Auto Dealers, Startups Try Amazon-Style Ordering for Cars | Hacker News Reader

Auto Dealers, Startups Try Amazon-Style Ordering for Cars

wsj.com

59 pointslxm128 comments

Buying a car is such a horrible and archaic process still.

I love this quote at the end...

"For the vast majority of dealerships, in-store sales will continue to be the main way they sell cars. Delivering cars to customers can get expensive, and dealers see a benefit in getting them in showrooms, where they can be induced to spend more for features and add-ons, like paint protection and extended warranties, "

That word "induced" made me laugh.

Carmax feels a lot like dealing with Saturn dealerships. No haggling. Fairly simple process. Low pressure. I’m never buying from a dealership again.

Carmax / Carvana seem to basically charge new car MSRP + tax + fees if you want to buy a one to two year old used car with 5-15k miles, at least in my experience, so I ended up ahead just buying the same model new from a dealer. They also have pretty high interest rates and it is in your best interest to do the 'backdoor' method into PenFed for their rates, which are pretty good.

I have sold cars to Carmax; Carvana requires an official payoff letter from your lien holder, unlike Carmax, which can be a pain or take a decent chunk of time, depending on the lien holder.

It seems like since the cash for clunkers program in 2009 the used car market hasn't been a very good deal. Last year I was looking at getting a 1-3 year old car and hoping to save money. For 5-10% more I could get it new and choose exactly what I want (my state charges the same tax rate on used cars).

My guess is that it's due to a combination of that program and wages not growing since the recession. It seemed like a lot of people used to buy brand new cars every few years. Someone like me could pick up something a year or two old for 50% off the original price and drive it for 5-10 years. I've heard stories of people buying 2-3 year old cars, selling them after a year or two for effectively the same price they bought it at. You may still be able to do that, just at a price closer to original sticker price.

The idea you pay sales tax every time the car is sold is frustrating. It feels like double dipping by the government.

My own theory is that everyone else is thinking the exact same thing: looking for a "great deal" 1-3 year old used car. So demand for these cars is quite high. Modern cars are much more reliable than before, and that is reflected in the price you pay for a lightly used car.

Used luxury cars still have a lot of depreciation and 1-3 year old luxury cars can be a good deal; my guess is that luxury cars tend to be more costly to maintain and less reliable than regular cars. Also, luxury car owners tend to lease their cars, which creates a large market of used luxury cars.

Also, the point of a luxury car is to show off that you can afford a luxury car, so a 3-year-old luxury car doesn't have the same cachet as a new one. The point of a "normal" car is transportation, which a 3-year-old car can do just as well as a new one.

I knew quite a few people who had a dream of owning a specific nicer brand, like BMW. They started making decent money and bought one that was 3-5 years old. Literally 6mo later they'd dump it at a loss because during that time it was constantly in the shop and each repair cost was ridiculous.

I now know a few people who own nicer cars for peer and client status reasons (I'm sure they like having a nice car, too). Leasing or selling the new car after a couple years seems like the only sane way to operate.

A friend bought a Mini Cooper new and drove it for 10 years. It had very low milage because for quite a few years it wasn't needed much. For the most part it ran fine, but paying for expensive brake pads, run-flat tires (no spare), and other maintenance on a car where the glove box wouldn't stay closed and the cloth headliner sagged down just didn't make sense.

The downside being that you pay 10%+ more than you would for the same car elsewhere, with no opportunity to negotiate. (Having bought from CarMax, I was ok with that, it's just something you know going in)

Carmax still only sells used cars, don't they?

I want a no-haggle dealer for new cars, especially if they sell economy cars like the Nissan Versa and Chevrolet Spark.

Honest question: why? Cars’ rapid depreciation makes a gently used car a much better buy than a new one in just about all circumstances. And CarMax does thorough inspections and provides solid warranties for cars they sell, so you don’t have to worry about “used” equaling “unreliable.”

Asymmetric information. The buyer has no way of knowing whether the car was used gently, which results in market for lemons.

CarMax has no incentive to fail a car at inspection. They'd rather sell it to you and if it breaks, fix it under warranty. But for you a broken car might mean ruined vacation or road trip.

CarMax has incentive to fail cars at inspection before they purchase the car, or to use the inspection results to adjust the price they pay for the car.

The price of fixing a car under warranty can be higher than the difference between their purchase price and their sell price.

You also need to multiply the price of fixing a car under warranty by probability of the car breaking before that warranty expires. CarMax only makes money on the cars it sells, so as long as there is a decent chance the car will break after warranty expires, it still might make economical sense to do it.

CarMax gives you a free history report on the life of the vehicle to date, including how many owners it's had, any accidents it's been involved in, any recalls it's been included in, registered odometer readings over the life of the car, and so forth. (Details here: https://www.carmax.com/articles/free-vehicle-history-report-...)

If you don't trust CarMax to give you an accurate report, you can buy a separate one from a third party like Carfax (https://www.carfax.com/vehicle-history-reports/) to confirm the details.

> CarMax has no incentive to fail a car at inspection. They'd rather sell it to you and if it breaks, fix it under warranty.

Any car you buy from CarMax can optionally be covered by their "MaxCare" extended warranty, which lets you choose a deductible and then obligates CarMax to pay the remaining cost of any repairs to the vehicle beyond that deductible. So if you set the deductible at, say, $250, and then you get the vehicle home and discover that the transmission is shot, the worst case scenario is you're out $250. CarMax eats the rest of the cost.

Car YouTuber Doug DeMuro bought a Range Rover from CarMax with this type of coverage a few years back. He paid $3,899 for the extended warranty, and CarMax ended up paying out $16,925 on warranty repairs over the six years he owned the car. More details here: https://www.youtube.com/watch?v=E3jA55TJboA

If the previous owner only changed oil once (just before trading the car in), how would CarMax or Carfax know?

They would know it had missed a bunch of scheduled maintenance. They know how many miles are on the car, they know how many times it should have had its oil changed over that many miles. If the owner never brought it in for service, you can say maybe they were just a gear-head and were changing the oil themselves in their garage. But there's lots of service tasks you can't do in your garage, so if the car missed lots of scheduled maintenance windows, that puts up a big red flag.

Typical lease is three years. In that timeframe there isn't a bunch of scheduled maintenance. You need to pass state inspection a couple of times, but apart from that there's normally nothing really to service yet.

From the carfax report the owner who did the oil changes on schedule with quality synthetic oil looks indistinguishable from the one who did nothing and drove the car like a rental. An you can't tell what's inside the engine block until you open it up.

Oil changes often don't get recorded.

Would one of those reports tell me if a car has ever been smoked in?

I quit five years ago, and ever since then I've been extremely sensitive to cigarette smoke to the point where sitting in a car that people have smoked in before makes me sick.

Is that still true? I feel like that used to be true, but not anymore. Since the 2008 recession (and the "cash for clunkers" program) every time I've tried to crunch the numbers, a 1-2 year old car is only 5-10% cheaper than a new one instead of 25%-50% cheaper. Maybe it's the specific cars I was interested in? I figured the economics of used cars had just changed.

Data is much more comprehensive now, and everyone knows which brands/models to buy.

I would have figured the opposite. That data has made most all car-makers build cars that fit the same customer's needs; lower TCO, less maintenance, lasts much longer. Japanese cars being reliable has been a known thing since the 70s. I feel like today it's fairly well known that most any car is reasonably safe, will last awhile, and have reasonable repair costs (excluding luxury cars).

I’m under the impression that American brands are still terrible, and Japanese brands are still the go to for long term reliability and ease of maintenance.

https://jalopnik.com/every-single-american-car-brand-is-on-t...

I’m sure this is priced into buying used Japanese cars.

Thanks for that info. I don't follow the car press so it's good to see some actual info.

I do think a brand like Honda has the used car pricing built-in. Parts are definitely cheap and plentiful, but they still seem to put some parts in hard-to reach places (all companies seem to do this). But I don't think a head-to-head tells you if the lowest-ranking brand now is better or worse than the lowest-ranking brand from 20 years ago. I'm not saying all the brands are the same, but the reliability of the average (or any) car today seems significantly better than 20 or 30 years ago. I imagine the spread from best to worse is a lot more narrow.

Some brands/dealers are no-pressure. My wife had very good luck with a Mini dealership in 2014. My impression at the time was that that was part of their corporate approach to sales. I have no idea if that's still the case, but it was pain-free, pressure-free and all very easy. All the features were a la carte. There were packages, but you could also order each feature individually if you preferred.

Individual dealerships and salespeople certainly prefer the in-person pressure-oriented sales model. But offering a showroom and online custom-ordering would certainly make _me_ more likely to buy vehicles more often. As it is, I drive my cars into the ground until I don't feel I can trust their reliability for my typical trips any longer (luckily I _do_ trust my mechanic), but it's usually a few years after I start thinking about replacing them. If it was truly easy to do, I would probably jump a lot sooner.

I had the hardest time getting a Honda Fit when I wanted one this summer.

Everybody wanted to push me to buy an S.U.V. though... I'm not sure if drivers really want S.U.V.'s or if carmakers really want to sell them.

I was looking for one a few years ago and had a difficult time. I was told they had recently changed manufacturing plants--the Mexico plant that used to make Fits was making more HR-Vs because they have better margins. Since Fits were now coming from Japan there was a backlog.

Maybe what I had heard was just a rumor, because it was definitely a few years ago and this recent article makes it sound like it hasn't happened yet.

[1] https://www.reuters.com/article/us-honda-production-mexico/h...

It’s the latter, I think. SUVs are more profitable than cars.

From what I understand, SUVs generally count as "trucks" rather than "cars" for regulation purposes, so they don't need to meet the same efficiency standards. I'm sure that's a big part of it.

That's not necessarily true anymore, and is pretty inconsistent. Most crossover "SUVs" (which are the best selling segment of cars in America), for example, are classified as cars.

They have new cars, but it's a pretty small percentage (looking now, it's ~300 new vs. ~8000 used), and it appears to be only Toyotas (?). So that's a good option if you're interested in new versions of Toyota Yaris or Corolla, at least.

Edit: I had the default 250-mile radius setting on. It's ~500 new vs. ~60000 used. Still looks like it's all Toyota, though.

And they don't have any in my state.

Well, almost any. Searching 2019 models only, there are exactly _two_ in 250 miles. A Jeep Cherokee and a Corvette Grand Sport.

I'm aware of at least one Carmax that is also a Toyota dealership, which they sell no-haggle. I think some dealership chains are also no-haggle (e.g., Fitzgerald Auto Mall)

> Buying a car is such a horrible and archaic process still.

Tell me about it. I bought a used car today and my stress level is through the roof.

If you can afford to, go buy a car before absolutely needed, get a Costco quote, go to the dealer and tell them that’s what your willing to pay, and keep saying no to whatever the financing person says. If they get annoying, walk out and find another dealership and hand them the Costco quote, and repeat. Should be done with whole process in 2 to 3 hours with minimal stress.

This is if you don’t want to play the haggling game. But I feel like most sought after cars don’t really have much haggle room anyway since they are so in demand, might as well save a few hours of your life and just walk in with the Costco quote the dealer has agreed to.

I avoid trading in and all that nonsense, that’s when dealers get to start playing games. I just prefer to run the car into the ground, give it away to family, or if I want a luxury car just lease it and return it.

The Costco Auto Purchase program won't give you a quote online or over the phone. You have to set foot in the pre-selected dealership to receive the price. Costco negotiates the price once a year so there's no guarantee that price is market competitive, especially late in the model year.

That's not true, I received a detailed price breakdown over email.

This definitely doesn't reflect my recent experience in the last year. Got several quotes online from different brands. Costco pricing is a good benchmark; you can probably do better if you're willing to put in the time.

I also purchased a car in the last year, but the Costco approved dealer did not give me a quote online.

Also, or alternatively, make sure you have your loan approval in hand as well. I recently bought a car and thought I got an okay rate at the dealer through CapitalOne, but they “figured out” a way to get my interest rate a whole point lower (much better than anticipated) if I went with the dealer warranty. So the price of my purchase went up, but my monthly payments went down. That’s okay with me in the end, but I really would have preferred my “real” rate and no extra warranty of course.

Having a hard price and a solid loan letter in hand before you even step on to the lot is really the only sane way to deal with auto purchasing.

i went in with a 3.64% approval rate.

car guy says "oh, we can beat that!". Come back with "how does 3.5 sound?". "well... fine, I guess... not a huge difference, but if it makes it any easier... whatever".

Mind you this was... $9k loan.

I get their paperwork... reviewing it - 3.59%. .05% difference. I mean, yes, it's lower, but ... "damn, we can beat that!". He was so excited! It's about 40 cents per month cheaper.

40 cents per month cheaper for you, but he made money on the deal. If a car dealership sells you an extended warranty or financing then they get a cut of it. Se he went from making $0 on your third party financing to making some level of money on you. It's a plus for both of you when it works out.

Not only that, but for many people, you should probably try to negotiate for the lower net cost vs. lower monthly payments with a higher total cost. If you can float the money, why pay more?

that's what I figured - they had to be making some sort of kickback or referral fee or piece of that action.

The last time I bought a new car for myself, I had a pre-approved loan from my bank in hand.

The dealership swore up and down they could beat that deal.

Three hours later and they finally gave up and went ahead with our pre-approved loan.

Pissed me off to no end that they made us wait that long before they gave up trying.

my deal only took about 10 minutes. for a late model used car, I wasn't seeing anything much out of the 3.6% range anywhere, so I didn't think they'd be able to do much better. had they surprised me with, say, 2.2%... great, but it's still not a huge savings anyway.

I hope the term was the same.

The whole 4 square shenanigans is really annoying. Agreed on having your own financing lined up, I've never seen a case where a dealer could beat my credit union.

Also wait to mention your trade-in if you have one until after you have the rest of the terms nailed down(and ideally have a carmax quote before).

If the Costco quote is so good then why not just get the car from them?

That's not how it works. "Costco Auto Program" is a system where dealers sell cars to customers at prices negotiated by Costco. Costco itself does not sell cars.

Hm, I'd heard lately of people buying cars from some supermarket chain but that must have been something different.

If you want to buy a car without much ( if any ) haggling and you do not want a specific car with specific options you should (strangely it applies to both used and new cars in larger dealerships i.e. non Buy here/Pay here shops)

1. Only talk to someone at the dealership who does the fleet sales. Simply ask for "Feet sales"

2. Only buy a car that is already on the floor

3. Do it in the last 27-29th day of the month -- dealerships pay monthly floor plan financing fees and you want to take something off their hand at the last moment they can replace it with a new car and still have the entire 30 days clock to sell it. If you are buying the car on 30th or 31st, the replacement car probably won't be there before 2nd or 3rd of the month, meaning the dealership would pay for 2 or 3 days of a floor plan financing when there is no car that they can immediately sell. That in turn means they would attempt to either bake higher price into the car you are buying or kick the sale to the next month giving themselves another 30 days to sell it.

Why would a dealer go through all this rigmarole about being worried about which day of the month the car was being purchased? Wouldn’t it be far more sane for the delay to just average things out and know that every day will eventually have a similar number of cars sold, so they should be priced accordingly?

Because anyone who is not purchasing it on the worst day would overpay by a few bucks. The margins are very tight, if any.

Not wanted to deal with a dealership is the biggest reason I haven't bought a new car in a long time. Last time was such an awful experience.

I bought a car recently, I was in a hurry and I got stuck with the extended service contract.

When I got home I read the contract carefully and found that I could cancel it within 15 days, so I did.

This must be all about new cars; I wouldn't buy a second hand car without seeing it first.

I'll share my last car buying experience. We had done our homework and more or less knew within a couple within a couple of models, which car we wanted.

After going through the test drives and the stupid dance with a couple of dealerships, the process smoothed out.

I checked out a few regional dealers, and called 3 different ones for prices. 2 of them were willing to me prices over the phone. Great. I found another regional dealer which had this "amazon-style" process. I could configure the car I wanted on their website, and it showed me the price. It was the best of the 3 prices I was quoted, so I "placed my order".

I got an auto-responder email email saying that paperwork was on the way and salesperson would be in touch. The guy called to discuss the trade in process, and tell me how the paperwork would be handled. In about 3 days I had a new car, delivered to my house, having never set foot in a dealership. They even did the trade in estimate remotely (I took some photos and sent them in).

Hopefully that's the trend things move in the future. It was a breeze.

Related to this I have the "best-worst" idea for a business...

So everyone hates car dealerships. But we need to test drive vehicles (or physically look at them). Right now car demos are linked to buying, and therefore the dealership.

What if there was a business that ONLY did car demos? You go in, and there's a row of SUVs from all the major manufacturers.

This saves you from driving all over town for the different dealership, and because they aren't selling you vehicles it is a no-pressure situation.

I'd pay money for this. But people are cheap and I doubt it would work as a concept, unless buying cars online became the norm.

I thought this post was sarcasting and only halfway through I've realized that you're actually serious. Renting. It's a thing. You can rent cars for short periods.

It's difficult to rent a specific car from most traditional car rental businesses. They generally take reservations for a class of car (economy, intermediate, full-size, etc.)

Yeah but no one is doing a one day rental on the 4 cars they want to drive. Not to mention finding the exact make/model they are looking for.

If I’m interested in a car, I’ll try and rent one for a few days on Turo. It’s a great way to see what it’s like to actually live with the car. I’m never buying without renting again.

I thought of this idea recently as well. You pay $20 bucks or whatever and get to drive X number of cars, book your time slot online, etc.

You would have to have enough volume to justify the inventory that is sitting on your lot. And what if someone wants to test drive a 2017 instead of a 2018 or a 2014 etc... The number of combinations of various makes, models, and years, seems like you could never cover the overhead and be profitable unless you specialize in specific niches.

You can rent other people's cars with turo. https://turo.com

The carmax experience isn't too far off from this. Carmax specializes in used cars. However, most of their used cars are 3-5 years old. I've always used them as a starting point when I'm not sure which make or model I want for my next car.

I suspect the capital costs of this would make the business unsustainable. The company would have to maintain essentially a dealership sized inventory of cars, but instead of having the revenue stream of car sales they'd just have to rely on this test drive fee. How many $20 test drives would people have to take in order to offset the costs of buying millions of dollars worth of cars?

It would make more sense for the manufacturers to just have test-drive centres.

I’ve been doing my test drives with Getaround. They don’t have everything, but for the cars they do have, you can actually spend some time with the thing on your own terms.

And the developers can call the process test driven development!

Providing the latest vehicles for people to try is expensive. It only really works if you make the money from selling them.

Car shows.

My last three cars, all second-hand, I bought without having driven them at all.

Most recent: Emailed dealer interstate. Negotiated price by email. Sent interstate mechanic to review/report on vehicle. Paid. Vehicle was delivered to me - first time I'd even seen it.

Previous: Bought through local government fleet online auction. First time I'd even seen the car was when I picked it up.

Another: Attended fleet auction. Could look over the car but not test-drive. Bought same day and drove it home.

Low hassle and all have been decent cars. In the most recent search, I emailed another interstate agent who said of the car, "I wouldn't buy this one sight-unseen, mate. It's a bit rough." - so I didn't.

Had you ever test drove a car of that brand before?

Brands were Mitsubishi, Subaru and then Kia (most recent). I had driven a Mitsubishi before, but never driven a Subaru or Kia before buying them.

I work in auto finance for a lender. There are so many gimmicks used by a dealership to get a customer into a car with financing. A lot of it is the lenders too because they offer incentives like markup to the dealers. There is a lot that goes on behind the scenes as far as car market value, backend products like warranty and GAP, and dealer incentives from lenders. It is just too much to understand for the typical customer.

My recommendation is to research the car you want and understand the market value. Then get pre-approved financing through a trusted lender. This will leave a lot of the confusion out of the car buying experience.

OT question: why does a car with financing cost less (summing up all the monthly payments) than a car paid cash?

Manufacturer financing is weird. You might be eligible for some rebates only if you take manufacturer financing. The financing arm may be trying to get more loans on the books in general, or specifically good credit loans, or ? Strange incentives all around.

Great point. Manufacturers are interested in moving inventory. Not so much with making money on loans. So they will take a small margin or even a loss on the loan as long as it sells the car.

It shouldn't. In fact it should be more since there is interest. I'm guessing there are some fees involved.

I’ve never seen this before. With 0% APR they should be identical. Are you missing an initial down payment?

How do you determine the market value of a new car?

For those looking to buy a new car and have a Costco in your area, I highly recommend looking into their Auto Purchase program. They negotiated great pricing below invoicing. I did a ton of work shopping around for a new car just before Thanksgiving and I couldn’t find a better price.

For reference the 2017 Toyota Highlander XLE AWD was $1700 under invoice.

Just know that the Costco price will always be higher than the price you could achieve by negotiating, simply because dealers pay Costco a referral fee for each sale made through the program.

It's great for getting quotes though.

Why do you think a dealer will sell you a car for X, just because Costco isn’t taking Y commission?

It's a shame that more dealerships aren't like this.

The traditional car dealership needs to go away. While companies like Carvana are great, the vast majority of car dealers are just engaging in rent-seeking behavior. These dealers exist solely so they can inject their own markup into the supply chain. They only continue to exist because their lobbyists have bribed state legislatures into passing laws that prohibit automakers from selling cars directly and blue laws that prohibit dealerships from being open on Sundays. Yes, most of the blue laws that are still on the books are the direct result of lobbying by car dealerships: small businesses are terrified that they're going to be replaced by corporate-owned dealerships that can afford to hire employees to staff their dealerships seven days a week, so they bribe lawmakers to pass anti-consumer laws that make it illegal for dealerships to be open seven days a week. Can't compete with a company that offers better service? Outlaw them! They are actively trying to drag the standard of living for the entire state all the way down to the lowest common denominator. Small businesses cause more externalities than they're worth.

We really need an aggressive push at the state level to overturn laws forbidding automakers selling cars and to overturn blue laws.

And while we're at it, let's get rid of the archaic third-world practice of haggling over car prices. We don't haggle over anything else, and it's an emotionally draining process that discriminates against people who don't have natural tendencies towards aggression. Honestly, I'm really disappointed Saturn and Scion went away, because they were the best hopes for dealership reform. And if we are going to have dealers lobbying state legislatures for laws, then let's actually have them do something beneficial and make it illegal to buy or sell a new car for anything other than MSRP.

Carvana is great, but ideally the automakers should be selling cars directly and adopting every single one of Carvana's innovations for themselves. We'd all benefit if every automaker in the country moved to the Apple Store model.

No more blue laws. No more dealers extracting markup from an unnecessary step in the supply chain. No more haggling. No more lying to and hiding information from buyers. Online sales as a first-class citizen of the omnichannel.

> We don't haggle over anything else

On the contrary, almost all big ticket items are negotiated. It's just cars are the most frequently encountered big ticket item for the average person.

Exactly right. I negotiated hard on both houses I bought and pretty regularly (as a percentage of transactions) negotiate on Craigslist or Ebay type purchases. I've negotiated salary at every job I've taken after my first one. Many (perhaps more than half) of my business contracts are also negotiated as well.

You don't have to negotiate these things if you're willing to take the other side's initial offer; it's probably financially materially in your favor to not do that though...

The next time you buy something over 100-200 dollars, try saying 'Can you give me a discount please?' with a smile. Be relaxed and expect to get a no from them (just a small confirmation, right?) and continue as usual.

It's not even haggling, it's just asking nicely. You'd be surprised how often that works. (Sometimes you get a choice of an additional small item free instead.)

https://outline.com/DjHJdV

I am curious to know how many other EV carmakers will be going direct to consumer. I know Tesla is doing it but they can't be the only one? I read about Rivian and Bollinger but i don't know if they are going D2C

Can someone lift my european ignorance and tell me what's wrong with the dealers? How are they different from BestBuy, Target, etc - just essentially bringing the car to a showroom and selling it to you?

Why are dealers such a huge problem and who would buy such an expensive thing as a car without trying it first?

The showroom isn't so much a problem as the high-pressure sales tactics and negotiations that comes with it. The laws in most US states protect this model. Ford can't typically setup a retail store where you just test drive a car and the pricing is transparent and obvious, they have to sell through dealerships (franchise). Obviously franchise owners have different motivations than the manufacturer, they make a commission and need to get as much as possible with each sale.

Other commenters have pointed out a lot of the issues, but one that always bugs me is how they often times refuse to talk about the actual price. They are always trying to sell you on the 'price per month' you are able to afford. This is so they can hide the true cost of ownership behind a low monthly payment.

It is because a lot of dealers in US are dishonnest. For example they never honor the quote they themselves have given in email. They never tell the interest rate or car price they are offering. They always ask you what is your affordable monthly payment! After buying they push to extended warranty so much. You need to spend couple of hours just saying no. It is just a frustrating experience overall.

In Belgium, any price on email is valid in court.

Also, I have never seen issues like this here. The entire price has to be shown upfront and it's pretty boring actually.

Compared to the US, it seems great though

I just wrote a comment where I detailed my recent experience. They honored their email quote, but tried to add on a $1500 BS package which I negotiated down to $150. So I supose they were off by $150 in my case.

With new cars it's pretty easy to get past most all of the problem. Don't negotiate in person. Do everything over email, and have them send over the bill of sale and other paperwork in advance. Take it with you and pick up the car.

With used cars it's a lot more hassle because you're not going to want to commit to that without more extensive, time consuming research and inspection.

Historically there have been a lot of sketchy dealers who are very pushy and dishonest.

If you go in with your own financing or cash, and say 'no' to all the upselling, it isn't much different than Best Buy.

Most new car dealers make more money from their service center than sales.

> Most new car dealers make more money from their service center than sales.

And from the "finance reserve." If Toyota Financial Services approves you for an autoloan at 3% the dealer will tell you're eligible for 5% - and they keep the difference.[1] That can really add up over the life of the loan. And why it's important to read your TILA disclosures.

[1] http://www.realcartips.com/carloans/220-how-much-dealers-mak...

If you go in with your own financing or cash, you are going to get a worse deal. I would use their financing then just pay it off after a month or two.

If you don't do your homework ahead of time, a dealership is a tough place to navigate. When I bought a Toyota, the sales guy only wanted to talk about payment - what payment did I want because he could get me that payment. I wanted to talk about absolute numbers for trade-in and purchase and then talk about financing for the balance. They really resisted that.

The last car I bought was a Subaru and that dealership felt even slimier. They handed me off from person-to-person-to-person and only the last guy could tell me the final numbers.

> I would use their financing then just pay it off after a month or two.

Make sure there isn't an early-payoff penalty.

I've heard two approaches on Reddit. One is to negotiate the final out-the-door cost (NOT monthly payments) with their financing, etc., and then tell them you have your own financing (or cash) and take it or leave it, being totally ready to walk.

The other is to negotiate with their financing, ensure there are no prepayment penalties to pay it off early, and then as soon as you leave just pay the thing in full or pay it with a loan you secured at a better rate.

Car dealerships made a lot sense in the pre-youtube/doug demuro age, they can explain the tech, the new cruise control options or passenger side airbags. These days cars are generally pretty reliable, have heavy feature parity at their price points, and car rental is accessible if you would like to try before you buy. Certainly, there are edge cases, but it's probably good enough for most people weighing something like a chevy bolt over a ford focus.

If I buy something at BestBuy or Target I feel well assured that everyone else that bought the thing from Bestbuy or Target, barring promoted discounts, paid the same amount for the item that I did.

People that buy cars usually do not pay the same price for the same car. This feels unfair to the average American consumer. There is a lot of anxiety around haggling, financing, and trade-ins.

It's been rather hard to find others who might have used Fair before (https://www.fair.com) - or have an open opinion about it, short term leasing I guess would be best way to describe.

I've used Fair to lease a car. The entire experience has been a nightmare. Billing errors, really bad support, them losing records of giving me a car, charging me interest for not making a payment when their system had an error, their auto-pay system is broken, their mobile app not working, they forgot to register my car with the DMV, them not able to generate receipts for me, etc.

The idea is great, but have had a really bad experience so far. I hope the resolve these issues. We need more competition/innovation in the space.

Thanks for the honest feedback, Sahas. I'm a director of engineering at Fair, and we realize our ops and customer support need improvement (and we have directed significant resources in that regard).

I'm curious when you used us, as we have resolved most of those issues.

When trying to deconstruct the entirety of the car industry and re-invent it in an app, there are so many moving pieces and entrenched players.

For example, our partners on wall street (with whom we pledge the assets and finance them through securitization agreements require us to use third party servicers so that these cashflows would still be serviceable if we happen to go bankrupt. Thus, our recurring billing is still through them and these old school finance companies are not paragons of modern technology (to say the least).

We are moving a lot of this servicing and payments in house and focusing on core customer support experience as our top priorities for this year in order to ensure we can scale while providing an amazing experience.

I'd be interested in talking to you more about your experience. E-mail me.

That looks super interesting. I am not convinced a subaru hatchback will come close to replacing ur minivan, probably a good way to try for a few months.

Yep, I work for Carnext.com, a spinoff of LeasePlan and we are doing this. Its very satisfying how hard everyone works to streamline the whole process from start of order to delivery of the car.

Is this like a Fair.com for europe? Any plans to come to the US with the service?

Anything would be an improvement.

I was looking into getting my first car recently. Narrowed it down to a few Honda models and walked into the SF Honda Dealership.

Never seen anywhere so incompetent in my life. When I asked about car features the guy would just Google "honda fit sunroof on ex?" where I could clearly see. I finally asked for a price and he came back with something 3.0x the market rate for the car ... When I asked why it was so high he said computer error nothing he could do.

So yeah, let's Amazon it up.

Since I can't view the article can someone tell me what Amazon is doing in the title?

If you scroll down through the comments, by now someone would have posted an outline.com link that allows you to get around the paywall. That should get you to the article!

Article is paywalled so I'm just gonna assume my experience with Vroom is relevant.

The long and short of it is that Vroom sold me a car, promised delivery by a certain date, and missed it by about 3 weeks ostensibly because they noticed a variety of maintenance issues with the vehicle during "final conditioning". In addition to being almost a month late, the delivery driver was expecting to pick up the trade-in at the same time, despite the Vroom rep telling us more than once that they'd send a different driver for it within 3 days of delivery.

The process is online until you click "buy" and then everyone wants to spend just as much time with you on the phone as they would if you had walked into the dealer -- I spent most of the weekend on the phone. Their agents double as reps at a used car dealership in Houston and are frequently unavailable because they're out with an in-person client. It seems like someone goes out to the floor and drags them away from their physical customers when a Vroom customer calls in. Every time I sent an email about something, after an hour or so I'd get a reply asking me to call in to discuss.

Once you're finally done with all that, they overnight a stack of about 50 papers to sign and return. As soon as the return label is scanned, you're considered sold and they do everything they can to ignore and avoid you.

A few days after I finally got the car, I noticed a leak and took it to the dealer, where I paid to get it examined. Was informed that the water pump was going bad and would need replaced soon. I emailed Vroom about this while I was still within the return window, including a copy of the quote from the dealership, and they never replied. I didn't want to deal with the crap anymore, overall I was OK with the car, and the mechanical issues were non-urgent so I just let it go.

The only reason I don't 100% regret the transaction is because there were no local dealers that had the vehicle I ordered from Vroom in stock for the entire duration of the delayed shipment. I'm sure, however, that I would've had a better experience if I had just done eBay Motors or something. Buyer beware.

Is there a way for people to learn to be good negotiators?

Below was my last negotiation. I think I did pretty well because I put a lot of research into it and had some background knowledge already. Most people won't have those luxuries, and I won't always be able to research or know everything before a negotiation. I would like to learn to be a better negotiator in general.

---

I recently just bought a new vehicle. I found the VIN I wanted, called up the dealership and asked for the Internet Sales Manager's email address. Sent a very short email saying I'm ready to buy a 2019 MAKE/MODEL in City, State. The dealership's website shows VIN in stock, is it still available? And without incentives, what is their best offer on that vehicle?

I got an email with a number, it was very close to invoice, and replied when I would be there to take a look at the vehicle.

(Dealerships do need to make some profit to keep the lights on and pay salaries. Even if you pay invoice, the dealership still makes money on dealer holdbacks and dealer incentives. Additionally, you do not want the dealer to include customer incentives/rebates when giving you a quote, because that's money you'll be paying directly into the dealership's pocket otherwise. Agree on a price, then let the dealership know what incentives you're eligible for. Also check with your bank and organizations you're a member of for additional rebates, I got an additional $1000 just for being a member of my bank.)

The only tricks the dealership tried to play on me was the waiting game, and the dealership's protection package that they "already applied" for $1500. I told them to take it off or I walk. They came back at $500. I said the VIN etching is a $20 kit that only takes a few minutes to apply, we're already breathing 78% nitrogen, and I'll offer them $100 because the anti-theft lug nuts actually cost some money. I was immediately offered $150 with no window tint (the 4th and last part of the package which I guess they didn't really apply yet). Later the salesperson said he looked up their cost for the VIN etching and it was $68 because they had a third party do it for them. I looked up the cost of the OEM anti-theft lug nuts, and they were about the same, so $150 does seem like the dealer's cost on what I got.

I only realized after I took the vehicle home, that it didn't have the window sticker on it (illegal for the dealership not to display the Monroney Sticker). I did thoroughly inspect every part (including the engine compartment and undercarriage) of the vehicle and test all of the features to make sure they worked (and that the manufacturer didn't forget to install something - it's happened before), but somehow I overlooked that. I knew everything about the vehicle prior and got the PDF of the window sticker from the manufacturer.

>Is there a way for people to learn to be good negotiators?

Never Split the Difference by Chris Voss is the best book on negotiation I’ve ever read, and it’s also pretty entertaining. I negotiate a lot at work, and that book helped me quite a bit. The negotiation style he advocates, aside from being effective, is also very personable. Which is great if you don’t have the stomach for the (less effective) sleazy and aggressive styles.

Thank you for the recommendation. Does the book offer any suggestions on how to practice the ideas that might be presented to the reader?

I know there's a lot of books out there which admittedly I haven't really looked into, but my concern is that in the US, it would be hard for the average person to actually find an opportunity to negotiate.

Absolutely. The book is essentially about communication strategies, presented in a way that relates to negotiation. But the strategies are useful in so many contexts. We actually negotiate all the time, any time we’re settling a difference of opinion, ask for something, have something asked of us, we usually end up negotiating. My girlfriend and I both use the strategies any time we ‘argue’ or disagree, because they’re really just about communicating towards and amicable outcome.

Any key takeaways?

All of the strategies he outlines are so good that it’d be hard to summarize in a HN comment, but I think it comes down to having an effective dialogue. You need to understand your counterpart and what it is that really motivates them, and you need to create trust between yourself and them. The guy used to be an FBI hostage negotiator, so he’d typically be aiming to get everything in exchange for nothing. I can’t do it justice really, but it’s a book I’d recommend to anybody.

> Is there a way for people to learn to be good negotiators?

IMO, you learn it from the experts who are car dealerships. You can use them to practice haggling and learn their tricks but simply walk away. I must have done this for about 30 hours before I felt confident enough to haggle 'for real'. I must confess I love haggling to buy cars but this was many years ago.

> I recently just bought a new vehicle. I found the VIN I wanted, called up the dealership and asked for the Internet Sales Manager's email address. Sent a very short email saying I'm ready to buy a 2019 MAKE/MODEL in City, State. The dealership's website shows VIN in stock, is it still available? And without incentives, what is their best offer on that vehicle?

On my most recent vehicle purchase, we drove the SUVs to death (always saying we're test driving only and no sale today) and once we knew what we wanted we scoured online dealer inventories for the exact model and got the VIN. Negotiated the bottom line via email (including all fees, taxes, etc, everything) with internet sales person then when the number felt right we said we'd take that VIN vehicle for a test drive. Once we were satisfied we bought right there and then. We did the finance dance whereby I bought my prearranged financing but they beat that so I went with the dealer.

All in all, it was in and out in two hours compared to haggling which takes 6+ hours and I did that on a Saturday (albeit 20 years ago).

You negotiated well. They're just scumbags.

This is why I just buy dirt cheap piles of rubbish and bring them to a trusty mechanic. I'd rather overpay him and it's done right, than pay some scumbag's commission/pool cleaning/viper payment

Edited the beginning of my original post to say something similar to the following:

Only because I put in a bit of research before hand and learned about the misc stuff over the years (VIN etching - which the police do not actually care about, and nitrogen in the air).

For the average person, they don't know this stuff so learning to be a better negotiator all-around would be helpful for most people. I would like to learn to be a better negotiator in general too, because I won't always have the luxury of research or knowledge.

Agreed :) Negotiation is mostly about confidence and understanding what a fair price for everything is.

Or you can just be like Tesla/Amazon and display your fair price on your website for the user to take or leave :)

>Is there a way for people to learn to be good negotiators?

There’s some great channels on YouTube showing real negotiations, not just theory. Check out https://www.youtube.com/user/CollinRocka

Wow, that's amazing. Thank you.

Reply on news.ycombinator.com