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Comment by bko | Hacker News Reader

This is great news. People often forget that dealerships often abuse their power and take advantage of consumers. This is especially true since purchasing a car is a large purchase with information asymmetry (although new resources have made this less true). It's especially appalling how dealerships often discriminate on race and gender [0]

I am disappointed that this move only applies to zero-emission vehicles but hopefully this will lead to future legislation undoing the protection granted to dealerships.

[0]http://islandia.law.yale.edu/ayres/Ayres%20Siegelman%20Race%...

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>This is great news.

It is!

> People often forget that dealerships often abuse their power and take advantage of consumers.

I doubt many people forget that. Car salesmen have some of the worst reputations of any profession in the US. Purchasing a car can be nerve-wracking. The research I felt compelled to do beforehand felt like I was preparing myself for battle, because I knew the incentives were diametrically opposed.

I haven't really run into this issue myself. Maybe I'm younger than others, but the two cars I've purchased from dealerships have been done mostly online. The only part that could be nerve-wracking is turning down all the up-selling when finalizing the purchase (warranty for wheels, dents, etc).

If you are trading in a car, it adds quite a bit to the complexity. It adds another level of where they can move numbers around to make it look like you're getting a better deal than you are. It goes from being just about the cost of the car and APR, to also including the amount you are getting for your trade-in. It's very easy for them to lower some portions of the equation while making up for it in other places, and they are well versed in how to do this as they do it every day.

Recently I've had both an extremely bad and an okay experience at car dealerships. In one case, the salesman was so pushy as to repeatedly argue with my as to my decision to not buy a car that day, even when I was up front in my first contact with him saying I was looking that day, not buying, and would be back in a day or two after I'd done my own research on what they presented to me. I left not just angry, but infuriated. A few weeks later I bought a different make of car at a different dealership, and the experience was fairly smooth. Even so, there's a lingering feeling that I may not have paid enough attention and they may have changed the deal slightly on one portion of the deal while I was busy focusing on another part. I have so little trust of that industry at this point that I find it nearly impossible to trust any good experience.

I understand that there shouldn't be an expectation that I will automatically get the best deal just by showing up, but there's so much purposeful obfuscation and complexity in the process that it's hard not to walk away confused and angry (even if it takes a while to settle in).

If you are buying a new run of the mill car and are not picky about colors/options, you are basically buying a commodity - every new car of the given make and model is just like the next. If you also happen to live in the U.S. near a metro area, chances are that there are a ton of dealerships nearby willing to compete to get their high-value inventory off the lot.

You can turn the tables around quite easily and stress free (and have some fun in the process). Here is a car-shopping tactic I learned in a negotiation class some four years ago, used when shopping for a new car a few months later, and got a significant discount to the original ask. It really works well.

Shop towards the quarter-end. If you can help it, shop as close to the quarter-end as you can. If it's raining - even better. It's incredible what sales guys will do to get one more car out of the lot before quarter-end on a rainy day with no one in the showroom.

Get Consumer Reports Wholesale Price report. This gives you a good approximation for what dealer pays to get the car.

Compile a list of dealerships in 20-50 mile radius. For some brands you can even see their inventory online, which is fantastic.

Call dealers one by one. Be very professional, polite and don’t get emotional. Here is the script -

- I need to buy a new car. I am paying cash and can buy today.

- I am looking for $Make and $Model in $Color and I see you have $N cars like that on the lot. I've checked the Consumer Reports Wholesale Price which lists this vehicle at $X. The additional cost for $Options is $Y, which makes the total cost to dealer to $Z.

- Please call me back and tell me the best price you can offer out the door [1]. Do not include taxes, title, or tags which I will handle on my own.

As you get quotes from the dealers, thank them for their time and inform them of the lowest quote you currently have. They will sure call you back. Be prepared that some dealers will get really pissed and emotional, but just remain professional and polite. There is really no need to lie or waste anyone's time, the process works itself out beautifully. You’ll get a great deal before you even step foot in the dealership.

If you are leasing or financing, it doesn't work as smoothly (more levers to pull), but it is doable. I also don't think it would work as well for high-end brands with fewer dealers around.

[1] This is part of car dealer lingo and for some reason it resonates really well.

Couple of things. Dealers know you're doing this, so they'll try to confuse/bamboozle you to regain their advantage in information asymmetry. You have to be 100% sure of what you want, and why you want it. The slightest hesitation, and they'll have you.

Secondly: this tactic works even better near the end of the month. Salesmen have sales goals; if s/he is a little short of that goal (or the next tier), you bet they'll do everything, including throwing in their grandma, to clinch the deal.

For those with a trade-in - my uncle, a former car salesman, adds this:

"Pick out a car, negotiate your best price, take your time. The day you're supposed to pick it up, call them up and say, "I thought my vehicle was worth more, I think it's worth $1000 more."

In their mind, that car is sold, the manager counted it, the salesperson is counting their commission already, and the minute you turn it around on them, they will not let that sale go. If they can give you another $500, trust me - they'll do it."

This is how I've bought my last two cars and I'm generally a huge fan. One question for you, though: Why do you exclude tax, title, and tags? My understanding was that "out the door" price included everything required to get the vehicle on the road. Especially tax - can a dealer even legally sell a car without collecting sales/excise tax?

As strange as it may sound - I ask them to exclude all taxes and fees to reduce variability and have more of an apples to apples comparison. Taxes & fees are well defined, but in my experience, dealers try to sneak in a decent "service fee" in there. One guy tried to sneak in as much as ~$600 I think, which I found amusing. It just helps to reduce noise and focus on a single number; they'll do all the DMV work for you for free.

"out the door" typically means bottom line... including all taxes, fees, etc.

The best way to buy cars is option out exactly what you want and get the invoice price. Personally I've used carsdirect.

Now with invoice price in mind, send emails to all dealers in your area. Simply explain you want X car @ X price and that you are emailing many dealers and will move forward with the dealer that has the best deal. Its important that you compare cars across dealers by the difference from invoice price as small options will change the price of the car slightly.

As you get quotes, you can forward those to other dealers if they have the specific color you want, etc.

Once you lock in a price, take care of financing through your local credit union. Show up to dealer, decline all warranties/addons, sign the papers making sure price is the same you agree, and off you go.

Just did this about a month ago and it worked out great. Remember to calculate exactly how much DMV fees will be(usually around 2-3 hundred dollars) which will likely be on top of the price you negotiated unless you specify otherwise.

Don't tell them you have a trade in until you show up at the dealer to buy. Then you can negotiate the trade in value without them trying to move numbers around with the car price.

I like this approach because there is zero advantage to negotiating the car price in person. Via email you can take your time to research and also field many more offers and quotes than you would ever be able to if you visited each dealer physically.

Or just use Costco Auto, and get invoice, sub a hundred or a few hundred (depending on mfg).

I don't have any experience with Costco Auto but knowing Costco it's probably a good program.

Also once you've narrowed the list of dealers. Make sure that the dealer actually has the car in question. Ask for the vin number. I've had the unfortunate experience of them trying a bait and switch once.

You're missing a huge part. Get an insurance quote for what it will run you every 6 months. You can also get a tag, title and tax quote as well.

Also 200-300 for DMV is for a $2000 car in CA or a $6000 car in OK. $200-300 sounds extraordinarily low based on my purchases in both the midwest (MO, TX, OK) and west coast (CA 10%+).

When you buy from a dealership, you pay the taxes to them. If you are buying a used car from another person, you pay the taxes at the DMV.

The $200-300 is just registration + any fees.

Depends on the state. In CA yes you do. In OK/TX/MO I never paid the dealer.

The best way to buy a car is from Tesla. Configure your car exactly as you want it online. See the exact price you will pay. When you're ready, click the button and put down a deposit using a credit card on their web site. When the car is delivered, pay the balance with an ACH transfer. Drive it home.

You certainly can do well with traditional dealers if you're prepared. It's just crazy that you even have to worry about it.

I genuinely prefer the no-haggle car sales process. It's ridiculous that some people pay hundreds or thousands more than others for these cars.

Most people can't afford a Tesla... so thats a moot point.

I disagree. It's an existence proof that there is a better way, and demonstrates that dealers are blocking our ability to access that better way.

Not long ago, one could have argued that the dealership model was the best you could do. Now it's impossible to argue that, since the best car-buying experience out there doesn't involve dealers.

Thanks for the downvote I guess? I said it was a moot point because you said just go buy a Tesla! Which most people can't afford or want to spend on a car.

I'm not in love with the dealership model but its not a choice for 99% of buyers.

I have no idea who downvoted you, but just for the record, on HN, it's not possible to downvote any post that is a reply to you.

I don't know why people always assume the person who replied is also the person who downvoted. There are probably a couple thousand people with downvote privileges who've visited this thread. Even ignoring the bit where I can't downvote you, the odds that it's the person replying are small.

I didn't say just go buy a Tesla. I said that Tesla is the best way to buy a car. I didn't say it was an option for everybody, and "the best way" doesn't require it to be.

I'm surprised no one has yet mentioned CarMax. I won't argue as to whether CarMax is best or not but I can attest that it is a very straight-forward, no-haggle, and pretty fair-priced way to buy a car. Even if you don't feel they are best-priced, you definitely will 100% avoid all of the anxiety and nerve-wrackiness that comes with going into traditional dealerships. That alone might be worth a slightly inflated price to avoid that experience anyways.

True and they will ship cars around their lots for you. That said, you pay for it if you don't end up purchasing the car but I think it opens up a lot of inventory to sift through.

What you're describing is (or used to be) called fax-blast car buying [1], and the best move once you've firmed your decision on exactly what you want is to contact the fleet sales managers with either a quote request, or an offer to buy - repeating the offer process until you stabilize on a overall discounted price.

In my case, I worked with 3 dealerships (one where I test drove the vehicle and 2 other fleet managers. I ended up going with the original dealer because I had more rapport, he was flexible on pricing and agreed to complete the paperwork and hand over the keys at our house (we had newborns) - I had no idea this was even possible, and was a nice completion to the purchase experience.

[1] http://www.edmunds.com/car-buying/blast-fax-car-buying.html

Sounds about right! And very cool about them coming to your house - nice of the dealer to do that.

My sister bought a car last summer. She started with a fax-blast site, then scheduled a test drive with the dealer with the best price. The night before, she called a fleet broker one of her friends suggested. He sent a price that was about $120 less than the dealer's, and promised to deliver the car to her door with a full tank of gas.

The dealer refused to skip the 2 hours of paperwork ("It's required by the state" he said) and said the fleet broker was a scam. She left, called the fleet broker on the way home, and had her car the next day. The paperwork took 5 minutes, standing at her front door.

I have always wanted to take a cashier's check to a dealership and tell them "that car, this check, keys in my hand in 15 minutes or I leave." But I think I'll skip that show, entertaining as it might be, and use a fleet broker.

This may have worked where you live, but all the dealerships here are refusing to play that game.

They'll all give you a form letter "come in and talk with us" message. Apparently cost-plus isn't that appealing to them, and they'd rather lose the sale and wait for a higher-margin purchaser.

Some tried that, I told them I was busy and didn't have the time to visit dealers. I never indicated I was desperate to get a car RIGHT NOW. Play it cool and all the power is in your hands imo.

> The best way to buy cars is option out exactly what you want and get the invoice price.

The problem is that you can't get exactly what car you want (all the options, color, etc...). Why? Because you're only limited to what dealers have in stock. You can't even wait a few months for what you. It's just not an option for most cars aside from Tesla.

I've found that dealers will trade cars with other dealers to the get what is wanted, but they'll try push back on the buyer to avoid having to do that. If it's out of stock in the region - then you have a harder situation...

It's still not exactly what people want in terms of exact options and color: no less and no more. There are people willing to wait.

As someone who is likely to need a car soon, thanks so much for posting this. I've heard others state that the trade in needs to be separate.

Don't even bother to trade it in. Just sell it private party. I have always been shocked to see what dealerships offer for a trade-in. It's money. I have given cars to relatives, or friends rather than accept their low ball offers.

The recommendation I've heard is not just to keep the trade-in separate, but to take it to at least three dealers and take the highest quote. (I haven't tried this myself.)

Really the best thing to do is buy a used car from a private seller. You'll save the bulk of the depreciation which happens in the first couple of years. A contemporary used car that's two or three years or even 5 years old is still going to be very reliable and have a lot of life left. Insurance and probably registration will be much cheaper as well. I own three cars, the newest is is a 2004 and they are all extremely dependable.

I doubt think people forget it, but I do think many people actually consider protectionism a good thing (not "abuse"), and many more people either haven't ever learned or thought about these policies. The negative stereotypes of car salesmen doesn't require people to know the history of the political struggle between automobile manufacturers and dealers.

>People often forget that dealerships often abuse their power and take advantage of consumers.

Don't worry we're reminded everytime we interact with them. Nothing says captive monopoly like an auto dealership. I'm buying a new car soon and am dreading the experience. I'm leaning towards a used car that's still on warranty because of how bad the dealership experience is and the various ways they try to scam you (hidden costs, poor financing, insulting your credit score to hike interest, trade-in scams, MSRP games, overpriced dealer add-ons, etc).

I watched as a salesman did a "pull the keys" at a Jeep dealership. It was so obviously fake. Another salesman just walked up, took the keys from my salesman, and said, "We have others interested in this game" to pressure me. I saw that guy through the glass walls. He didn't have a customer. He just pocketed them and looked at once once in a while in anticipation.

Not to mention how they treat women like shit. The things my wife puts up at the dealership is inexcusable. They tried to get her to pay, out of pocket, a engine rebuild for a car on warranty. I pretty much had to yell at them to honor it and call my lawyer.

I'm pretty critical of Tesla, but I do think their no-haggle Saturn-like policy is excellent. If Tesla survives long enough to sell an affordable electric with great range, its a no-brainer buy for me.

>I'm buying a new car soon and am dreading the experience

I've bought multiple cars in my life. I don't understand this in the slightest. Every experience I've had has been only slightly more involved than purchasing anything else, as it should be for the cost.

The dealership world is hyper-competitive. Know the value of the car you want, and what you're willing to pay. Let them know that. If they can't do it, go elsewhere. Don't pay for anything you didn't ask for.

Like practically every other consumer experience, the buyer has all the power. You're the one signing the cheque. They want your business.

>poor financing

Most companies offer 0% financing. Where else can you get that?

A few more tips:

Like anything else, have alternative financing lined up before you start that conversation. This reduces the financing issue to one question: "Can you beat this rate?"

Secondly, I'd highly recommend going through internet/fleet sales at any dealership. Typically, these people are paid primarily in total-volume and less in sales-price-over-invoice, which gives them a great incentive to do the deal on your terms (as long as you don't abuse their time). The added bonus is these people also tend to be just fine negotiating the preliminaries over more convenient email. In contrast, every dollar you negotiate the lot salesman down is generally a dollar out of his pocket.

The problem is that the process is so opaque that it's hard to get rid of the nagging question of, "Am I being screwed somehow?"

You say you should know the value of the car and what you're willing to pay. How can you be sure that what you're willing to pay is reasonable? What if what you're willing to pay is a thousand dollars too high because you screwed something up? You can mitigate this with more research, but it's a lot of work compared to buying most things.

You're right that the buyer ultimately has the power (as long as the buyer doesn't need a car right now and has a reasonable choice of dealers in his area), but you have to wield it. This is not true in most areas. I don't need to do research and look up tips for getting the best deal out of my local Safeway. I just go buy stuff (after getting a loyalty card). My power works invisibly to ensure I get a reasonably good deal on almost everything. To the extent that there are tricks, it's simple stuff like "when there are two identical items from different brands, buy the cheaper one." When buying a car, you still have the power, but you have to go out of your way to wield it, or else you'll get screwed.

People want an experience where they just go in, pay, and walk out with a good deal. You can get a good deal from car dealers if you put in the work, but it's that very fact that you have to put in the work that people don't like.

There is no such thing as 0% financing. The cost of the interest is buried in the product somewhere.

Used car dealerships run scams, too. I've bought a lot of cars, though, and never from a dealer. Some folks act as if they're OBLIGATED to buy a new car every couple of years, and obligated to put up with these people.

dealerships are the reason I've only ever owned 3 cars in over 20 years of driving. My last car was a mitsubishi bought from a Chevy dealership, I think I got reamed on that one. My current car is a Toyota from a no-haggle dealership. Went there, they brought up Edmunds.com "true car value," we walked through it together, and they knocked $1000 off that price. I walked away happy. And that Toyota has been going on 6 years now. The only major service it's needed was to clean out a nest that some pack rats created in the engine bay (before chewing some spark plug wires and electrocuting themselves)

On the other hand, this could be an incentive to purchase zero-emission vehicles instead of the alternatives, as the buying experience would be theoretically much better than that of going to a traditional dealer.

Yes. It's like visiting the websites of two competing software vendors. One has a plain-as-day pricing table with a $100 / month plan and a big blue "Buy now" button. The other company's Pricing page just reads: "Call us for a quote". Given the choice, who would ever go with the company that makes you talk to an enterprise salesman?

Somehow car dealers in the U.S. have managed to enshrine this sleazy sales model into state laws, which is certainly an amazing feat of lobbying.

"Call us" is if you're lucky. More like drive over to our place and we'll talk about it over stale coffee.

Pro-tip: if you're calling them, they don't have a $100 / month plan to sell you. There aren't many companies that sell most of their business at $5,000 / month through the website. And for those that do, talking to a sales rep gets you a discount just for picking up the phone.

Also, having moved from programming to sales/marketing, I'm a bit more sympathetic towards the "call me" model of selling. There's a lot of companies (like mine) that aren't deliberately withholding information, but instead are training and enabling reps to walk you through a process that can't be navigated with blog posts and product pages alone. We do monitoring, and most of our customers treat our sales reps and pre-sales engineers as free consultants. Nothing magical about it, but talking to a human is valuable for problems like "how to a unify monitoring for my 1,000 servers are 24 teams which runs apps that are a result of 17 acquisitions".

I imagine the car salesmen also think of buying a car as a "process that can't be navigated with blog posts and product pages alone". Probably your business has a more valid claim to that.

There are areas where it's reasonable to ask people to call. Where it gets suspicious and tricky is when some businesses state prices up-front, and others ask you to call. When the nature of the thing requires contact, they'll (almost?) all say you should call. For example, plumbers typically won't advertised fixed rates for jobs, and in the rare cases they do that's a warning sign.

There's a lot of companies (like mine) that aren't deliberately withholding information, but instead are training and enabling reps to walk you through a process that can't be navigated with blog posts and product pages alone.

I've designed complex electronic devices via product pages (data sheets) and other online information sources, and sold them to the Federal government through GSA procurement. I'm pretty sure I can "navigate" your "process" without wasting time schmoozing your sales guys on the telephone.

If you have a competitor who doesn't make me do that, they have a strong advantage over your company, right out of the gate. Just saying.

I'm not questioning your intelligence! I'm sure you could do it.

The more common scenario is that there are a ton of people involved, and it's not easy / worthwhile for the person who kicked this off to convince them all. Where the sales rep provides value there is they can help the you sell. You make an intro, they'll pull together a bunch of materials and demos and other crap to convince your coworkers that it's important.

We do have a self-serve path which is about as easy as anybody else's, and our prices are stated up front. Most people can navigate that technically, but the larger organizations almost never take that route because of organizational / political concerns.

> Somehow car dealers in the U.S. have managed to enshrine this sleazy sales model into state laws, which is certainly an amazing feat of lobbying.

It's a perversion of originally customer-friendly laws. The regulations were from an era where being able to be sure you have a local presence to service your car was very, very important.

Right. The conversion rate is better for some products after a salesperson walks the customer through.

Of course, you're cutting off the cohort of people who just don't want to talk to a salesperson - so you'll never convert those - but you're converting at a far higher rate with people who need explanations and a salesperson to help them navigate the internal blockers at the company.

There is a good joel-on-software post about this - essentially once the price goes above a set level - maybe $2000 all in - then the price has to jump because enterprise-y sales means that the buyer has to justify it to their purchasing, which means needing a salesperson to do all the grunt work to help.

A lot of people in the no-touch SaaS model think this is nuts - but the fact is different models work for different people. Just because two companies have similar-sounding products, it doesn't mean they are in the same market. Gmail and Exchange server essentially do the same thing, but the markets are mostly different, with only a small overlap.

> which is certainly an amazing feat of lobbying.

It's like I heard a collective "bitch please" come from the banks, food wholesalers, defense contractors, insurance companies, immigration lawyers, patent attorneys, entertainment industry, telcos, etc. etc.

It's nothing like this.

One has a plain-as-day pricing table with a $100 / month plan and a big blue "Buy now" button. The other company's Pricing page has $100/month plan with "Buy now" button and additional text: "Call us if you want to pay less".

okay, this old trope again. anyone who has a $100/month plan has it on their website. it's 2015, saas is a thing now.

nobody is going to make you call them for $100/month. ~$3k/month or ~$10k lump sum is roughly the threshold for enterprise sales that require you to talk to someone.

they do this because anyone who pays anything less than that for an enterprise service or product is going to be a demanding, unreasonable, cheapskate, entitled, caustic asshole because they're not used to spending large amounts and the money is probably coming out of their pocket (small business or soho customer). nobody on earth wants to deal with that kind of customer.

the phone call is designed to filter people out who get annoyed at needing to talk to someone. if you don't want to talk to anyone, you don't want to spend real money, because people who spend real money want to talk to real someones, usually multiple someones, the more someones the better. nobody wants to deal with the 'in between' customer who is too big for their consumer britches but won't step up to spend money for a real solution where real people on the other end of the line give a shit about their problems.

I am not sure why the experience would be better. You always have the option of paying asking price to the traditional dealer.

For some reason people that don't like to negotiate don't want to pay sticker price either.

Even if you do pay the sticker price, you might also be trading your car in, in which case you still have to negotiate how much they will pay you for your car.

Not only that but the sticker prices are usually artificially high since they are expecting negotiation with high prices for random add-ons like paint protection or other things nobody asked for.

1. If you trade your old car to Tesla, you still have to negotiate it's price.

2. I am not sure how is your opinion about price is related to the experience at the dealership. Sticker prices for all cars are available online, and you can make a decision if the car worth that price well in advance. Once you make that decision nothing is stopping you from having a great car buying experience.

You are totally right, that was dumb of me. Oops

If you are not price sensitive, it's very easy to have an excellent buying experience.

Yes if you are not concerned with wasting money, it's very easy to not care who takes your money.

I assume his point is that makes car buying stressful for a lot of people is the negotiation thing. If you're willing to dispense with that--which can indeed save money in many circumstances--then it will indeed be less stressful. And, at the margins, that's not even an irrational decision.

> future legislation undoing the protection granted to dealerships

Franchises were purchased with the understanding that they wouldn't compete with manufacturers. I think the correct law would be to grandfather the old manufacturers in but let new ones sell direct. I guess a zero-emissions exception makes sense to eventually phase out dealerships and immediately allow Tesla.

Also I'm no so anti-dealership. It's not the easiest business and most of them have low margins.

>People often forget that dealerships often abuse their power and take advantage of consumers.

Aren't corporations selling directly to consumers known for doing the same?

Funny how they way they abused their power was by getting a law passed.

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