New car buying guide: the algorithm (2021)

Yeah, negotiating a price is a loosing battle on average. why ? Because you're always on the defending side: the salesperson tries to max the money he gest from you and then you have to make a rather big effort to just get the fair price.

Granted, when talking to big company, you can't even negociate.

I'd find myself in a pretty awkward position if my goal in a professional relationship was to make the other side loose.

10 years ago I walked in a dealership to buy a used car and employed a negotiation tactic that I had recently learned online. The problem was that the technical price negotiation worked so incredibly well that I basically got (politely) thrown out of the dealership.

The tactic was simple: disarming empathy. It was a method presented by a hostage negotiator via this NPR podcast: https://www.npr.org/transcripts/167802325 Basically you agree with the salesman that whatever price they are offering is actually very fair, and in a normal situation you would accept it... but you apologize profusely saying you just can't spend this much because it is too expensive for you. When he says such and such product quality justifies the price, you wholeheartedly agree with him... but you can't afford this.

So that day I had identified a specific car I wanted, online, at a dealer in my area. I went in to see it in person. I explained I was ready to buy it today, got sat down at a desk with one of their salesmen. And he starts by presenting his price. I explained it's a really good price, but I really can't afford that, and asks if there is anything they can do to reduce it? After a while he says, sure, OK, what about this new number? And basically I keep doing the same thing over and over. I profusely thank him for reducing the price, but explains it's still too much. Over a span of 20 minutes, he cuts the price down 5 or 6 times, up to a point where I finally say we've reached a price that I am able to afford. I don't remember the numbers but I think we had started around $19k and got down to $16k. The salesman is mildly happy, but I distinctively remember him not being that enthusiastic. He said he's going to get the paperwork ready to finalize the sale. He leaves me at his desk while he walks way. And a few minutes later he comes back, with a very sad look on his face, and apologizes while explaining that the owner of the dealership refused to let the sale close at this price. He says there is nothing he can do for me, shakes my hand, and remains awkwardly silent, then apologetically stood up to make me understand it was time to leave. I kept thinking the guy probably had just been yelled at by the owner about he could have screwed up the negotiation so badly.

I have gotten into the habit of asking myself of any company "What is their actual business?". This is invaluable in the IT world, but a useful tool in the real world too.

I know nothing about the car business in the states, but it seems to me after reading these comments and the article that the actual business of car dealerships is most probably - selling financing, and the cars are the 'vehicle' for this.

CarMax also turns the transaction into just like buying something from the grocery store. Instead of paying people to argue with you about price they pay them to get you through the transaction as smoothly as possible.

The UK is heading this way too, and I hate it.

If you show up with cash to buy a car, you're looked at like you're crazy. They push, and push to get you to take out a loan.

It no longer puts you in a better negotiating position to be a cash buyer, as they're making more money selling you finance than selling the car.

For all of Tesla's failings, car dealerships will die out. Millennials and Gen Z _hate_ being sold to and will do anything they can to remove salespeople from the process; even if it means paying more in the end.