I’ve sold $100s of millions of used cars. Most customers lose the negotiation. 3 steps to win when buying your next car:
I’ve been a car dealer for over a decade. I've been involved in many negotiations. This thread highlights the best strategies I've observed. Important to remember that markets are dynamic, dealers can be emotional and life is nuanced. Ok, let's begin:
Step 1: Start online. Before stepping foot into a dealership, research the car you want. Edmunds, Cargurus, TrueCar, etc. There is a never-ending amount of information available online.
Chances are you will quickly find the car you're looking for at many dealerships with a quick, online search. If you don't, you should probably stop reading this thread as you won't have any leverage to negotiate. Dealers try to be on every car listing site. FOMO is real!
Pro-tip: If you plan on trading in a vehicle to a dealership, don't forget to research your own car as well! Trade-ins are one of the biggest moneymakers for dealers. You can get a real, online offer within 5 minutes from websites such as Carmax, Driveway, Carvana and Vroom.
Step 2: Get smart. Use these online tools for the following: Cargurus: Local Market Prices Carvana/Carmax: National Market Prices KBB: Suggested Retail Value Your friend the local dealer: Anecdotal insight Combine these data points. Voila, you're progressing.
Step 3: Build-up negotiating leverage. You can and should get creative here: - Product quality: Does the car have a blemish on the Carfax? - Redundancy: Does the dealer carry multiple units of this type of car? - Double-dip: Can the dealer retail your trade-in?
- Speed: Can you make the purchase in the next 24 hrs? - Relationship: Do you know someone who works at the dealership? - Spiffs: Is it close to the end of the month/quarter? (Franchise dealers get paid by OEMs for hitting monthly/quarterly volume targets)
And, last but not least, the holy grail of leverage: BATNA. Best Alternative To a Negotiated Agreement. Essentially, is there another car in the local market that is comparable and similarly priced? If used correctly, this is the ultimate leverage.
Now, you're ready to make the offer. The fun part! The cardinal rule: Always, always, always make an "all-in" offer based on your budget. Meaning, offer a flat, out-the-door price for the entire deal (including tax, tags, and fees). Why? A couple of reasons:
1. Forcing function: The dealer will fight hard to figure out how to discount your deal. 2. Optics: General Managers and General Sales Managers - who report to ownership - may prefer to reduce fees or ancillary product margins before reducing the price of a vehicle.
Pro-tip: Bring a cashier's check from your bank or local credit union. This is the ultimate forcing function and will kick the dealer into overdrive. There is nothing worse for a dealer than losing a customer with a real check in hand.
That's a wrap! If you enjoyed this thread: 1. Follow me @GuyDealership for more of these 2. RT the tweet below to share this thread with your audience
