Negotiate at dealership
03-06-04, 08:08 AM
#1
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Negotiate at dealership
Let say a dealership asking for USD 27,888 for a car.
How low can it gets?
Is it true that dealerships add about 4-5k on top of whatever they paid for?
thanks much
How low can it gets?
Is it true that dealerships add about 4-5k on top of whatever they paid for?
thanks much
03-06-04, 08:25 AM
#2
How much markup a dealer takes on a used car will depend a lot on where the car came from and if it's certified. If a car priced at $27k came from a regional Lexus auction and is certified it is very possible the dealer bought it for close to $17 and has another $1k-1.5k in ready charges.
The dealers love these auction cars because the profit margins are so high. The dealers willingness to negotiate into that margin will be driven by how popular the make and model is, the mileage, the dealer's assesssment of the true condition of the car, the number of other like cars he has in inventory and how long its been on the lot. Lexus and MB dealers tend to be harder to negotiate with because they view their market as being quite price insensitve. There is also a concern about bastardizing the inventory. Many dealer would prefer to send cars to (or back to) the auction rather than take less than their normal retail markup. They don't want the word to get out that they heavily discount any car.
The dealers cost basis in any non-auction car is hard to predict. Sometimes a dealer will work a special deal on a trade to move something that been around for a while. Other times, people who don't or won't negotiate provide the dealer with a high markup opportunity. Overall its not unusal for the dealers basis in a used car to be 2/3 of the asking price. In the NADA used car guide there's a value called loan. Most of the time the dealers basis in a car will be less than that.
And only parts of the above applies to the "no hassle" dealers. The markup may be a little less and the willingness to negotiate a lot less. I personally think this whole concept is a tool to pad dealer profits but there is plenty of disagreement on that point I'm sure.
George
The dealers love these auction cars because the profit margins are so high. The dealers willingness to negotiate into that margin will be driven by how popular the make and model is, the mileage, the dealer's assesssment of the true condition of the car, the number of other like cars he has in inventory and how long its been on the lot. Lexus and MB dealers tend to be harder to negotiate with because they view their market as being quite price insensitve. There is also a concern about bastardizing the inventory. Many dealer would prefer to send cars to (or back to) the auction rather than take less than their normal retail markup. They don't want the word to get out that they heavily discount any car.
The dealers cost basis in any non-auction car is hard to predict. Sometimes a dealer will work a special deal on a trade to move something that been around for a while. Other times, people who don't or won't negotiate provide the dealer with a high markup opportunity. Overall its not unusal for the dealers basis in a used car to be 2/3 of the asking price. In the NADA used car guide there's a value called loan. Most of the time the dealers basis in a car will be less than that.
And only parts of the above applies to the "no hassle" dealers. The markup may be a little less and the willingness to negotiate a lot less. I personally think this whole concept is a tool to pad dealer profits but there is plenty of disagreement on that point I'm sure.
George
Last edited by Carpe Diem; 03-06-04 at 08:43 AM.
03-06-04, 07:55 PM
#3
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right now prices are up because of tax season, the auction prices are up as swell, checkut my reply as this thread
https://www.clublexus.com/forums/sho...hreadid=112568
https://www.clublexus.com/forums/sho...hreadid=112568
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