Nissan 370Z Forum - View Single Post - New Car Buying 101. Please Read Before Buying Your Nissan 370Z

AK370Z · 01-08-2009, 02:53 AM

Shopping for Price

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There are two ways to buy a car from a new car dealership: through the Internet department or by walking onto the car lot. Like in a TV game show, choosing the wrong door can cost you dearly — in time, money and aggravation.

As we discussed in Part One, Internet (and fleet) salespeople make their money by selling a high volume of cars. Salespeople who are "working the floor" (the showroom floor) rely on commissions to earn a living. Therefore, they try to maximize profit on fewer deals. This means the car lot salesperson will usually attempt to squeeze out a larger amount of profit from a car buyer than the Internet salesperson.

A veteran fleet saleswoman told us she would never walk onto a car lot if she wanted to buy a car because "those guys will always start at sticker." On the other hand, the Internet salesperson will hit you with a tempting price that may leave little room — or reason — to negotiate. (In several cases, we've found the opening quote from the Internet department to be close to — and just a little under — the Edmunds.com True Market Value® price.)

We decided to test this Internet saleswoman's opinion by sending one of our editors to three dealerships, having him act as a normal buyer and getting vehicle prices from the salespeople working the lots. Afterwards our editor would telephone the Internet sales managers of those dealerships and ask for prices on the same cars that we shopped earlier.

We knew we would have difficulty even getting a car lot salesperson to quote us a price — any price. Usually they won't talk about the cost of the car until the buyer is deeply committed in the buying process. Their fear is that the buyer will take a good quote from one dealership and challenge another dealership to beat

In Defense of the Salesperson

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It's true there is more to buying a car than getting the lowest price. A good car salesperson can demonstrate the car's features and options. However, this information is readily available on Web sites such as Edmunds.com as is expert automotive advice and opinions.

We apologize in advance to the three salesmen we met during this story for taking their time without intending to buy. Furthermore, we don't encourage shoppers to test drive a car with a salesman and then buy that car through that dealership's Internet department. Internet salespeople are happy to show and demonstrate cars on their own.

Rules of the Game

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We selected three popular vehicles to shop for: a 2003 Toyota Camry LE, a 2003 Volkswagen Passat GLS and a 2002 Ford Explorer XLT 2WD. We posed as "today buyers" who were cross-shopping different brands. We assured the salespeople we were not going to "shop their prices" at another dealership of the same make. We just wanted a price — a real price — so we could make an informed comparison between cars. All our shopping was done in the Los Angeles area. The Toyota and Volkswagen dealerships were medium-size; the Ford dealership was a high-volume lot.

Scenario #1: 2003 Toyota Camry LE

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Salesman Steve got us quickly settled on a car matching our request. He gave us a full "walk around" demonstrating all the Camry's features. But when we said price would be a deciding factor, he tried to redirect our interests toward another Camry, one he called a "new car" with "only 26,000 miles on it." We declined this generous offer.

Following a test drive, we asked for the price of the car and requested a written price quote from the manager. We were escorted into a sales office where Steve wrote down our name, phone number and address on a "four-square" worksheet (used by salespeople to negotiate the four elements of a typical car deal). We repeated our request for a written price quote from the manager. Soon, Paul appeared, a short, stocky man who smelled of cigarettes. Apparently, Paul was a "closer" or assistant sales manager. After an opening sales pitch, extolling the virtues of the Camry, he said, "What if we could discount it by $500?"

"Is that your best price?" we asked.

"Well, it depends. The price isn't set by us, it's what you're willing to pay."

Paul then began firing questions at us about a possible trade-in, a down payment and monthly payments. He began crossing out numbers and writing in lower ones while asking, "Where do you want to be?"

We stopped this activity by saying, "I'm really confused now. I liked it when you said $500 off the sticker — I understood that. If that's your price, that's your price." Our editor started to leave.

Paul said, "Let me talk to my manager."

While Paul was gone, Steve again tried to sell us the "new" car with "only 26,000 miles on it." We declined a second time. "Just thought I'd ask," he said, slouching in his chair.

Paul returned with the four-square with writing on it that read, "$999 discount! Great deal if you buy now!"

When we said it was time to test drive our other possibilities, Paul's pressure to keep us there increased. We left anyway.

Time on Lot: 1 hour 10 minutes

Pressure level: Medium increasing to high

Camry Sticker Price: $20,809

Best Price Quoted: $500 discount off sticker or $20,309 (after we threatened to leave, a discount of $999 was mentioned if we bought today)

Salesman's best line: "The only difference between low-balling and lying is the way they're spelled."

Internet Experience: Five-minute phone call

Best Price Quoted: The Internet manager gave us a price on the same car of $19,310. When we inquired about additional fees he said, "I can fax you all the fees and your out-the-door cost if you like."

Savings: $999

Scenario #2: 2003 Volkswagen Passat GLS

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We were inspecting the window sticker of a silver Passat GLS when a cheerful voice greeted us. Our salesman would be "Stan," a white-haired man with dark glasses. We immediately felt at ease with Stan. We said we would be buying very soon, perhaps today, and wanted to test drive the Passat and get a price for it. "I can do that," he announced and went to fetch the keys.

"Is there anything you'd like to know about the car before we drive it?" Stan asked. We asked a few questions and Stan volunteered a brief overview of the car's features. On the test drive he controlled our route closely. At one point he urgently warned us, "Car coming! Car coming!"

Back in the car lot, we sat in the car with the engine running. We said it was time to talk price. Stan said he would give us a price when we were "ready to do something." We said we were comparing the Passat to other cars that would likely be less expensive. It would be helpful to have a number to work with. We volunteered to meet with his manager to let him know we were serious. Stan finally said he would "work from invoice" with us and give it to us for $600 over invoice, "or whatever fleet is selling them for."

Stan made no attempt to force us into a sale on the spot and cheerfully bid us farewell.

Time on Lot: 37 minutes

Pressure level: Low

Passat Sticker Price: $24,990

Best Price Quoted: $600 over invoice "or whatever fleet is selling them for." If this had been honored the selling price would have been $23,833.

Salesman's best line: "The Passat comes with a full spare. We had to go on a diet. Doctor's orders: no more doughnuts."

Internet Experience: A five-minute phone call

Best Price Quoted: The Internet manager gave us a price on the same car of $23,533 or $300 over invoice on the same car.

Savings: $300

Scenario #3: 2002 Ford Explorer XLT

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We weren't more than a dozen steps onto the Ford dealership when we were greeted by Mike, a short, round, enthusiastic man with a foreign accent. He asked if we had come from the service department. When we said we hadn't, he brightened visibly. We told him we wanted to look at the Explorer XLT with few options. He took us to a white one. The sticker had been shredded when the window was rolled down and he apologized saying, "It's not very professional." We pieced it back together and found it cost $30,060.

We said we were cross-shopping brands and wanted to know how much we would have to pay for this Explorer. Mike said he could offer us a $2,500 cash back rebate. We said that was nice, but wanted to know how much this would reduce the price. He shook his head sadly, then said, "Do your shopping first, then come back. We will beat any price out there." We said we needed a figure as a benchmark, to know how aggressive this dealership would be. We even offered to come inside and talk to the manager. Mike was still shaking his head sadly. "All I can tell you at this time is, we'll take care of you."

We left the car lot.

Time on Lot: 15 minutes

Pressure level: Medium

Explorer XLT Sticker Price: $30,060

Price Quoted: None

Salesman's best line: "We need to sell these cars. They have no nutritional value — we can't eat them."

Internet Experience: A three-minute phone call

Best Price Quoted: The Internet manager at this Ford dealership seemed more like a car lot salesman. He was vague about the selling price of the car and wanted us to come in and settle on a specific car first. We asked how close he could get to invoice. He said, "Very close, probably $500 to $600, depending on the model you choose."

Savings: Unknown

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Internet vs. Traditional Car Shopping — Conclusions

We don't consider the numbers we got from the car lot salesmen to be very firm. And more money could have been lost by making poor spur-of-the-moment decisions on financing or additional products. If we had returned to buy one of the cars at the quoted price, we probably would have had to start negotiations again. Still, we got an idea of how pricing would be handled and a rough idea of what discounts were available. On the other hand, the Internet prices were specific and realistic; we felt confident we could close the deal at that price.

This exercise showed us just how hard it is to get a real price for a new car from a traditional salesperson. The price is obviously in flux and will depend greatly on how the customer presents him or herself and handles negotiations.

When dealing with a salesman on the car lot there is the reassurance of the human contact, however. One can't help but like one salesman more than another and want to buy from them. Furthermore, the product knowledge and their advice might, in some cases, be valuable.

On the other hand, the Internet route is fast, easy and clearly saves money. It also is good for people who don't have an appetite for negotiations. Furthermore, the decision is apt to be more informed since the buyer can consider all the possibilities in a relaxed atmosphere away from the well-documented enticement of new car smell.