Friends who have witnessed me purchase a new car will tell you it’s a spectacle not to be missed! Priemerization at its finest.
Well, after being repeatedly asked for my secrets, I decided to share with you Priemer’s top 5 tips for negotiating excellence when purchasing your next vehicle.
Tip #1: Be like Spock
Sales 101: sales people try to hook you by creating an emotional connection to their product. Even if you’re buying your dream car (aka: your “car built for Homer“), the more logical and impartial you seem (without seeming totally uninterested), the harder the salesperson will have to work to win you over. The more work they have to do, the more negotiating capital you have.
How?: when interacting with the sales person showcase your knowledge of competitive vehicles and ask them how they stack up. Forcing them to articulate the value of their own product will help set the foundation for a fact-based interaction.
Tip #2: Embrace the math
Car salespeople are notorious for camouflaging the total cost of the vehicle behind strategically calculated monthly fees, down payments, taxes, promotions, and interest rates. My advice: let them throw as many numbers as they want at you but ask them a) to take you through the calculation step by step and b) to give you all the information you need to “do the calculation yourself when you get home” (including all the due on delivery costs and taxes).
How?: one word. Spreadsheet. Make one! Or if you want a head start, download my starter version HERE (Note: I’m usually a “leaser”).
Tip #3: Beware of hidden profit
Like a kid strategically hiding brussel sprouts around the dinner table, dealers have become increasingly clever at sneaking high profit “extras” into your vehicle purchase. $300 admin fees, $150 wheel locks, and $499 security fees are all extraneous cash cows that generate revenue for the dealer. Of course the dealer has a right to make a profit, but make sure you take into account ALL the hidden sources during your negotiation.
For example, In my last negotiation the dealer asked that I pay at $400 “security fee” (note: such fees are usually pre-printed on the deal forms to invoke the power of legitimacy). When I asked about the charge, the dealer said, “Well, we register your car with our security service so that in the event of….blah blah blah“. Needless to say, I didn’t pay for it and they ended up giving it to me anyways.
Priemerization: Many seemingly “standard” fees have copious amount of dealer profit built in to them. In a negotiation, EVERYTHING is fair game. Dissect each stat so you know how it can impact the final result.
Tip #4: Find out where you need to be
The economics of buying a car aren’t that hard. The key is figuring out how much profit the dealer typically needs to see in order to save face and part with the car. The more expensive a car is, the more profit margin is likely built into the price. The newer or more in demand a car is, the more likely it will sell close to the list price. So what’s the easiest way of figuring out where you need to be? Ask!
Priemerization: Negotiation 101 says that useful information is much easier to come by at the beginning of a negotiation process when the other party isn’t focused on “closing you”. I’ve found that having a casual conversation with multiple salespeople early on, simply asking for this information, and triangulating with other dealers works best.
The other part of this equation is figuring out what the dealer paid for the car. This info is quite easy to come by with services like Car Cost Canada which will tell you for a small fee (high recommend).
Tip #5: Think of the dealer AS a deadbeat dad
Don’t let the salesperson act like they can “step into your life after all this time and just expect a relationship“. Make them work for it! The key is being friendly but tantalizingly distant enough to make THEM try as hard as they can to win your business. For example, say things like “I really appreciate all the time you’ve spent with me, I really want you to get this sale, and your offer seems fair, but before I commit I need to see if there’s another dealer that can do better.“
Priemerization: one of the best negotiation tactics ever; being prepared to walk away. My last negotiation was concluded in the parking lot of the dealership after I had put away my glasses, closed my laptop, and the salesperson followed me out. When he told me that I was only the second person to walk out on a offer from him in the last 6 months, I knew I had him
Simply follow these five tips when purchasing your next vehicle and I guarantee you’ll come out ahead!