Sunday, May 1, 2011

Don't Believe the Hype. There Are Still Deals to be Had!

As the New York area got into New York International Auto Show mode (I went, it was okay...) I remember seeing an interview with the CEO of, Jeremy Anwyl citing in gist "now is not a good time to be buying a new car." Or something along these lines. See the interview here. He makes some interesting points. Points best kept in the back of your head when negotiating the price of a new car.

With the economy, the recent uptick in gas prices; as well as the Japanese car "supply issues," as a result of the earthquake/tsunami, well- there are a lot of variables that may prevent a "good deal." I'm contesting- in the great pearls of wisdom of Public Enemy "Don't Believe the Hype."

Ironically enough, in the last two weeks alone I've had a few friends come to me "Randy, I need a new car, I want a (insert a Japanese car maker here) and the dealer is not giving me a deal..." they then proceed to educate me- that because of the tsunami, they (the dealers) are not getting any cars. Supply is low, there are no incentives, etc, etc. That, and the world is coming to an end. That's what the salesmen told them as he blew-them-out the door.

I then proceed to ask- what color do you want?

Why? My point is- chances are, the dealers have the car you want- unless you want something specially ordered or especially out-of-the-ordinary, in other words- do they have the car you want? And are you willing to take it today?

If they do- I'm seeing a lot of Japanese cars still selling at a good discount, at or below dealer costs, depending on the car, rebates-to-dealer, incentives, etc, etc.

The "supply shortages" noted in the news like most any a metric say, with the Federal Reserve and monetary policy- there are lags and it takes time. It could take (in the car business' case, depending on supply chain) through the summer for the consumer to feel any real supply shortages as a result of auto plant closures around the world. By the time there are any real shortages felt in the supply chain- the said Japanese automaker's plant may be back online and vamping up production.

Many new car dealers (many of which that have a pretty ignorant, desperate front-line of salesmen motivated by fear and greed) will say "oh, well, ma'am we're not getting any new cars because Toyota closed its plants... do you watch the news?" as they proceed to reach for your... pants.

If you login to, (a great new car pricing database) you'll see, locally and nationally- there are still "deals" to be had on most Japanese (and domestic) cars. Dealer cash, factory rebates, incentives or not- cars are still selling at a discount- you just have to ask/insist and be ready to walk-out of the dealer if they riddle you a line of bullshit.

I'm painting some broad strokes here, but from what I know, as someone who has sat on both sides of the desk, times are tough. If a salesmen/dealership wants to make a buck, that's their right- it's their business, but its up to you to come in armed with knowledge and numbers in hand to get a fair price.

Don't get fooled by tricky sales tactics which include the addendum sticker - that funny little list of extras put on to the car at the dealership- marked-up a good 200% over cost. Some addendum lists may include: wheel locks, pinstriping, door-edge guards, interior protection and floormats for an additional $1500. Actual dealer cost? Maybe $500.

Watch-out for unusually high dealer "documentation" or "administrative" fees- which as I've heard- have risen with the profit margins decreasing at the dealer level. Anything over $350 is suspect in my opinion. Ask for these numbers in advance keep them in mind when negotiating a price. Also keep in mind- taxes!

Know your factory incentives and dealer cash allotments. If you walk-in and they give you, what you think is a really good deal, chances are- it's not your good looks or your savvy negotiating skills getting the great price- it's the incentives and at these prices- the dealer is basically still selling you the car at full-list!

A good, really general rule-of-thumb I like to use is- if you roll-up all the fees, taxes and costs associated with buying a new car- you should come-in at or around slightly higher or lower than the original MSRP. If you do, chances are, you got a really good deal, or at least you're not getting taken advantage of. Sales-tax alone can be say 7-8%- and the truth is- there isn't really that much more profit in a new car these days.

I will guaranty you this- you're not going to see "Honda's Year End Sale" or the "Toyotathon" late in the model year being wildly advertised if there is even a hint of supply chain delays- that's not to say there are no cars to sell at a discount. There just won't be an extravagant invitation.

I will also say this- if there's one Japanese car company really good at keeping their inventories just at the right level, it's Honda. I believe out of all the major Asian brands, this one may be the hardest to haggle with if there are real inventory issues. So, be prepared to shop around and accept the rules of supply and demand if need be.

Remember- new car dealerships are like casinos. They're in business to make money, it's their right- but keep in mind some important facts and variables and they won't be making all their money... from you.


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