The art of negotiating
The most widely recognized method of getting a lower price is to negotiate. But before we get into some of the tactics and strategies of negotiating, it is important to understand your goals and the goals of your dealer.
Just as with any small business, car dealers need to make money. Therefore their goals are to:
- Win you over as a satisfied customer (ideally one who will become loyal to the dealership and refer other potential buyers)
- Make a reasonable profit on each sale
- Sell as many cars as they can
As an individual looking to purchase a new vehicle, your goals are to:
- Drive away with the vehicle you want
- Negotiate for the best possible price
- Find a dealer who wants a relationship (and not just a 'sale')
Getting the Best Price
There is an enormous amount of information online about this subject; however, here are a few basic tactics and strategies that might be helpful.
- Understand the prices - Make sure you know what the different price tags mean (see our Pricing section for more info). From here you can choose one of three basic approaches:
- If possible, time your purchase - Generally accepted wisdom has it that month-end and year-end (when consultants and dealerships are working to make their sales objectives), and whenever new-year models are being introduced are the best times to buy.
- Check for special offers and programs - Research both manufacturer and dealership incentives and programs for which you may qualify (such as The GM Card and GM Student Bonus, GM Military Program and the GM Supplier Program).
- Check inventory - Find out which cars have been on the lot longest, because the amount of time a vehicle sits in inventory can affect the price. Dealers have to pay interest on their stock, so if they're not seeing adequate turnover rates, they may be more flexible on the price.
- Trade-in and up if you have one - There are pros and cons to taking your used car to the dealer as a trade-in. On one hand, if you check newspapers, automobile buy-and-sell publications, and Web sites selling used cars, you may find you can get more money selling privately. However, here are some clear pros to going the trade-in route:
- Reduces the amount of sales tax you have to pay
- Selling to the dealer is much easier and more convenient
- Given the dealer's large market, you may get a price competitive with selling privately
- You don't have to deal with making arrangements to show the vehicle, negotiating with potential buyers, assuring their honesty, and so forth
- Don't haggle if you don't want to - If you don't want to haggle, be honest and say so right upfront. Ask the consultant for their best price. Then either accept the quote or take the information to other dealers and compare. Once you're satisfied with the price, take it.
- Negotiate up not down - After some initial research from web sites and other sources, set a price that you feel is fair. Use this price as a starting point and negotiate up from there. This is typically more successful than negotiating down from the dealer's price. If you aren't satisfied with the price, thank the consultant and leave - this is your most powerful weapon. Just remember, your goal is to drive away with the vehicle you want so be realistic.
- End on a good note - Successful negotiations should end with positive feelings on both sides: You should feel reassured that you're paying a fair price; and if your sales consultant is a good one, he or she should feel that they've begun a relationship with a potentially long-term, satisfied customer.
