Cash for Clunkers and ability to negotiate.

[tbonesteak]

Hey guys,

If you take advantage of the cash for clunkers program and take advantage of the 4,500 rebate, are dealers less willing to negotiate the price on a new car that you'll be buying as opposed to just buying the car w/out the rebate program? This is fairly urgent so anything would be appreciated. Thanks.

Tim

[m4a1mustang]

It shouldn't. The dealers get reimbursed from the government, so they aren't losing any money at all... shouldn't impact your ability to negotiate at all!

[frost]

^ seems logical

[theDreamer]

Originally Posted by m4a1mustang

It shouldn't. The dealers get reimbursed from the government, so they aren't losing any money at all... shouldn't impact your ability to negotiate at all!

I know it sounds mean, but you might try to get the deal going and then bring in the CARS program later once you are getting closer to the deal you want. Since you know you have a sure thing with CARS, work on the variable items first.

[FuszNissan]

We have done over 400 CARS deals, we have been paid on 10....I don't even want to start. But it should have no effect on your deal, it always comes down to how good you can negotiate.

[Cjanik]

Just remember you cant trade in a clunker for a 370z, we missed the mark by 1mpg

[MeetJoeAsian]

Originally Posted by theDreamer

I know it sounds mean, but you might try to get the deal going and then bring in the CARS program later once you are getting closer to the deal you want. Since you know you have a sure thing with CARS, work on the variable items first.

Having a clunker or not, does not make a difference in the the final negotiated price. By doing what you said can actually backfire and you can end up paying more without even knowing it. A lot of people come in to us wanting to negotiate "DRIVE-OUT". Drive-out includes TT&L for those of you who don't know. Then if you try to throw in the clunker, we may tell you "Well, your drive out is $20,000 and you qualify for $4,500, so subtracting $4,500 from $20,000, your new drive-out is $15,500". Depending on the state and the law, you can get a tax credit for your clunker. In the state of Texas, automobile sales tax is 6.25%, and you get tax credit for your trade in and rebates. Therefore, if you negotiate a drive-out, then throw in a trade-in or a rebate (CARS program), well, most people won't know, but they will lose $281.25 in the tax savings, which allows the dealership to sell the car for an additional $281.25.

The reason why the dealerships are not discounting cars isn't because of the clunker program. It's because of supply and demand. Right now, there isn't an exact date to when this program will end. Initially, they projected that the initial funds will last through the end of the year, and that each dealership in the US will do an average of 12 clunker deals under the ENTIRE program. We sold 16 cars the FIRST day of the launch. They stopped the program that Thursday because they ran out of money because the response to the program was so massive. They got the approval to keep it going and they are projecting to end it around Labor day, well, the money probably won't last thru Labor day.

Dealerships across America are running out of cars to sell. We normally stock about 600-700 cars on our lot at ALL time, and for the past few weeks, we've been sitting between 150-200 cars. We're on track to sell about 1200 cars this month at my dealership, but that's "projected" numbers IF we have the inventory. Dealerships are not discounting because they will sell out of these cars regardless. And it may sound cocky, but the people with clunkers who are not buying are risking losing out on the program if the program ends ANY DAY now. I have customers coming into the dealership who have been to 2-3 other dealerships pissed off cuz no one is discounting cars. And the more they shop, the more they will spend because all the cars with the cheaper packages are moving first, and the ones that are loaded out are the only ones left...and again, not to sound cocky, but they can either buy it now, or they will lose out on the rebate.

In Texas, we've had a similar program going for the past year called Texas Aircheck where you can apply and get between $3000-$3500 rebate for a 10+ year old car. Well, the federal program and the state program can be combined, thus some of our customers are actually getting $8000 total in rebate. That's insane.

[FuszNissan]

^^ Pretty right on.

[MeetJoeAsian]

Before you come into the dealership, have these items ready:

-proof of insurance coverage for the past FULL year. Meaning, if your policy is per every 6 months, then you will have to bring your current insurance, AND your previous 6 months, AND the previous six months BEFORE that last 6 months. You have to provide proof that your insurance did not lapse. Your other option would be to have your insurance agent write you a letter on letterhead verifying that you have had continuous insurance for over a year.
-Proof of registration for a full year. Bring your receipts that you got after you paid for your yearly registration for the CURRENT registration and the last registration. Another way to show this is to bring your current registration receipt and your title that shows you've owned the vehicle for more than 1 year.
-And of course, your TITLE in hand. I've had a lot of people asking me about paying off their cars and get the difference in the rebate, the answer is NO. You must OWN the car free and clear at the time of trading in your vehicle. Meaning, you MUST have your title already.


One more thing about this program, this rebate is all you are getting for your vehicle. (I'm not talking about rebate incentive from the dealer on the car you purchase, that's different). What I mean is that you are NOT getting a value for your trade, and then get this clunker rebate. So, if your car's trade in value is more than $3500 or $4500, then trade in your car, because you are not getting anything else for your car other than the rebate.

[kannibul]

I hate to say it, but I bet the next bubble that'll pop are people defaulting on these new car loans. =/

[tbonesteak]

Wow, Joe and Fusz you guys are great. It's always great to have honest dealerships that participate in the forums. I've taken nothing but tons of useful info from you guys. Thank you. Ok, back on topic. I currently have an 07 sl550, 09 z, and a ford bronco from like the 80s. I'm hoping to pick up a 2010 rx350. The reason why i initially asked the question was because 2 salespeople that i've spoken to this weekend told me that utilizing CARS has a big impact on ability to negotiate the selling price. I didn't know about the demand that has been created for new cars via this program. I guess i'll start calling and telling the dealerships everything up front and see where i can go from there. My goal is 1000 above invoice. Do you guys think that's possible with the Cash for clunkers program? Thanks again.

[tbonesteak]

Originally Posted by FuszNissan

We have done over 400 CARS deals, we have been paid on 10....I don't even want to start. But it should have no effect on your deal, it always comes down to how good you can negotiate.

What do you mean you've been paid on 10? What happened to the 390 that you haven't been paid on? Why would you not get paid on some of them? Can you explain how this works from a dealer's perspective? Thanks!

Tim

[Cjanik]

Originally Posted by kannibul

I hate to say it, but I bet the next bubble that'll pop are people defaulting on these new car loans. =/

Im worried about that too,

a lot of people planned on buying a car on spread out dates throughout the year or two. Now because of this clunker deal, they acted fast and early to get the most for their money.

now whats going to happen to all of the sales for the next year or two now that a big lump of the buyers already purchased inside of this 1-2 month period.

oh boy oh boy, more layoffs? huge drop in sales = companies going bankrupt?

[tbonesteak]

The world is not coming to an end. Cars are not like homes.

[MeetJoeAsian]

Originally Posted by kannibul

I hate to say it, but I bet the next bubble that'll pop are people defaulting on these new car loans. =/

With $3500/$4500 initial investment into a new vehicle, if someone defaults on the loan, the risk is minimal to the banks. Just because there is a big rebate for a new car doesn't make it that easy for ANYONE to just get a loan. Subprime lenders are still REQUIRING down payment in the form of CASH OUT OF POCKET in addition to any sort of rebate offered by dealership/government. However, if even with the strict guidelines banks are imposing these days, should someone defaults on the loan, then chances are, the vehicle should be in or close to equity position because of the initial $3500/$4500 deduction. You can't just go out and buy ANY new car, the new car has to follow the federal program guideline, and those cars are generally NOT that high a dollar.