Like many of you, I’m a completely car-obsessed nut job.
I love almost everything about cars: I love driving them. I love reading about them. I love writing about them. I love criticizing them and praising them. Heck, I even love smelling them (2004 models and newer only, please).
Buying cars is perhaps the only thing that I don’t like, even though I’ve done it now 13 times in 12 years.
Last weekend I again began the process of car shopping to replace my wife’s 2002 Honda CR-V. Last night we finished the process and happily brought home a 2004 Lexus RX 330 with only 28,000 miles on the odometer. The days in between were a mix of delight, excitement, frustration, and torture. But I have a way to fix the process.
First, though, this Lexus is the first car my wife picked out herself, test drove herself, and took delivery of herself. Being the car nut that I am, I ALWAYS decided what cars we had and when we bought them. This time I was the casual observer – the friend who came along for advice, support, and negotiation know-how.
My wife is quite delighted that I hadn’t even driven an RX 330 before she did, which is a miracle, considering how many cars I’ve tested.
Lexus was the first brand we looked at and the last, with Mazda, Nissan, 
Chevy, Volkswagen, Ford, and Cadillac in between. Negotiations started and stalled, we walked onto dealership lots and off them. It was during one of those walk-offs that a stroke of brilliance hit so hard I was nearly ready to go start my own dealership and change the way America buys cars. And it’s so simple it’s almost silly!
I want dealerships to negotiate whatever price they want for the trade-in vehicles they acquire. But, when a shopper comes in to look at that vehicle, the dealer has to show them what they paid for it and include a set mark-up that’s not negotiable, say 15 percent. The shopper then knows exactly what the car costs, the salesman knows exactly what his commission will be, and the dealership knows exactly how much profit it will make. It’d be like buying from Saturn, only better.
Would you rather buy a car at a no-negotiation price, or do you like the back-and-forth experience?
-tgriffith
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You must be an employee, tgriffith. You wouldn’t last very long in business for yourself. A car dealership is one of the most complex retail business to own. Not only are you dealing with big ticket items and multi-million dollar inventories, you also have service, parts and body shop departments and used car buying and selling. Add to that some interchange between dealers as well on both new and used cars and advertising budgets that typically comprise the bulk of local print advertising in most newspapers. That’s a LOT to manage. What goes into buying and selling is a very complex formula of overhead, purchase price and resell price, taxes, fees, advertising and commissions, yet for some reason you seem to think it’s a matter of how much they paid for it and how much they want you to pay for it. As a customer, you don’t have to take this all personally. You need to go in knowing what you want, how much you are willing to pay, and how much you need to get from your trade. If you need more than a wholesale price on your trade, you shouldn’t feel angry when the dealer doesn’t want to be your “friend” and offer you more. I’m always willing to walk away from a deal if it’s not to my liking but I always make sure I’m being realistic in the first place. Car dealers aren’t necessarily bad guys, but if they don’t make money enough money, they aren’t going to make it. A LOT Of car dealers are going to learn that lesson the hard way in the next few years.
Yea,
This is a good idea in theory but I don’t think it could ever happen because of reasons Norm pointed out.
I have to disagree with you on this one, for a change. I’m also hate the haggling and posturing that goes with buying a used car, but at the same time I appreciate that the market for any particular car model is a moving target at best. The real value of anything is what the buyer is willing to pay for it. Anyone can research the current market these days – buyers and sellers alike. If a dealer is selling a car way over Blue Book, and you want it badly and can’t find the same model anywhere else, you’re probably going to come to an agreement on that car. If a dealer is taking your old car in trade, you have to factor it into the total cost of the new car and forget about what you’re getting for it. I agree that the hassle and the creepy feeling that you’re getting taken is not very pleasant. But locking in a markup won’t work; it may actually drive the better dealerships out of business.
Here’s a simple example: Two dealers, a mile apart from each other, get identical 2005 Blue Mustangs trade-ins with identical mileage and condition and options. (Hey, it could happen). One dealer lowballed the value and bought it outright from the previous owner, who didn’t care. The other dealer offered more than the car was worth in order to finalize the trade-up to a new car. What’s each car worth? The same amount? Or does it depend on what the next owner might be trading in? It’s not so clear cut, sometimes.
For me, I don’t care what the dealer paid. I research the car, I get it looked at. If the price is right, I buy it. If not, I pass. The trick is to look at only a few car models – narrow the field so you can really compare.