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This is practically verbatim copied from "The Millionaire Next Door". Additionally it really has nothing to do with Game Theory, just common sense negotiating. And you can improve on their play by A LOT. What power does the salesman have? None. He has cars, he wants to sell them. You have the money. You have the power. He postures that he has the power but really, you can walk out at any time. There are other dealers…
This is practically verbatim copied from "The Millionaire Next Door". Additionally it really has nothing to do with Game Theory, just common sense negotiating. And you can improve on their play by A LOT. What power does the salesman have? None. He has cars, he wants to sell them. You have the money. You have the power. He postures that he has the power but really, you can walk out at any time. There are other dealers…
This article has a fascinating discussion of the "4 square sheet" that dealers use to fudge negotiations. Two of the squares are price and financing (included in your monthly amount), and the others are trade in and warranty. People generally get a better deal if they're negotiating solely on price:
http://www.edmunds.com/advice/buying/articles/42962/article....
No question, there is much one can do to shift the power. But there is a reason why no one has yet gotten the car purchase process totally online: the dealers do indeed have some power. They control the distribution of the car to you, and they have location-based impact that, for some people, is important. At the end of the day, you are buying from one of the dealers, and if they are all above your price but you want the car, well, you either pay more than you think you should, or change your car choice.
If you don't care about the "free oil change" services or other post-sales issues involving the dealer, and have the time to deal with multiple dealers and a potentially extended process... then go for it. If you are in an area with few dealers for the car you want, however, you may find the negotiation requires a different approach than merely a PDG assuming multiple equal competitors.
Earlier quoted context omitted.
Always buy rustproofing, if you bought a car crappy enough that the paint job doesn't include anti-rust elements, especially if you live in a location with lots of water-based weather or near the coast. Why are you adding money to the lowest price they can sell at? That is your target price -- the lowest price they can sell will always be the lowest price that includes a profit (or the smallest loss, for brands like…
ah, but never buy rustproofing (or optional alarm, tint, etc.) from the dealer! those are the optional extras that are marked up 200-500%. there are specialty shops that will do the same exact thing for much cheaper. also, every modern car sold today has anti-corrosion measures, as well as corrosion warranties, so i don't see why you would pay extra for rustproofing. this might've been a good idea 20 years ago, but i…
He'd get the "best price" and then tell the buyer to say, "that includes the mats and metallic paint, yes" (or similar). Basically the guy thinks he's secured it, you hit him for that last bit.
He did a general buying show too.
Re the article - not all dealers are equal: You come back at 4pm, the cheapest dealer has had the alloys switched off or put on cheaper tyres (that's £50 at least). You've no time to go back to the others. You buy? If you don't do you think the other dealers will play your game the next day or just see you as a time-waster?
The author mentions South Korea and its foreign policy several times. I would prefer to know more about (and attempt to predict) the foreign policy of North Korea over South, because of its closed-off nature. Did anyone else think that the author meant North Korea?
"The South Korean automobile industry is today the fifth largest in the world in terms of production volume and the sixth largest in terms of export volume."
But the author may well have meant North.
A nice theory, but has it been tested? It assumes rational behavior on the part of the salesperson, not to mention assumes that the writer understands the motivations of the salesperson. I once found a car salesman who was asking way too much for a used car on his lot. He refused to budge on price. I couldn't believe both that it was priced so high above market rates or that he wouldn't come down on the price at all.…
For used cars the dealers are making money on trade-ins even if they let it go far below the posted price. Any used car they sell off the lot is going to be a bigger profit than cars going to auction. A lot of times you can simply look at the dealer's lot and see how crowded it is. If it's packed with lots of used cars there's a great chance you can walk in and say I will pay $X and get the car. They just want to get it off the lot to make room for better inventory.
My advice, if you're looking for a used car, is to find a dealer that doesn't deal with a huge volume of used cars. They're often selling their trade-ins at a good value because they don't have the volume to make the auction process work in their favor. They'd much rather just sell them off the lot.
This is practically verbatim copied from "The Millionaire Next Door". Additionally it really has nothing to do with Game Theory, just common sense negotiating. And you can improve on their play by A LOT. What power does the salesman have? None. He has cars, he wants to sell them. You have the money. You have the power. He postures that he has the power but really, you can walk out at any time. There are other dealers…
It's interesting that you mentioned your prices in monthly payments, rather than the pre-financed total. What precisely were you negotiating? This article has a fascinating discussion of the "4 square sheet" that dealers use to fudge negotiations. Two of the squares are price and financing (included in your monthly amount), and the others are trade in and warranty. People generally get a better deal if they're negoti…
This is practically verbatim copied from "The Millionaire Next Door". Additionally it really has nothing to do with Game Theory, just common sense negotiating. And you can improve on their play by A LOT. What power does the salesman have? None. He has cars, he wants to sell them. You have the money. You have the power. He postures that he has the power but really, you can walk out at any time. There are other dealers…
It's interesting that you mentioned your prices in monthly payments, rather than the pre-financed total. What precisely were you negotiating? This article has a fascinating discussion of the "4 square sheet" that dealers use to fudge negotiations. Two of the squares are price and financing (included in your monthly amount), and the others are trade in and warranty. People generally get a better deal if they're negoti…
On the 4 variables. I can see their point but I never get into that stuff.
My experience has been that you can usually sell the car yourself for more than trade in value, and these days with craigslist and ebay its not very difficult. I've sold 2 cars this year and you know bad the economy is.
I also don't really finance. I guess I will have to in the future but so far I've been able to buy all my cars cash. I buy most coming off a lease 2-3 years old.
And I definitely never buy an extended warranty or dealer warranty. The dealer I bought that car from is gone now and its only 4 years later, the manufacturer's standard warranty is all that matters.
The seller has perfect information (knows all the flaws) and the buyer has imperfect information (only knows what information can be gathered from a test drive and superficial inspection).
Earlier quoted context omitted.
It's interesting that you mentioned your prices in monthly payments, rather than the pre-financed total. What precisely were you negotiating? This article has a fascinating discussion of the "4 square sheet" that dealers use to fudge negotiations. Two of the squares are price and financing (included in your monthly amount), and the others are trade in and warranty. People generally get a better deal if they're negoti…
I was negotiating the total price of the car. I guess the missing bit of information is the term (both prices were the same) and the amount down (both were $0). That wouldn't always be the case if the dealer is trying to pull a fast one on you by giving you a lower monthly payment but a higher total payment. I made sure to match apples to apples. I assume most people reading this website would realize the possible ba…
Huh? If you don't finance and both of the cars were the same price, how does the difference in term mean anything?