I've repeated this a few times now: dedicate a day to car buying and call 10 of them up telling them I'm buying a car TODAY, with these precise specs. No upsells entertained. And I let them in on the fact that I'm calling all the others and expect to make a decision by a set time. Always remain super polite but stay firm. In a way I suspect many appreciate this because I'm not wasting their time, it's a quick decision on how eager they are to fill their quota. But it's fun to see how much the "final price" evolves over the course of a few hours…
The problem though is the lack of real commitment. If you can guarantee you really are going to buy a car today and really will take the lowest offer, plenty of dealers would reply. Without a guaranteed commitment it’s just a negotiating tactic and they know it.
If I’m a salesman I’m OK making less on a sale if my time investment is practically nothing.
There’s a service you can use that has a $500 service fee that will bid it out for you. Dealers will reply because they know you’re serious (otherwise you’re throwing away $500). I can’t say if you get a good deal, but you definitely get quotes.
go to a smaller dealer and ask them to buy a car from wholesale auction for you and you cover their costs. that way their margin js transparent and is negotiated upfront. You will be lucky to get 5-10% discount from retail prices, but wholesale prices at Manheim can be 15-30% less than retail, even more if you are willing to buy less than perfect condition car
https://www.econtalk.org/cole-on-the-market-for-new-cars/
One interesting point was letting the buyer successfully negotiate to an absolute rock bottom price, but then making back the margin on financing.
The car business is a giant recursive function where cost can be added at every step.
The sales price may have been low but the dealer has lots of ways to add pure profit:
* sub-prime loans with high interest
* gap insurance
* alarm systems
* extended warranties
* window tints, undercoats, towing hitches, etc.
The buyer might also have a trade in which conveniently starts the whole process over again.
The "Forbes list of Billionaires" has several car dealers in it.
Also 1% sounds too low for an independent bank loan, even with the now-cratered loan rates. I am guessing that is probably a subsidized loan through a manufacturer's bank. Manufacturers have long offered artificially low rates through their own banks to help move product.
Dealerships TOTALLY make money on the financing. In your example, it might be $1000 - it sounds like you have pretty good credit, and the margins are thin there. You should remember that if someone is leaning YOU money, they just want a reliable investment for their portfolio - they'll make their money on the next guy.
If you are getting <1% offers, that is probably financing from the manufacturer (that is, Toyota Financing is lending money for a Toyota, at a Toyota dealership). These deals are HOT because Toyota Financing's #1 job is to sell Toyota's - making money is #2 or #3.
Also, did you buy a warranty or gap coverage? Cause that is profit for the dealer, too.
You probably think you got the "best rate" because you SAW ALL THE OFFERS. Nope. Dealerships see the rate from the bank and can bump it up. Did Wells Fargo offer you 2%, well, let's show him 3% and I keep the difference.
Also, yup, getting a "direct rate" is difficult. The bank doesn't really know the car you are buying, and they might see that you were already approved at the dealership and give you a WORSE rate DELIBERATLY simply to maintain a relationship with the dealership.
I worked in counterintel for a while, so I have had a lot of fun with car dealers over the years. I won't buy a new car (still drive an 87 Suburban Diesel) but from time to time my wife let's me know it's time for her to get a new car. Anyways knowing that they can and do run surveillance can actually be used to your advantage.
Try it one time, when they go back to the manager, say to the person with you, let's leave, I am not going to get what I want here and restate what you know the car is worth based on research. Leave enough meat on the bone for a decent commision and profit, but cut it close to a good deal. Get up and watch them be on the other side of the cube before you can even fully stand up. Manager will have miraculously come back 10-15% over the amount you stated. If you are not willing to walk from the deal, you are not getting a deal.
You just state what you want at a price and then walk away if you don't get what you want. Some will flat out tell you "i can't beat that price, go for it" or they won't even bother responding to calls or emails.
When you have other options, it changes the power dynamic of the relationship and gives you a ton of leverage. The dealership needs you to purchase the vehicle and that can't happen if you walk away.
Then I call each one, telling them I saw the online inventory had the vehicle in stock but since I'm buying today I just want to check if that's still the case. That already reduces some of the options: many dealers will leave attractive but outdated inventory to generate leads, and then try to upsell.
I start from the cheapest option I see online and work my way through the list. As I encounter the higher priced versions, I voice a slight disappointement that another dealer X is selling the same model for $Y. That's when they can choose to match or stay firm. Either way I thank them for their time and tell them I will be calling back within a couple hours to let them know.
During this time, I often get callbacks with counter-offers. I note the value, thank them and let them know I'm finishing my list.
Once I have a winner, I go back and call all the others, starting with the most pricy, to let them know I've made my decision, and that I respect their time so didn't want to let them hang. Things get interesting at that stage, as more counter-offers appear. At that stage, you can also visit in person to thank the salesperson as you're on the way to the lowest offer: sometimes they end up with yet another counter offer.
Having your own financing means you're not stuck with their shell game. Only when you go to doing the paperwork, you can negotiate financing rates and see if they can beat what you got from your bank. But the sale price is already set at that stage so it's safe.
The whole point during this process, it's super important to remain humble and friendly. Even though you control the process, any smugness will kill your options. And to tie this back to the thread, that's a skill you can improve with negotiation training (and it benefits more than just car buying).
Now, the best way to save money on cars is to play the meta-game! Looking for a car which is not as popular or rare will give you much more bargaining power. End of model year, end of platform, etc are other good deals. Also having many dealers to compete works better than manufactures with less dealers (I have 10+ Ford dealers nearby, but only 1-2 VW dealers for example)
I e-mailed three dealerships in town. I said I wanted a BRZ, Limited trim, Black, with a manual transmission, and asked what their lowest price was. MSRP for this configuration I believe was $29K. One dealership didn't answer at all, the second offered $29K, the third offered $26K and included all the dealer-installed options like the cargo mat for the drunk, auto-dimming mirror with HomeLink, and wheel locks.
I definitely went with the third dealer. Didn't even feel the need to haggle any more than that.
How much is a day off work going to cost you? If you can save more than that by negotiating go ahead.
Let's say one day might shave you $1k off, but 2 days of effort might save you $1.5k, consider the diminishing returns. Or just consider it "education" or "entertainment"