The first thing to appreciate when buying a car is you're negotiating 4 deals:
- Car price
- Part-exchange price
- Finance rate
- Add-on prices for other financial products, options and accessories
A salesperson can focus the negotiation on one deal while they win on the other three. For example they can play difficult on the car price and discount and then conditionally cave in saying, ‘if I give you that discount does that make it a deal for you?’ If you deal you do so without fully negotiating the other three where they maximize their profit.
They’ll pick one of the four where you seem most interested and pretend to thwart you. Sometimes they switch the negotiation from your interest to their special offer. You want discount or a better part-exchange price but they keep referring to the value in their 0% finance offer. It can get more complicated when they claim the best small car deal with car insurance included because then you need to compare it with real quotes for car insurance.
Some dealers make it easy for you. They divide an A4 piece of paper into 4 squares - 2 columns by 2 rows. This means you can focus on one square at a time. You could do this for yourself.
The best way to negotiate a price is to
have a next best negotiable alternative.
In the past having a next best negotiable alternative - you can get a better deal elsewhere - didn't work that well. Today it's a killer strategy.
In the past if you told a salesperson you could get a better deal elsewhere it didn't work because salesperson knew their market, would have worked elsewhere and knew lots of people in the trade.
Also if you told a salesperson you are considering alternatives, it just gave them the opportunity to sell the qualities of their product.
Today things are very different because:
- Salespeople’s claims of different qualities can be revealed as motoring myths by making car comparisons.
- Your alternative can be a car on the same platform badged as a different make and model.
- Many modern cars share the same platform. For example the Citroen C1, Peugeot 107 and Toyota Aygo are virtually the same car. The Ford Ka, Fiat 500 are both on a Panda platform. The premium brand Volvo V50 estate is based on a ubiquitous Ford Focus. The C-Max, Kuga, Mazda3, Mazda5, Volvo S40, C30, C70 are also based on the Focus platform. Some Fiats and GM cars share platforms. Audi, Seat and Skoda are on VW platforms.
- By making changes in styling and perceived prestige they can charge different prices.
- However, when you make comparisons for mpg, emissions and performance there may be no significant difference. These are laboratory figures and there may be no real difference when on the road.
- Basically cars in the same class are more or less the same size, with similar interior space and trim options. The engine options will also be similar, engine sharing is even more common than platform sharing.
- Quality claims are myths when surveys and magazines nominate Skoda above Lexus for customer satisfaction. Hyundai and Kia can rank above Mercedes, BMW and Audi.
- Prestige also becomes a nonsense idea when compared with the history and achievements of manufacturers like Peugeot, Renault, Ford and Chevrolet.
So remember there are 4 deals to negotiate separately before you put them together in a total package. Your approach needs to be, 'it then depends on the part-exchange price, finance rate, and cost of add-ons.' All are negotiable by having next best negotiable alternatives.
Most car shoppers are armed with smart-phone internet access to quickly find or pre-find information on alternatives to support their case for a better price on all 4 deals. You can even load a four-square document into your device.
The 4 deals need to be completely negotiated before talking about signing up. You can recognize when a salesperson is trying to prematurely close the deal in one of three ways – automatic, alternative, conditional.
An automatic close is when the salesperson automatically switches from selling the car to talking about preparing the car for delivery, invoicing, car insurance, vehicle excise duty, guarantees and finance. You need to hold them up until you've completed your negotiations.
An alternative close is when they offer alternative colours, delivery dates, finance options, etc. When you pick one you close the deal. So refuse to decide until you've negotiated your 4 deals.
A conditional close is where you’re offered a condition the salesperson knows they can satisfy – ‘if I throw in,’ or ‘if I give you X discount,’ or ‘if I give you Y for your part-exchange,’ or ‘if I can get the finance rate at Z, will you do a deal?’ When you say yes they snatch your hand off. So remind them there are 4 deals to do.
Even then don't commit yourself before going through preparing the car for delivery, invoicing, car insurance, vehicle excise duty, guarantees and finance which we'll look at in a later post. Don't think of it as placing an order because what you're really doing is subscribing to years of fixed costs for depreciation, interest and maintenance.
Happy Hunting
Ralph
carbuyersinfo car comparison website