Monday, 14 January 2013

New car purchases - negotiation tips

“Good” salespeople are prolific in the car sales industry – good in the sense that they have the ability to extract thousands of dollars of profit from you, the innocent customer, while at the same time managing to convince you that you actually got a good deal.  An entire counter industry seems to have emerged to address this issue, with thousands of websites devoted to helping you get a better deal.  Of course, the best salespeople will be clued on to recommended counter attacks to their standard tricks and will no doubt have thought of new ways to entrap you.  So at best here, I’ve resigned myself to providing you with some guidance on how to deal with a less than average to average car salesperson.

Fundamentally, the price you will pay for a car is a function of how much you want to buy it versus how keen the vendor is to sell.  From your perspective, the price you will pay is somewhere between the recommended retail price (RRP) and the dealer’s invoice price (what they pay the manufacturer for the car) minus any holdback price or special discounts from the manufacturer, depending on how good a negotiator you are.  Once you visibly commit to the vendor that you will make a purchase if the price is right, your negotiations are limited to that range.  However, until you have committed, the potential sale for the vendor ranges from $0 to the RRP.  The longer you can keep the vendor thinking $0 is an option, the lower you can get his/her frame of reference as to what is a good sales result for all the effort he/she has put into winning the sale.