Ah yes, that universal turning point we all remember: purchasing your first new car. Driving onto the lot in anticipation, test driving several models of cutting-edge vehicles, all equipped with the newest features and offering your senses the coveted "new car smell." (Where do they get that, anyway?) Arranged in neat rows with paint and wheels glistening in the sun, they beckon to us, invite us to enter an alluring world that exists behind the wheel of our soon-to-be new car. Even the names of the colors sound like something on the horizon: Sandy Beach Metallic, Phantom Gray, Barcelona Red. These are not just basic shades and hues, folks; it's much more than that.
Sometimes buying a new car has been something on your mind for a long time, perhaps a long awaited rite of passage. Maybe it's a spur of the moment decision, or something out of necessity. In any case, there are elements common in each scenario - trying to decide on a particular model, weighing all the options, and then one final little detail...negotiating the price.
In the information age, this process has undergone significant change. For many car buyers these days, the negotiations start before they ever arrive at the lot. A small percentage even finalize the purchase without going to the dealer in person. Many people research on various consumer information websites, such as Edmunds and Kelly Blue Book, and then arrive in person to test drive and possibly purchase a vehicle. Simply driving to the dealership and starting the process from scratch still happens, too. No matter which route you take, at some point the consumer has to ask themselves this question:
How much is a fair profit for the dealership?
Or, put another way, how do I make sure I'm not hosed? What can I do to ensure that no money is left on the table, that I wasn't taken advantage of, that my rights and best interests were served in this transaction?
These are all reasonable questions, and they should be asked. In theory, we all recognize that without profit, the dealership cannot stay in business, the salespeople and other staff can't buy groceries, etc. But we cannot escape the fear and trepidation common to the car buying experience. We've all heard stories about unscrupulous car salesmen preying on unsuspecting customers. Is this really a common scenario, or has it become a part of pop culture and urban legend?
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I used to go to a dealership that sold their new cars for $150 over invoice and relied on the factory kickbacks on their large volumes to make their profit. The used car operation was the more traditional negotiation process.It worked well for about 20 years until recently when the economy tanked and the volumes fell off. They went out of business, but it's hard to tell if it was simply a financial thing or if the government takeover contributed to closing them down.
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