A lot of car salesmen ignore buyers like this. They see it as a waste of time to get pitted against each other. I’ve gotten the best results by starting with the dealerships with the lowest prices on TrueCar and then baiting them to invest time in me. Then they’re more committed and eager to close. Show your teeth later in the negotiation.

They're free to turn down the business, and only time will tell if it was the right call. Personally I believe revenue is revenue, and salesmen generally need a lesson in humility, but then again I've never successfully ran a car dealership.

Yeah this. I've tried this in various ways (not with cars, with other things) but usually they just hang up on me. I've never gotten deals that are better than what I could have gotten in other ways.

Depends on inventory and the value of the salesman’s time. This can work if it means they don’t have to waste hours selling you.

The problem though is the lack of real commitment. If you can guarantee you really are going to buy a car today and really will take the lowest offer, plenty of dealers would reply. Without a guaranteed commitment it’s just a negotiating tactic and they know it.

If I’m a salesman I’m OK making less on a sale if my time investment is practically nothing.

There’s a service you can use that has a $500 service fee that will bid it out for you. Dealers will reply because they know you’re serious (otherwise you’re throwing away $500). I can’t say if you get a good deal, but you definitely get quotes.

I like this approach. I check the inventory on a dealer's lot through their website, pick the car I want, learn what I can about it, and show up ready to skip the first steps. I ended up buying my current car from a no-haggle dealership since they had the best price even after factoring in negotiation (they had an overstock of the car I wanted and the new model year was about to be released).

I did this with my previous car, a 2016 Subaru BRZ.

I e-mailed three dealerships in town. I said I wanted a BRZ, Limited trim, Black, with a manual transmission, and asked what their lowest price was. MSRP for this configuration I believe was $29K. One dealership didn't answer at all, the second offered $29K, the third offered $26K and included all the dealer-installed options like the cargo mat for the drunk, auto-dimming mirror with HomeLink, and wheel locks.

I definitely went with the third dealer. Didn't even feel the need to haggle any more than that.

I've had luck with this technique as well. I generally make a deadline a few days out though which gives me a little time to work the phone without being overwhelmed. Some dealers do NOT want to deal this way ("You need to come here to get the best price"), but enough do deal over the phone to make it easy enough.

Now, the best way to save money on cars is to play the meta-game! Looking for a car which is not as popular or rare will give you much more bargaining power. End of model year, end of platform, etc are other good deals. Also having many dealers to compete works better than manufactures with less dealers (I have 10+ Ford dealers nearby, but only 1-2 VW dealers for example)

never buy from dealership at retail prices period.

go to a smaller dealer and ask them to buy a car from wholesale auction for you and you cover their costs. that way their margin js transparent and is negotiated upfront. You will be lucky to get 5-10% discount from retail prices, but wholesale prices at Manheim can be 15-30% less than retail, even more if you are willing to buy less than perfect condition car

There was a fascinating EconTalk episode about the economics of a car dealers.

https://www.econtalk.org/cole-on-the-market-for-new-cars/

One interesting point was letting the buyer successfully negotiate to an absolute rock bottom price, but then making back the margin on financing.

That is why you never say cash or commit to financing until the deal is close. Also a dark hack, all car lot have a disclaimer that there is surveillance video and audio equipment on premise. This means you have been notified of surveillance, they can and do bug the cubicle. When they go back to talk it over with their manager many times they are reading you by your conversations going on in the cube and your body language.

I worked in counterintel for a while, so I have had a lot of fun with car dealers over the years. I won't buy a new car (still drive an 87 Suburban Diesel) but from time to time my wife let's me know it's time for her to get a new car. Anyways knowing that they can and do run surveillance can actually be used to your advantage.

Try it one time, when they go back to the manager, say to the person with you, let's leave, I am not going to get what I want here and restate what you know the car is worth based on research. Leave enough meat on the bone for a decent commision and profit, but cut it close to a good deal. Get up and watch them be on the other side of the cube before you can even fully stand up. Manager will have miraculously come back 10-15% over the amount you stated. If you are not willing to walk from the deal, you are not getting a deal.

I’ve tried that and they wouldn’t budge. I got rock bottom and I offered to do financing if they would go lower but the incentive structure of the individual sales person didn’t match that of the dealership so no go

You showed too much commitment. In either situation they knew your were going to buy. The trick is to keep one foot out the door until you're locked in on price.

I had the same experience. The dealer knew I was ready to walk, but it was as simple as "computer says no lower". I sold them a car, and saw it listed the following day. My napkin math said that the margin was close to 0 on the car in the first place,once they had paid £30 to tax it and a salesperson an hour to talk to someone and take their details.

> and saw it listed the following day.

The car business is a giant recursive function where cost can be added at every step.

The sales price may have been low but the dealer has lots of ways to add pure profit:

* sub-prime loans with high interest

* gap insurance

* alarm systems

* extended warranties

* window tints, undercoats, towing hitches, etc.

The buyer might also have a trade in which conveniently starts the whole process over again.

The "Forbes list of Billionaires" has several car dealers in it.

Right, that's exactly the point. There was almost 0 money in the pure sale. All of the money is in high interest loans (via kickback from the financing), waterproofing treatments, "extra" insurance, service plans managed in house. The profit on a car night be negligible, but a cheap car sold with gap insuranxe is likely a days salary!

I keep hearing "they make money on financing" but I don't see how that's possible. I've bought three new cars financed, and every time the finance person puts my info in and gets finance "offers" from 4-5 big banks plus their in-house financing, and just lets me pick the one with the best rate -- usually most of the finance offers are under 5%, with the best one being under 1%. One time I went to one of the offering banks directly and got a worse rate than they offered me through the dealer! Maybe they're making commission on the sale but it can't be much.

Hi! I work in auto finance. About my company: we finance in the USA and we focus in "sub prime" (aka bad credit), but we are a "full spectrum" lender.

Dealerships TOTALLY make money on the financing. In your example, it might be $1000 - it sounds like you have pretty good credit, and the margins are thin there. You should remember that if someone is leaning YOU money, they just want a reliable investment for their portfolio - they'll make their money on the next guy.

If you are getting <1% offers, that is probably financing from the manufacturer (that is, Toyota Financing is lending money for a Toyota, at a Toyota dealership). These deals are HOT because Toyota Financing's #1 job is to sell Toyota's - making money is #2 or #3.

Also, did you buy a warranty or gap coverage? Cause that is profit for the dealer, too.

You probably think you got the "best rate" because you SAW ALL THE OFFERS. Nope. Dealerships see the rate from the bank and can bump it up. Did Wells Fargo offer you 2%, well, let's show him 3% and I keep the difference.

Also, yup, getting a "direct rate" is difficult. The bank doesn't really know the car you are buying, and they might see that you were already approved at the dealership and give you a WORSE rate DELIBERATLY simply to maintain a relationship with the dealership.

Thanks for the info, I appreciate the insider perspective.

Getting a higher rate directly from the bank does not necessarily mean that the dealer is not making any money on your loan. It is likely that the bank just offers better rates through their dealer partners because: 1. it's less hassle than dealing with retail customers, and 2. the dealer market for loans is more competitive.

I mean yes, I'm sure they're getting something, but the margins are so thin I don't think it's even worth considering. Consider a $50k car, dealer offers you 1% via bank. At best the bank is only taking half of that (0.5% is already ridiculous for a not-really-secured loan, considering new car depreciation), so over a 5yr loan the dealership makes... $1250. That's, what, one week of salary for one of their salesmen? I just don't think it's as much of a factor as we think it is. People talk about the dealerships handing out $10k discounts because "they make their money on financing" but the math just doesn't support that unless you're doing credit-card-interest-level loans.

Usually people cite the financing incentives when people mistakenly use the "cash is king" strategy when trying to negotiate on a car, but it isn't the only way they're making money. Dealers make significant money from manufacturer kick-backs and service too.

Also 1% sounds too low for an independent bank loan, even with the now-cratered loan rates. I am guessing that is probably a subsidized loan through a manufacturer's bank. Manufacturers have long offered artificially low rates through their own banks to help move product.

100%. There are lots of small dealers that will be super happy to go pick up a car at auction for you. I highly recommend this if you want the best price. If you don't really care, it is significantly faster and easier to just go to a dealership.

I’ve heard of the same, but with email. Spec out the car you want, timeframe you are wanting to purchase, and copy dealerships on the email. Tell them the lowest price gets your business.

Fascinating. Can you follow up with more info on how the day progresses? You play one dealer against another or use some other technique?

So first I do my homework. Get my own financing. Know exactly what model I want. Then I look online for all the dealers selling this vehicle, note the place, contact info, leave room for the name of the rep I'll be speaking to, price, etc.

Then I call each one, telling them I saw the online inventory had the vehicle in stock but since I'm buying today I just want to check if that's still the case. That already reduces some of the options: many dealers will leave attractive but outdated inventory to generate leads, and then try to upsell.

I start from the cheapest option I see online and work my way through the list. As I encounter the higher priced versions, I voice a slight disappointement that another dealer X is selling the same model for $Y. That's when they can choose to match or stay firm. Either way I thank them for their time and tell them I will be calling back within a couple hours to let them know.

During this time, I often get callbacks with counter-offers. I note the value, thank them and let them know I'm finishing my list.

Once I have a winner, I go back and call all the others, starting with the most pricy, to let them know I've made my decision, and that I respect their time so didn't want to let them hang. Things get interesting at that stage, as more counter-offers appear. At that stage, you can also visit in person to thank the salesperson as you're on the way to the lowest offer: sometimes they end up with yet another counter offer.

Having your own financing means you're not stuck with their shell game. Only when you go to doing the paperwork, you can negotiate financing rates and see if they can beat what you got from your bank. But the sale price is already set at that stage so it's safe.

The whole point during this process, it's super important to remain humble and friendly. Even though you control the process, any smugness will kill your options. And to tie this back to the thread, that's a skill you can improve with negotiation training (and it benefits more than just car buying).

That's great. Thanks for following up and filling me in. I'll be in need of a car in a few years, so I'll have to give this a try.

You don't really pit them against each other in the sense that two dealers are going to duke it out on a conference call or something.

You just state what you want at a price and then walk away if you don't get what you want. Some will flat out tell you "i can't beat that price, go for it" or they won't even bother responding to calls or emails.

When you have other options, it changes the power dynamic of the relationship and gives you a ton of leverage. The dealership needs you to purchase the vehicle and that can't happen if you walk away.

Cool. Thanks for clarity.