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Old 07-28-2007, 09:20 AM
 
Location: Tennessee/Michigan
28,208 posts, read 47,606,329 times
Reputation: 19722

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Find out the reasons why car dealers are willing to give you
the best deal.

Whether shopping for a new washer, a new home or a new car, everyone is always looking for the best deal, right? And why not? The capitalistic system is built on a free market where businesses compete with each other to offer the best product for the lowest -- or at least fairest -- price.

- Cars Buy New at End of Month - AOL Autos
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Old 07-29-2007, 09:12 AM
 
2,775 posts, read 2,840,265 times
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The best advice I've ever read is to throw away such non-sensical ideas. Do you really think getting commission one month instead of the next really makes that big of an impact on a dealership on a regular basis? Unless they are experiencing something of a major sales shortage, you won't be offered a significant savings just because you're going to buy at the end of any particular month.

One idea I've read is to instead, go figure out what car you want to buy (via whatever method), research the prices, heck even test drive it locally, and then fax over an offer to the dealership with a price you are willing to pay expressing how you are willing and in fact going to reach out to different dealerships with a similar offer if this one rejects it. Ask for acceptance back in writing/fax in the next 12 hours or else you will take your business elsewhere.

What you will find is that by cutting out the face to face negotiations experience - and also being open to faxing your offer to dealerships which have similar vehicles beyond your immediate vicinity, you can get a much better deal. You won't be sized up in the same way, and sales managers will appreciate saving a ton of time "selling to you" while still lightening their inventory.
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Old 07-29-2007, 09:46 AM
 
11,256 posts, read 43,386,385 times
Reputation: 14922
Ah, if only it were so simple, mbuszu ...

the world of new car dealerships is loaded with sales incentives, time-sensitive pricing of cars, rebates, advertising allowances, floor plan costs, access to dealer purchase of various models & packages, quotas, etc.

the real "cost" to a dealer of a vehicle may only be determined after the close of a given sales period when the total product mix and sales totals goals are met (or not ....).

if a dealer has but a very small number of cars left to sell in a time period to make a "quota", he may very well be interested in selling those last few cars at any cost (including a paper "loss") because it qualifies him for larger rebates or allowances on all the other cars sold earlier in the time period, which may well make up for the "loss" on a given car. of course, this doesn't mean that he'll not try to maximize the sales price on those last cars, but he knows that he can go to a lower sales price (if that's the only issue left to sell the car) and still be ahead.

"spiffs" and similar commission added time-sensitive programs may be an incentive to the salespeople to make a deal. Keep in mind that the sales managers and the salespeople have control of a deal and know all the costs and benefits involved ... you don't, as a retail customer.

The simple fact is that true price discovery on the part of a retail car sale is a game where you, the consumer, are playing without knowing all the rules and benefits at any given moment. It's all showmanship on the part of the dealer. The fun really begins when you introduce a trade-in car to the equation.

So, end of sales period, end of quota, end of promotion time periods are the best time to buy a new car. This doesn't automatically mean that you will always get the best possible deal ... if the dealer has "made quota", then his incentive to sell at a deep discount is gone.

Personally, I wouldn't put much store in your "bottom line" FAX'd offer to a dealer. You've just gotten into a bidding war with yourself without knowing what all the costs and incentives are to a dealer with your initial offer. I prefer the face-to-face dealing with a sales manager at a dealership, and ask the questions to qualify him as a decision maker for my deal. If he's not the decision maker and won't allow me direct access to the decision maker, then I'm walking out. I let them know up front I'm capable, qualified, and motivated to make a deal on a specific type/model of vehicle; either they have it or they don't. I will not play into the games or walking the lot looking for a car; they can find it and bring it up to the service area for my inspection while I sit and read the paper or twiddle my thumbs to pass the time. I start out my interest level of price point at a very lowball number and work up from there ... armed with the best possible information about unit costs I can find. If they're sitting on a popular model without much incentive to drop the price .... then we're not going to be making a deal; but if they've got that model without a popular option pack, or a slow moving color combination ... I could be a buyer.

It's essential (in my book, anyway) that you buy cars as a disinterested player when you don't absolutely need to have a deal. Buy what you want when you can get the best possible deal; otherwise, you're working on emotion and the stress of need, which is a poor basis for your buying decisions.

This is not the only business set up with all these types of promotional sales/marketing programs. I saw this in consumer audio for many years, and I see it now in quarterly "bonus" promotions in the wholesale to the trade products I rep now. I saw this also in computer hardware and software systems, too. I know it goes on in many varied product lines ... hard goods, soft goods, consumables ... virtually everything that you could buy as a consumer, even including financial products, insurance, etc ... and applies also to wholesale to the trade only goods and services, too.

Last edited by sunsprit; 07-29-2007 at 09:55 AM..
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Old 07-29-2007, 05:21 PM
 
Location: Jax
8,204 posts, read 32,215,112 times
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There is some truth to it.

Like so many other commission-based incomes, there is a tier-system. Often, just one more sale can push the salesperson into the next tier - now everything he/she sold this month is suddenly worth $300 per sale instead of $150 per sale (fictional numbers).

Sometimes the better salespeople, against their employers' wishes, often ignore the internet/fax leads - they enjoy the face-to-face negotiations (and they see that I'm anxious and ready to walk to the next dealership).

I don't time my purchase to "end of the month", but if there's a car I want I will wait until the end of the year (October/November) to purchase it. You can get good deals when they need that year's models off the lot.
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Old 07-29-2007, 07:00 PM
 
11,256 posts, read 43,386,385 times
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riveree ... there's generally little point to waiting until the model year-end closeouts for the "best deals".

the reason is that you're buying essentially last year's model, which will have depreciated the model year's value almost immediately in October.

for example, if it's a car stickered at $22,000 and typically selling off the lot for $20,000 with all the incentives and promo's on the car, it may have a real world retail value when driven off the lot (new) of less than $17-18,0000 during the model year run. As a year-old model, it may be "worth" retail another 10-15% less than that, maybe only $15,000. So, if you buy the car as a clearance year old model, you need to be factoring in the depreciation in full immediately, buying this (hypothetical) vehicle for close to $15,000 to really be a "deal" at the time.

The proof of your purchase value is to ask the dealer (or another of the same make) ... "what would you give me for this car, cash, today?". I'd bet that most popular cars stickered at $22,000 wouldn't get a one-year old model offer with almost no miles (remember, it's now a used car when it's been titled off the MSO) much higher than $12,000. I've seen this happen on many car situations ... like an elderly family member buying a car and driving it only a few miles before illness or other circumstances has the car parked in the garage and it must later be disposed of by the family.

Keep in mind that the dealer buys new cars with full factory warranty terms for a well discounted price and gets floor plan money at a favorable rate. The manufacturer's incentives are based upon new units sold, not how many used units go through the dealership.

A used car, no matter how minimally used ... is still a used car to be sold against a full value new car. That used car will always be worth less money on the dealer lot, even if it has only 100 miles on it and not a scratch on it. It will not qualify for any dealer/manufacturer new car incentive or financing program, either. (Try to keep in mind that the dealer's bigger net profit on the sale of a new car may come from his F&I department, not his sales department).

So, when I look for "year-end" bargains, I'm bargaining off of the current values for the vehicle, not getting dazzled at how big the price reduction is off the sticker price. The dealer's cost of inventory is a big motivation for him to move that stale stuff off the lot.

Oh, by the way ... your hypothetical example of commission sales incentives is not far off the mark on a lot of items.
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Old 07-30-2007, 03:51 PM
 
Location: Jax
8,204 posts, read 32,215,112 times
Reputation: 3397
Quote:
Originally Posted by sunsprit View Post
riveree ... there's generally little point to waiting until the model year-end closeouts for the "best deals".

Oh, by the way ... your hypothetical example of commission sales incentives is not far off the mark on a lot of items.
I would never do it if I intended to sell/trade the car anytime soon, but I do it because:

1) That year's model, which will usually have at some minor changes, has had a chance to "test", so hopefully there will be less problems than if I bought the same year car as soon as it drops on the market (this is minor, but with a new body style can be major).

2) Yes, there is the drop in value as soon as you leave the lot, but it will even out later (provided you keep the car for enough years), and you have a good shot at below invoice, which you may not have with the new year's model.

It's a personal choice, as is buying a new car at all, and if I could get the new year's model for the same price as last year's, then it would be a no-brainer - I'd go for the new year model. My experience has been that's there's more wiggle room on last year's model and yet you're still buying a car that no one else has driven/messed up.

As for the commission example, yup! it was based on real life experience !
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Old 08-04-2007, 11:05 PM
 
Location: in drifts of snow wherever you go
2,493 posts, read 3,277,387 times
Reputation: 692
A car depreciates the most in the first two or three years. Don't ever buy a brand new car and make payments on it. Find a good used car. Plenty out there.
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