I think there really does need to be some kind of change to the process here, sales people just literally cannot survive on what Edmunds would consider a fair price. As a sales person though, I can't tell you how many times someone had a fair price worked out before coming in to the dealership and then expected to negotiate more. Most people just seem to expect it, so you're in a weird limbo land where it's difficult to A sell a car to most people without a big negotiation, and then at the end the same people complain they have to negotiate, but had you just given that price up front, they never would have bought. Lots of interesting psychology :)
The role of a salesperson is to convince someone to buy a product. If I am already convinced, why should I have to involve this person in my transactions?
A lot of people don't know exactly what they want.
They have a price range, and that's about it. Someone needs to show them their options. Particularly if they're looking at used cars.
The key is to be an informed buyer, and to break out separate parts of the transaction and analyze them individually.
Financing from your credit union, in the absence of a manufacturer-driven promotional financing rate, is going to be better.
You'll get more for your car selling it on Craigslist or whatever (although, more hassle).
Various services exist to negotiate fixed discounted prices for cars themselves: costco, usaa, etc. Founderscard has an audi MSRP discount, too. You might be able to do better negotiating in person at a dealer if you know the structure of manufacturer incentives -- sometimes selling a car at a loss makes sense because it pushes them over a threshold -- but that's a lot harder in a place like the Bay Area and for popular cars (VW TDI when gas was expensive, audi and bmw now).
The great deal that was the certified preowned seems to have become popular enough that it's no longer such a deal.
I really hope my car lasts me another 2-3 years; either get a Tesla then, or a 535d in Germany.
Consider it’s 7 years old with 50k miles and in great condition. Assuming I keep it for another 3 years the net cost of getting the exact car I wanted will be around 10$ a month. Plus the added bonus of fewer repairs and less frequent and easier car purchases saves me time in the long run.
Though, considering it's still in great condition I may keep it even longer than that. In the end it's not buying a new car that's an issue, it's buying a car frequently that's the real issue which costs people a lot of money.
When I bought the car I currently drive, I actually did have a hard time locating exact alternatives to the one I ultimately bought because the navigation package was fairly rare for the lower-end engine I wanted, but I just told the sales person that I'd be fine not getting the navigation package, which opened up a huge number of alternatives. I was also committal to the make and told the dealer so much.
The best way to not give up a psychological advantage is to keep your options open. It's not always possible, but the more options you have to explore, the better.
All that said, I'm probably never going to buy a brand new car.
Never buy a car new unless you have to. If you're buying the car new you shouldn't focus on the purchase price, but the value for your trade in and your APR.
Most used car sales generally only brought in $1,000-$3,000 in profit. The dishonesty in the business doesn't revolve around the pricing, it's in the details of the cars. Salesmen will lie about resale values, maintenance records, previous owners and so on.
My advice is to identify 2-3 cars you'd like and then buy that car with 30K-50K miles on it no more than 3-4 years old. You'll still be able to get a low APR, and you'll have cashed in on a car that will hold it's resell value better than a brand new car.
It is an interesting article, even though things may have changed since it was published.
I knew exactly what car (including trim, color and options) I want to buy. In one case I knew VIN number of the car on the lot. But I still negotiated with other dealers within 100 miles from my zip code in order to drive the sale price down by letting them 'beat the competitors'.
I had money or financing arranged before closing the deal. Only considered dealer financing if there were incentives to use them. Did not trade in any cars as part of the same transaction.
I've considered buying a 2-3 y.o used car, but dealers were not willing to negotiate. Main reason is that every used car is a unique snowflake, so it is harder to pitch comparable cars against each other. On the other hand, one can get exactly same new car from any dealer, and they understand this.
I've tried using Truecar and Edmunds to get a good deal on a car. No much success there. It's just a dumb lead generators for dealers. I would get great initial responses from participating dealers, but then they will not have the car that they offered to sell and would push something they have in stock.
Bottom line, when you send a copy of the competitor's email with the "out of the door price" for a specific car and a promised to close the deal tonight, dealers tends to become really accommodating.
* Car salesman DoS attack the customer with numbers and options, for example using 4-square grid of options: overwhelm the customer with at least 4 different financing and trade in options, too many decisions to compare, lot of numbers, math, options, numbers, more options, overwhelm the customer, then steer them into the set of numbers that maximizes your commission.
* That amazing deal of the week advertised in the paper? Sorry, we don't have it anymore, we just sold the last one (bullshit) but this one here is similar model for just a little more (bullshit)
I read this article over 10 years ago, and it remains the gold standard of what you must read before stepping into a car dealership. Basically stand firm on what you will pay total and if they start playing these games then be prepared to walk away without the new car.
Also, even if it pisses them off, haggle and get prices from multiple dealerships, then play them off against each other. If they won't play, walk away to another dealer.
I'm not saying I got the best deal possible; I didn't shop dealerships. (OTOH I'm not sure that would have worked, as the model I was buying was in demand.) But basically, I think I did okay.
I'll probably go with TrueCar.com or something like that to automate the process next time, unless I get a Tesla.
I documented my experience at http://xn.pinkhamster.net/blog/misc/buying_an_audi_under_inv...
I still got ripped off, especially on the trade in--but my wife was rather pregnant and close to being put on bedrest at the time and we didn't want to have to deal with Craigslist or whatever for selling her old car.
I can do the math to figure out monthly payment for the price I what is at that point. Then I just negotiate using that number, if they bump up the trade allowance or reduce the price of the car it really doesn't matter. I precompute a few numbers to know where we are (e.g., Invoice, Invoice + 3%); but also know the cost of a $1 worth of financing so that I know how much they're charging me during a back and forth.