Knowledge, Power, and Cars
If you have been considering a new car purchase recently, now might be a good time to take the next step. Automobile manufacturers have suffered more dramatically than other retailers during this harsh winter.
This isn’t surprising. Who wants to test drive cars when it is 4 degrees outside?
Inventories have been rising to what most economists consider unsustainable levels. Yet most auto makers have not slowed down production. The industry expects sales to skyrocket once it warms up.
Regardless of the veracity of that prediction, what that means right now is dealers have too many cars on the lot and not many prospects to sell them to. This is good news for a savvy consumer.
Below is a link containing some great tips when buying a car from a dealership. But I want to share what I believe the most important tip is in negotiating price, which I never see included in tip sheets:
- Be able to justify why they should sell the car to you for the price you want to pay
I purchased a new car on a cold rainy day in late November of 2013. I picked a cold rainy day as fewer people shop for cars on days like that. I picked late November as dealerships begin taking delivery of the new year models typically by early November.
That’s when we start seeing lots of ads about the latest and greatest…in plenty of time to capture holiday shoppers already in the money spending mindset. Inevitably, the dealerships still have what is known as “new old stock” on the lot.
That’s a new car from the previous model year. They don’t just
want to get rid of these vehicles, they
have to get rid of them and usually offer additional incentives to achieve that.
I told the salesman I would pay the sticker price for the mid-line model, as long as he sold me the top end model. He said his manager wouldn’t go for that.
I explained they had 8 of these on the lot and I knew they needed to get rid of them. I told him specifically why I knew that to be true (as described above). I concluded with my knowledge that every other dealership in town is in the same situation and several competitors have very similar cars.
My final point, I’m ready to buy a car today, but I don’t need a car today.
15 minutes later we had a deal at my price - $3,500 below sticker. I guess knowledge really is power.
Currently, dealers have a similar inventory problem with the added benefit (for the consumer) that they are hungry. Low sales don’t just mean excess inventory, they mean low commissions for salespeople and income for dealerships- another leverage point for buyers.
Some manufacturers are offering extra incentives and rebates right now to help alleviate these problems. So if you’re in the market for a new car, enjoy exerting your power.
Car buying tipsInventories and incentives risingAs always, I welcome your questions and comments.
Marc Becker
Accredited Investment Fiduciary
Managing Partner, Wiser Financial Coaching, LLC
Wiser Financial Coaching, LLC, is a Registered Investment Advisor Firm
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