Friday, July 10, 2015

The Art of Negotiating

I like dickering on car prices, my wife not so much. Every time she goes into a deal she gets nervous that I'm going to get taken for a ride and comes out amazed at how hard I was on the salesperson. Hard is her term and not mine. I just try to get the best price while still giving the other guy some money to be made as well.

When we test drove the RAV4, we of course had to go through the what would it take to get you in this car today spiel. I threw out a price that was slightly north of insulting and was surprised when the inexperienced saleslady (been on the job for a week) took it to her manager. She came back and asked if that was our budget and in which case they had some nice used vehicles we could look at, just north of insulting us. I told her that was my not having done any research price and that if it wasn't feasible, we would just go and do some research. Of course she called us several times over the next couple weeks as I was doing my research.

The last new vehicle I bought nearly nine years ago, our trip vehicle with wheels still functioning, things were a lot different. Back then, I simply went onto Consumer Reports website and for $20+ got a report that detailed what the dealer paid for the vehicle and all the options for both the front end of the deal and the back. It was simply math to see how much money the dealer stood to be made. Unfortunately the internet changed all that. Now the dealers moved all their incentives to the back end of the deal so they aren't readily apparent. In fact, the best I could do was several sites that listed what others paid for the same vehicle in our area, though many of those had flaws because they didn't allow you to select options or trim models. So after lots of research, the best I could find was not much help.

While my wife was at work, I made a trip to the local dealer where we test drove one and made a better offer. It was still well below what others had paid for it but my goal was not to buy the vehicle but get a sense for how much they would come down. I told the lady firsthand that my budget was X amount of dollars and I wouldn't go a penny over. After several trips to her manager, she came down four times in price while I didn't raise a cent before we finally came to a stalemate and she realized I was serious. I countered by adding another $500 to my 'budget' and after a couple more trips to the manager, she came back and said we were within $1000 of a deal with the options I wanted. If I didn't want the options we could make a deal. I told her I wanted the options for my budget plus $900 price or I would walk and go to another dealer down the road. She hemmed and hawed, went back to her manager but in the end, let me walk out the door over the $100 difference trying to warn me that the deal wouldn't be as good if I came back.

I had done some internet shopping beforehand and knew that a dealer had promised me a deal that was my was my budgeted price but since I was going to trade in a vehicle, nothing could be finalized until they saw it in person. If he would give me that price, we would save $400 plus the cost of all the options we wanted but I knew he would beat me up on how bad the CR-V was in real life even though I described all its flaws. So that weekend, we drove up the the urban jungle and gave the keys over to be inspected. Like I predicted, when he came back he started going on about how he had fought with his manager about the value of our trade-in but they were going to have to value it at $500 less than what he had thought. I told him I understood but I think we could still do a deal if he would sell us the RAV4 for my budget plus the $500 bucks as long as it had all the options we had wanted (and he had told us was included in the internet deal) plus the optional remote starter package with the upgraded remote that can start the car from a quarter mile away. He came back and we shook hands. Negotiating was done, hopefully for a long, long time until the wheels of another car fall off... or come close.

Over the years, the best vehicle I've owned when figured out cost per mile driven is my current daily driver which I bought brand new 18 years ago. A close second was my first used car that I bought and drove until the wheels fell off. Until this RAV4, I've only got three other data points in my life's experience but the worst one was most definitely the CR-V which is now out of the picture and our vacation van which is almost fully depreciated out but still has a lot of life left and is very reliable so it may eventually end up in the better buy column. I wish I could say buying a new vehicle or buying a used vehicle was the best route to go but I can't because it just varies on how reliable the vehicle is and what I paid for it. It's a large check to write for a new vehicle these days, about $250% more than I paid for my first new vehicle 18 years ago, but we've pretty much been saving up for it for a decade.

But most importantly, the wife is happy and as you all know, if mama ain't happy, ain't nobody happy!


sage said...

I put buying a car up there with root canals...

Vince said...

You have to think of what you think you should pay, then half it, and half that number. Then you are getting close to the margin.
But why didn't you Kelly Blue Book reverse engineer it. We don't have such a semi formal datum point. You could probably plot a curve from the year on year price fall-off.
And yeah, that first flush of really helpful data on the internet has gone. Even the easy ones like petrol price that could truly help the consumer. Or the €/$150 shopping basket of a family's basics. My breeding cousins tell shocking stories about price differences on disposable nappies. Dammit, what could possible make such a difference.