Negotiation at the Dealership

Purchase discussion over a desk and coffee

We're Not Always Right (but mostly)

In one of the most important sections of our New Car Buying Course (subscription required), we address negotiation at the dealership with your sales consultant. I have two real-life examples to share with you; one where we’re spot on with what we say in the course, and one where we miss the mark (but not by much).

The Used Car Purchase

The first instance involves our son who was negotiating the purchase of a used car. Our course emphasizes a new car purchase, but a used car purchase goes through many of the same steps. He had a budget in mind, his eye on a particular vehicle, and a sales consultant that seemed bent on making his life as miserable as possible.

First, when he first contacted the dealership after seeing an ad on Kijiji, he was told the vehicle was undergoing some minor repairs and it would be ready to see in a few days. Not hearing from the dealership, he checked back with them. He was told it had been sold to someone else, but they had a number of vehicles available at higher price points.

He told them he wasn’t interested in those vehicles as they were out of his price range. A few days later, the first vehicle he wanted magically reappeared at the dealership. The dealership contacted him and he was told that the other deal fell through. He could now look at the vehicle and test drive it.

Believe It? Or Not?

Now this might have actually been the case. The deal with the third party absolutely could have fallen through. But we warn in our course about a vehicle you might be interested in not actually being available at the dealership, and then you’re walked over to something pricier or not on your shopping list. The term for this sales tactic is Bait and Switch.

After a test drive, he went through the process of negotiating his deal. In our course, we recommend that you walk away if you aren’t happy with the price, or even as a negotiating tactic if you think there’s more discount available. We feel that you’ll get a call anywhere from 24 to 72 hours after the negotiation from the dealer, offering to cut the price further.

It didn’t take that long for our son. He left the dealership, the offer sheet unsigned. 15 MINUTES LATER he received a call offering an additional $500 off the purchase price. Chapter and verse as outlined in our course.

The Limited Selection Purchase

However, our son’s experience isn’t universal. My sister went into a dealership as part of a three day clearout promotion. (It was a busy few days fielding phone calls from family members for new vehicle purchases). She’d been thinking about a new vehicle for some months, and wanted to see if she could come to terms on a new SUV. The 2020s were being moved off the lot. Supply of these vehicles is limited. The dealer had the vehicle that she wanted. While she was talking to the sales consultant and negotiating the price on it, another person purchased the SUV that she wanted out from under her.

The Buyer is at a Disadvantage

Two things have occurred. One, the other sales consultant would have used my sister as leverage with their customer. “Sign right now, or the woman that my associate is talking to will buy it”. This would help them retain margin and reduce the customer’s negotiating position. Our advice would be to get up and walk away.

Second, with limited supply, the dealership doesn’t have the same pressure to move vehicles at a discount advantageous to you. My sister’s leverage was reduced by lack of supply. The dealer offered to trade with another dealer to get the vehicle my sister wanted, but there was no discount beyond what was published. And for a 2020 model versus a new 2021 model, you have to take into account the depreciation from the newer model year. That 2020 model should be discounted substantially over the same 2021 vehicle.  All things being equal, a 2020 model will always sell for less than a comparably equipped 2021 vehicle from model year depreciation, and that decrease in value should be reflected in your purchase price.

She hasn’t received a follow up phone call either. She was ready to purchase. The dealer lost a sale by not meeting her needs or taking into account the depreciated value of the 2020 model. She left the dealership, cheque book in hand.

The Upshot

There’s lots that can happen when you’re in the midst of negotiation at the dealership. Sign in and review the Negotiation and Back Office sections of our New Car Buying Course. If you’re not a member of Automobl, click on the Subscribe Today button below and get our New Car Buying Course on your side. Our son put $500 in his pocket by knowing when to leave. My sister saved by not taking a 2020 at an inflated price. Make sure you’re prepared when it comes time to negotiate your deal.

Do you have a buying experience you can share? Leave us a comment (you need to be signed in to comment).

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