Sunday, February 20, 2011

One Way To Get A Good Deal Buying A New Car - Part 1 of 3

A few years ago, after 10+ years in practice, I finally bought my first new car.  Previously, I had only driven used cars in order to save money, but this new car was primarily for my wife and she was more concerned with a potential breakdown then I typically am.  She was especially interested in a Honda that was known for reliability.  I agreed to buy the new car, but I wanted to get the best deal that I could in the shortest amount of time - remember! every hour spent on the car purchase is an hour less billing/another hour longer you will have to work.  Also, I didn't feel too badly about buying this model new because this model of Honda typically holds its value well - as I checked on Kelley Blue Book.  I'll relate my experience below as one way a busy lawyer can try to get a good price with a minimal investment of time.

First, once we decided on the model we wanted, we went to a local dealer to take a test drive to confirm our decision.  Once we got to the dealership, they hooked us up with a salesman.

I had previously read The Millionaire Next Door which included a section analyzing four different ways to go about buying a new car.  The information that I took away from the book is that there are the salespeople at the dealership - and then there is the "Fleet Manager" or "Operations Manager" who oversees the salespeople.  It seems like the salespeople have a significant degree of freedom with regard to making a deal.  The Fleet Manager sets the lowest price that the dealership will let the car go for, but the salesperson tries to get the customer to pay the highest price that they can.  There are also incentives for volume, etc.

One of the methods outlined in the book was to call the fleet managers of several dealerships, tell them what you want and that you are inviting several dealerships to bid on it and that you will be taking the lowest bid.  In this way, the fleet managers bid against each other to give you the lowest price.  One potential downside for some people is that the car you pick has to be pretty standard. Not that it can't have a lot of options - you just have to be looking for the typical options that people typically buy.

I had resolved that I was going to try out this method, but we wanted to take a test drive just to confirm that we liked the car before we started.  Now, I sometimes have a thing about karma, so when we walked in the first dealership, I resolved to be very upfront and I told the salesman that we would be asking several dealers for quotes and would understand if he did not want to work with us.  He was unfazed, so we took our test drive and decided that this was the car for us.

Next, instead of calling the dealerships, I thought that I might try out the Internet.  Consequently, I went to Yahoo Auto and entered in the make, model, and options that I was looking for.  Once you do that it brings up a new window that has a "Free Dealer Price Quote" box on the lower right.  You enter in your zip code and it will send your information to three local dealers for them to bid.

However, instead of just sticking with three, I wanted more bidders.  Consequently, I changed my zip code until I had all 9 local Honda dealerships - I had previously looked up a list of local dealerships.  It took me about 20 minutes to send the request for quotes out to all 9 dealers.  In the comments of the request, I mentioned that I would be comparing results from a number of dealerships and that they only should reply with their final and best offer.

For the dealership where the salesman gave us a test drive, I felt that I should not back-door him, so I called him specifically (instead of just e-mailing the dealership), and again mentioned that we would be looking for other dealerships and asked him to give us his final and best offer.

Next - in Part 2 of 3 I'll tell you about the offers that I got from the dealers and how I managed the bidding process!

1 comment:

  1. Buy used car and get a used car assessment report before buying. This is very important because used cars are a risk to buy and invest money on.