Here’s the script for the “Negotiating A New Car Deal” video below:
This is the time for us to start to move the needle more towards what we want to accomplish. We aren’t going to reveal our final intentions yet, but we are going to get closer now. After all, you can’t just stare at the sales rep with a funny look on your face at this point and buy a car. So what’s next?
We’re going to attack the sales price. They want to get you into a spot where you’re negotiating a new car deal on payments, or your trade-in, or your down payment, but that’s not our job at this point. Regardless of how everything else works out, whether you’re going to pay cash, finance, or lease, we need the vehicle price to be as low as possible, yet still acceptable to a dealer.
How do we start to tackle price alone on a new car? Simple, we ask to see the dealer invoice. You may get some resistance, but that’s okay. Hold to your position. Let them know that you will walk away if they don’t print it out for you.
The dealer invoice shows the price that a dealer will pay the manufacturer for a car. It will break down the base vehicle, plus any options into the dealer cost and the MSRP. Some invoices will even show the “dealer holdback” now holdback is additional money that the dealer will receive from the manufacturer when they sell the car. We’re going to use the invoice price to prepare our counter-offer.
You also may see other plans on an invoice like the ones at the bottom here.
These are special discounts for specific classes of people providing an additional factory discount. You’ll know already if you qualify for one of these plans because you’re either working for the manufacturer or have retired from there, or you’re a dealer employee.
Just make sure that the last 6 of the VIN on the invoice match the last 6 for the car that you want.
Our strategy here will be to offer them the invoice price and let them keep the holdback. This is a winning scenario for both you and the dealer. They are content to let a car go at invoice price because they have other ways to make money. In addition to holdback, a dealer will also receive factory bonuses based on the number of cars sold per month. Remember how I mentioned earlier that a sales rep will receive stacking bonuses based on units sold? Factory incentives are part of the reason why.
Now you may be asking at this point, “Why can’t I offer below invoice?”
In fact, some dealers will even advertise below invoice. In this Information Age, where dealers publish pricing online, there can be a race to the bottom so that they can advertise the lowest price. When this happens, though, a dealer is playing a shell game by moving numbers around and relying on the sales management team to pick up profit in other areas.
We want to build a straight and clean deal here where everyone gets what they want.
I’ve seen it a hundred times where a customer negotiates themselves out of a deal by taking the wrong approach, and then either pride wouldn’t allow them to fix it. Or they have completely unreasonable expectations about what a dealer will do. If you overplay your hand and leave, then you just wasted everyone’s time, especially your own.
A dealership absorbing a net loss on a deal is so extremely rare that teaching you how to line up all those conditions perfectly would almost certainly result in your not getting the car you want at all.
This process of negotiating a new car deal will take long enough, so let’s take a methodical approach to the negotiation and actually get a good deal across the board for the car you want.
Now either the sales rep or someone from management will bring the invoice out to you, will want to know what you want to accomplish, and will try to commit you. We still aren’t going to tell them, though. We’re just moving the needle on price. We want them to accept that they’re only getting invoice pricing.
At this point, I want them to show me options. Regardless of my true intention is to pay cash, finance, or lease, I want them to show me what it would look like to finance with three different down payments. Tell them that you will pay invoice and let them keep the holdback. Ask to see how payments will look with three different down payments, 1 of which being the down payment that you actually want.
Here’s how the conversation would go from me as the buyer to the sales rep when I already know that I want to put $2,000 down:
“Alright, Jim. I’m willing to pay the invoice price and let you keep the holdback. I haven’t decided how exactly I want to buy it yet, though. Maybe I’ll just pay cash. Please have the desk show me how the payments would work if I put down, zero dollars, two thousand, and five thousand, including all applicable rebates, of course. Oh, and tell them to assume that my credit is good.”-You
Notice that I still haven’t told them anything about my true intentions. Sending the rep back to the tower without a commitment will frustrate the desk manager, but they will know now that you’re locked in on price and that you aren’t going to roll over on what they offer.
Finally, there are sites that will estimate invoice pricing, but the only accurate source of this information is from the dealer itself. The only way that you’ll have a ridiculous time getting this information is if you’re looking to buy an exotic or rare car. If you’re on a relatively common car though with multiple options in your market, don’t be afraid or think you’re weird by just walking away and going to a different place.
If the dealer wants to play games in this age of heightened transparency, then they’re just trying to “put you together” instead of making a win-win deal.
Move on to a less sketchy dealership if possible.