Buying a car in 2020 is a bit surreal. As a car buyer, you have many (and varied) options for where you can go to purchase a vehicle. Your options range from digital dealerships with “car vending machines” to traditional dealerships that still fill out credit applications by hand. It’s crazy to think that you could go to two car dealerships in one day and have two completely different experiences.
That being said, regardless of where you go to buy your next car, the odds are you’ll be negotiating the price of it. Even as more upstart digital car dealerships make their way into the market (Carvana, Vroom, Shift, et al), the majority of cars are still sold either via private party (on Craigslist, eBay, Facebook Marketplace, etc.) or at a dealership (franchised new car dealerships and independent local car dealerships). For you, as a car buyer, that most likely means you’ll be negotiating the price of the vehicle you’re interested in.
Many car buyers experience an awkward and uncomfortable situation when a car dealer is unwilling to negotiate. What do you do in this circumstance? After spending 43 years in the retail automotive industry, I’ve seen nearly every “sales” technique used on any unsuspecting customer, and I can assure you that even a car dealer who won’t negotiate on price, will bend even a bit to make a car deal.
What do you need to know when a car dealer won’t negotiate? Let’s dive in.
Know the current market conditions
After 43 years of selling cars for a living, I now coach, counsel, and provide recommendations to car buyers for how they should navigate their car deals. The first piece of advice I give every single person who wants to buy a car is to check their local market conditions before contacting any dealership.
What does it mean to “know the current market conditions?” It’s simple; it means you know how many vehicles in your area would satisfy your needs. My son and I built the free Market Price Report back at CarEdge to help with this.
Car dealers use a piece of software called vAuto to track local market conditions. What vAuto provides a dealership with is a snapshot in time of all comparable inventory within a 100-mile radius of them. Dealers look at this snapshot to determine what price they should list their inventory for sale. Feel free to ask a dealer to see their vAuto report, most will oblige and share it with you.
What does this mean for you as the car buyer? It means you need to have your equivalent report in hand before you contact any dealership. The Market Price Report from CarEdge shows you all of the comparable year, make, model, trim (YMMT) options within a 100-mile radius of your location. Best of all it shows you the negotiability score of each vehicle in that area as well.
If you run a Market Price Report and you find there are no similar vehicles in your area, that’s a good sign that you won’t have much (if any) leverage during your negotiations. However, if you run a Market Price Report and find that there are 100+ similar vehicles in your area then you know now you can walk away from any deal and go find another one. The best part is, the car dealer knows that too, since they’re looking at their vAuto report.
Knowing your local market conditions puts you on a level playing field with the dealer, and that’s of the utmost importance when it comes to negotiations. It’s one of your best tools to make a car dealer budge when a car dealer won’t negotiate with you.
Know how long the car you’re interested in has been on the dealer’s lot
Once you have confirmed the local market conditions, I highly recommend you get a sense for how long each dealer has had their inventory in stock. You’ll hear me call this the “time on lot,” and it’s of the utmost importance.
Why? Because car dealers do not buy their inventory in cash, instead they finance their purchase (just like you or I would). This means that for every day a piece of inventory is sitting on their lot they are paying interest on that loan. You’ll hear this referred to as “floor plan” from dealers.
If you know how long a dealer has held a vehicle on their lot, you can begin to get a sense for what their floor plan cost is on that unit. With that information, you can then negotiate more effectively. You can also pair this knowledge with the local market conditions to target your negotiation efforts on the vehicle that has been sitting on a dealer’s lot longest.
If a car dealer won’t negotiate, one of the first things you should bring up is that you know how long the car has been on their lot. This gives you tremendous leverage in the negotiation.
It’s worth noting that the Negotiability Score we provide in the CarEdge dashboard reflects this (i.e., higher scores are for vehicles that have been on dealer’s lots longer than lower scores).
Be prepared to walk and go to another dealership
With your research out of the way, you’re now ready to engage with a dealership about the particular vehicle you’re interested in. I recommend you use one of our tried and tested email templates for your initial outreach to a dealer.
If you come across a situation in which a car dealer won’t negotiate, my recommendation would be to bring up the vehicle’s time on lot and remind the dealer (politely) that it is costing them money to have the vehicle sit there, when you would gladly take it off of their hands for the right price.
If this tactic does not work, my recommendation would be to show them the similar vehicles you have identified in the area, along with their time on the lot, and let the dealer know you have many options for where you can go to purchase your next car. If this doesn’t persuade them to negotiate and make a car deal, then it’s time to send your email introduction to the next dealer on the list.
Obviously, this strategy will not work if there are no similar vehicles in your area. If that’s the case, then I’d suggest you read this guide on how to buy a car long distance from a dealer.
When it comes to negotiating tactics, whoever is in command of the conversation has the leverage during the negotiation. Car salespeople are trained to always be in control of the conversation. You need to keep them on their toes by using the above tips to gain control of the conversation.
Ultimately, the power the customer has is that they can simply say “no” and walk away. The salesperson can say no, but then they lose out on commission and a chance to make a car deal. When you say no, all you’ve lost is a little bit of time. This is the ultimate upper hand that you have when a car dealer won’t negotiate.
By following the advice in this article (and in our free cheat sheet), you’ll know how to negotiate car prices like a pro. Don’t be afraid to say no and walk away if a salesperson refuses to work with you on the price.
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