| This is a good article which maybe is a specialization of a generic negotiations algorithm. Not that much different in concept from how you deal with a rent negotiation, or figuring out which dealer to buy your Singaporean bonds from. A thing that will control your outcome a lot is the dynamic of the car market itself at that moment, and what's going on in the dealership. In my case, we bought our car in 2021 amid the chip shortages/supply chain issues. I called a good number of dealers and got the following response: One dealer had the car coming in a few weeks and can sell it to me for the MSRP. One dealer said "we charge 1k OVER the MSRP for every car." The rest said "we don't have this car and won't have it anytime soon." In that environment, knowing the dealer costs and all that other bullshit doesn't matter. You have one guy who knows he's got a car that nobody else has, and if he doesn't sell it to you there's gonna be someone else who wants it that same week. You have zero leverage to drive the price down. We bought it for the MSRP and considered ourselves lucky. In another environment, getting consistent apples to apples quotes is your key to driving down cost. Basically you are putting dealers in competition. If Bob has more cars than he can sell, his best outcome is to sell to you for MSRP, but his second best outcome is to sell to you at all vs having you buy from someone else. What usually happens in this approach is you understand the range of quotes, pick your lowest quote and then ask the dealer you would rather deal with if they can beat it. "you are my local guy and I liked talking to you, would rather buy from you but you are a lot pricier than someone I can get from two towns away. Can you give me your best quote please?" can do wonders. The reason you get a range of quotes is that dealers face different environments. Bob may have a lot of car X and not a lot of people asking about it, and John may have sold most of his X and has a lot of interest. This can be for totally arbitrary reasons from what their area is like, to total luck of the draw and in a few weeks Bob and John may have their situations reversed, but at the moment Bob's probably gonna be more open to giving you a deal. A thing that also works is to make sure they know you're a thoughtful money conscious person who is doing his due diligence will make them give you a better quote. I say straight up "full disclosure, I am speaking to a few other dealerships to get a couple of quotes." That tells you that if they give you a high quote you will simply ignore it. If you seem naive and aren't going to be equipped to shop around, they might give you a higher quote to see what happens. The article makes a good point that you should negotiate (as always) one thin at a time. So lock in the new car quote separately from financing and trade-ins. Better get one number down and then work on getting the next number up. Finally and this is key - realize your situation and the leverage you do or don't have. If you don't need a new car right away, and dealers have more cars than they know what to do with, you can really work on this to squeeze out another grand out of the deal. If you are in a situation like I described above where I needed the car and literally nobody had one, don't feel bad paying the MSRP because that was the best price possible under that dynamic I can also say in general that people undervalue and under-study how to negotiate. Negotiation is often a collaborative thing where both sides win (the dealer wins because I did the deal w them vs their competitor, I win because I paid less) and people often fail to negotiate because they assume negotiation is a confrontation and it scares them. If you are a person that lives in the world where you're not just ordering off a menu, taking a negotiations class or reading a book is a great use of time. |