strategy will be to control the context of the negotiation.

  •  Don't let them talk in terms of discount from the MRSP. Your first goal is to get them to talk in terms of cost over the invoice price.

  •  Don't allow the salesperson to bring rebates, financing, special options and/or everything else into the negotiation. Control the negotiation and focus on the invoice price and your bid over that price.

The waiting gameA third sales strategy is the waiting game.

  •  Stay on the move. Do not sit around in a waiting area while the salesperson 'goes to talk to the manager'. Instead, move around the shop looking at the other vehicles. Let them be aware that you are quite prepared to move on to the next dealership down the street and that you want to buy soon.

  •  If they are constantly going the sales-manager for consultation, ask to deal with the manager yourself. Be in control and be prepared to walk away.

Guilt, the universal sales ploy.

  •  Don't feel compelled to buy because a salesperson spends time with you. You know your price; if they want your business they can accept yours or lose it to the guy down the block. That's their call.

  •  They're not 'losing money on this deal'. A main point of your research and preparation is that it allows you to know how much they are making off your purchase so that you can control that number. You know specifics about their holdback percentage, invoice price, dealer incentives, demand and supply. If they make $500 off your purchase instead of $1500, they haven't lost $1,000; they've still gained $500.


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