Note: The following refers to pre-owned vehicles. Generally, the only variations in the “cost” of a new car to franchise dealers is in destination or shipping fees. An additional variation for buyers is the notorious ‘doc. fee’, which varies widely by dealer.
Let’s take two cars, identical in every way. The first one has cost the dealer $13000 to acquire, between the expense of the vehicle, the necessary work to prepare it for sale, new brakes and tires, etc. The second one has cost another dealer $12000, with all identical work being done. These cars are on sale for the Kelley Blue Book retail price of $15995. You have determined, through your research, that a very good price would be $14500, and a great price would be $14000. Both vehicles are eventually purchased for $14000. Dealer A has made a profit of $1000, dealer B has profited $2000, and you have purchased the vehicle for a great price. Now, let’s say that you purchased yours from dealer B and have somehow found out the specifics of both of these deals.
Do you feel
A) angry that your dealer made more money on your deal than the other dealer made on the other deal
B) extremely happy knowing that you bought your car at a great price.
If you answered ‘A’, you are suffering from ‘beat the dealer’ syndrome, a self-destructive, ultimately self-defeating attitude about life in general that requires that someone else must lose in order for you to win. You will never be happy in any deal of any kind, because you will always worry that you ‘left something on the table’, that you could have gotten a better deal if only you had done something differently or if everyone wasn’t out to cheat you.
If you answered ‘B’, you understand that the profit made on the sale of an individual vehicle has nothing to do with you getting a great deal. You are halfway down the road to car buying serenity.
These two entirely separate topics must stay separate in the minds of buyers. Only the owner of a particular vehicle can determine how much profit(or loss!)is acceptable in a deal. Often it is the crushing weight of time and depreciation that determines how much a vehicle will eventually sell for, whether it is a dealer or private-party sale. An acceptable offer today is sure to be lower than it would have been a month ago–to the seller–but a great deal a month ago is still a great deal today for the buyer.
Generally, those folks who are members of the ‘A’ group become that way as a result of the continuous stream of bad car buying advice they have received since birth. They feel cheated every time because they are conditioned to believe that it is the sellers objective to cheat them rather than to simply make a profit. And while this may seem like just two different ways of looking at the same thing, it is the folks who can focus on the factors they can control who will ultimately be ‘driving happy’.
Buyers need to understand how to do proper research in order to determine what a great price would be on a given vehicle, how to formulate an acceptable offer, and how to execute the deal efficiently. There is a lot of bad information out there for buyers and tools like the Kelley Blue Book require real training to use properly. In fact, the raw KBB numbers work to the advantage of the seller every single time, so folks using those numbers to build their budget are doing themselves a disservice if they do not learn more.
A dealer or an individual should determine when they will sell a vehicle at any given price. A buyer should determine what a good price is on a given vehicle, then should offer to purchase the vehicle for that price or better. If the research isn’t sound, it is possible to end up with a conversation that goes something like this:
Buyer: ” I’ll offer you $10000 for this car right now…”
Dealer: “Fantastic! Just sign here and here and off you go…!”
Buyer: “Um…on second thought…”
About the Author
Peter W. Robinson is the owner of Movinmetal,Inc. and creator of the CAR FU: Self-Defense for Car Buyers book and system. Check out The Blog!
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