Volantis

Salesmen at dealers are professional negotiators...whether we want to admit it or not, it's what they do. I'm ready to buy an LS 430 and found a few I'm interested in. One is at a Lexus dealer and I figure with the help of the aggregate knowledge here I'll be able to do a little better with the dealer.

Here's what I'm looking at:

2005 ML
40k miles
Lexus Dealership
Not a CPO
Asking $31,600

What is a fair value for this car if it's in great shape, how far down will the dealership come, and what else should I know?

Thanks guys.

Jabberwock

no way on that price unless its CPO and even then its too high. First you need to know if there is a reason they won't CPO the car - is there a past bad history, wreck, or problem? For a none CPO 2005 with 40k, tops I'd pay is 27k out the door with all BS dealer fees included except tax and title/tag fee. For that model year and miles you would have absolutely no warranty. If it was CPO maybe 29.5k out the door max.

Car salesmen are typically weak negotiators actually. They have very little training in either sales or negotiation techniques but they are used to working the buying public who for the most part are ignorant and or just plain foolish. So if you are a smart buyer the car salesmen are rendered are helpless. They will moan like babies if you refuse to play the game by their rules.

Negotiating for a car is all about who has the power. The dealer has tricks to make you think they have the power - they say the car is in high demand, they say someone else is interested in the specific car, they say that can't keep these on the lot, they tell you they will pay the absolute highest dollar for your trade. All of this is total BS but it works for most of the public.

First thing is you have to have cash in hand or your own financing lined up. You absolutely have to keep the deal simple that means no trades. If you have a car to trade, sell it yourself instead privately or sell it to carmax (or sell it to Lexus AFTER you have bought the new car - not during). Do not do a deal where you have to do a trade or you will get screwed and never know how bad - a deal with a trade is where the dealer has all the skill and leverage and you have none.

So once you have your ducks in a row - Find the car you want, test drive it and then go home. When you get home call the dealer on the phone - ask to speak to the sales manager - not the sales person. Make your offer on the phone - say this "I'll give you 27K plus tax and title for this specific car. Let me know if you want to complete the deal within 24 hours, after that I'll assume you have a better offer so I will make offers one of the alternate cars I have my eye on. If you agree to this deal, I will bring you check today and you will give me the car. Any change in price and I tear up check and walk out." Then hang up and wait.

Do not go in and sit in the dealer office - REPEAT - Do not go in and sit in their office. You have lots more leverage at home. Being in the dealer office makes you significantly weaker in the dealers eyes. If you keep the power on your side , buy on the phone, don't need a trade in, don't need to beg for their financing, then and only then do you have the all the power. They have a used car on their lot that they are making monthly payments on and every month that they own that car it loses retail value. Don't ever assume they have any leverage at all - Remember you don't have to play the sucker like most car buyers. Don't be in a hurry, take your time , make your offer, if they refuse, that's fine there are more LS430's always coming on the market - the longer it takes the cheaper they get actually.

The profit the dealer makes on you is typically split 3 ways - usually profit is cut roughly in thirds - 33% to salesperson, 33% to sales manager, 34% to dealership owner.

Volantis

Thanks Jabberwock. When I asked they said it's private and local car, with all service and maintenance done at the dealership and records to support that. The reason for not making the car CPO was the extra expense. I don't know how that works between dealers and corporate. Is that a bad sign or not a big deal?

Jabberwock

That's BS from them. There must be a reason they can't CPO the car. CPO is very little expense to the dealer versus the extra value they get in the sale price.

ebolger

A person after my own heart.

Volantis

Great writeup.

Not familiar with the CPO process specifically. Are there any common issues that would prevent it from being a CPO vehicle? I figure there's something if it doesn't cost them a few thousand the certify it...but they claim it's perfect and they have all the records to show for it.

Great point about leaving and making the sale on the phone. I live about an hour and a half away from the dealer, but have several friends in the city and a potential client I can visit.

Do you have any more advice? I feel like based on what you're saying it's a $24k car.

Much appreciated

caddyowner

Jabberwock has a great writeup. I'll suggest a few more items:

- Go to www.kbb.com and determine the retail and excellent private party prices for the car. There are also Edmunds and NADA sites that can provide price information.

- Compare the way the public buys cars with the way a business buys items. Businesses accept multiple bids from sellers, narrows down the offerings, and negotiates the best deal on price, service, timing, etc. If the buyer can find multiple cars available that meet their needs, dealers will have to compete with each other rather than the buyer. This is likely to mean that the buyer has to accept multiple brands, colors, option packages, etc.

- If the buyer has very specific brand, color, etc. requirements and the cars are in limited supply, the buyer needs to decide if time or money are more important. If the buyer can be patient for a number of months, they are likely to find the car they want and a dealer willing to meet their reasonable price goal. If the buyer wants to buy quickly, additional money will usually accomplish the goal.

- Low price is likely not the ultimate goal. If it was, we wouldn't be frequenting a Lexus forum. Vehicle condition and maintenance history are critical with a used vehicle - and often more important factors in the overall cost of owning the vehicle.

- Buying from a competent, trustworthy local dealer that you have (or want to have) a long term relationship with is worth something. Being one of their buying customers rather than just a service customer may get you better treatment. You are also supporting local businesses and families.

Re CPO cost: I understand that the costs involved with CPO include fixing everything wrong, replacing all wear items (tires, brakes, etc.) that don't meet specification, and about $1000 for the Lexus CPO warranty.

Jabberwock

Caddyowner - excellent points. Research on edmunds, bluebook etc to see what the car is valued at and research across the country to see what similar/same type and mileage cars are being sold/priced at is very important. I agree the lowest price is not the most important item in car buying but was just giving some basic tips to insure someone doesn't get taken advantage of in the transaction. Research, self education, and patience is required to not get "shorn". And if you are chasing a super popular rare car you will likely pay a premium - no way around that. But in any case - it is best to keep the deal as clean as possible anyway (ie, have financing in place or have cash, don't bring a trade into the deal, make an offer by phone, etc).

I do appreciate and recognize that the dealer needs to make a profit (and that they deserve to make a living just like anyone else). So I want them to make a profit but I want them to make the minimum required profit on me. I always treat them with respect and courtesy to build and maintain a long term relationship but I am 100% businesslike about the transaction and let them know, politely and humbly, that I am a "different" sort of buyer. I don't play the big man role - don't give a rat's patoot about that. My view is that the dealer can make the larger profits on the other buyers that come in and haggle for hours in the dealership, and/or that have trades, and/or say they just need to keep their payments under $700 a month - those kinds of buyers (and there are plenty of them) send the sales manager's kids to college.

One other very important tip on car buying from a dealer - the most critical piece of info you must know to assess a car on a dealer lot is how long that specific car has been on the lot. Ask the salesperson how long the car has been for sale, ask how long the dealer has had it. They usually won't lie. Some dealers will even move cars from one lot to another in a city so they stay fresh. A car that the dealer just got 2 days ago on the lot is going to be harder to negotiate an aggressive discount on, however a car that has been unsold on the lot for 30+ days is definitely subject to aggressive offers. A car on the lot for 60+ days - well they really need to get rid of that one - so bid low and always try to stay in a position of power and leverage in the transaction. Remember the dealer is typically making monthly payments on every car on the lot. And every used car on the lot loses some retail value every single month. Fall in love with the car after you buy it : )

DrJfrmLA

Good advice, Jabberwock. In my experience, when a car is stale on the lot, the dealer may well be upside down from the floor plan. Usually floor plans are a flat rate per car per day. 30 or 60 days of floor plan payments will drive a dealer's margin paper thin. The problem is some dealers want to chase the loss, which means they RAISE the price to try and recover some margin. That is completely contrary to common sense, but there you have it.

If the car has been bought at auction rather than as a trade-in, you can find out what was paid for it. I have a friend who has a friend who subscribes to some sort of national auction results site. Several years ago, he told me exactly when and where a car I was considering was sold to the dealer who wanted to sell it to me. He also told me exactly what was paid for the car. That's a handy little piece of information to have. If you can find the true price the dealer has in the car--and to be fair you have to allow for transport from the auction ($600 to $800), the cost of detailing the car, and whatever repairs had to be made (usually a new set of tires, too). But then you have a number to work from to do the deal.

Good luck finding your LS.

Volantis

So the car I'm looking at has been on the lot since the first of November. Could be good could be bad. Guess we'll see.

they claim they won't be undersold and price won't be an issue. I'm going to go look at it and not take any money.

slclexus

JabberW,

Great input ... mang.

Also from the other posters.

But I've got a couple of question: 1) Why is bringing a trade-in into the purchase of another used car death to the buyer's side of the deal? Maybe I'm being dense, but I can't hook up the reasons/facts that would necessarily make that true. 2) Can't the dealer over-allow on the trade-in and wouldn't that eclipse what you could sell the trade-in for to a private party? Not to mention the PITA factor of dealing with ads in the paper or Craig's List, waiting for no-shows, haggling with mouth-breathers, etc.

BTW, I'm a noob to the forum and you guys/gals ROCK!

Best,

Doc Eye

jimmyford1

Good points everyone. I may have missed it, but don't forget to ask for a Carfax.

Jabberwock

A Trade in a deal means you are actually challenged with negotiating and trying to assess and manage two transactions (the old car and the new car) in one deal. The dealer has to give you a low price on the trade because of the hassle and cost they take on in having to sell your old car. You may not want to deal with that hassle, but don't fool yourself, you will pay dearly for the dealer to take on and sell your old car for you.

The dealer is expert at obfuscating the real price of either transaction. Typically you end up thinking you got a good trade but not so good price on the new car or vice versa - in reality you just don't know exactly what happened.

The best way to maximize your money is to sell the old car yourself. Yes it certainly takes time and hassle as you rightly pointed out. That's why so few people do it and why the dealer counts on you bring in your trade so they can do their smoke and mirrors dance with your deal.

If you don't want to sell yourself do the following: Do the whole deal as if there is no trade - then at the very last minute - when you are bringing the check to pick up the car ask the dealer to have their buyer appraise your old car and tell you what they will give for it. Believe me the buy offer won't be a penny more than you would have got if you had put the trade in the mix at the beginning but at least this way you will get an honest assessment.

If the price offered by the dealer's used car purchase guy is too low, take it to Carmax and get a second opinion, they will buy it on the spot for published average wholesale.

Note to all I am ignoring the potential sales tax affect of the trade - this is something that varies by state and town - so you have to figure that into the entire deal - sometimes it makes a difference but 95% of the time doing the work of selling your own old car privately is way cheaper for you than trying to trade it in as part of a car negotiation. I do understand that many folks dont want to hassle with the old car - just understand that this usually costs you roughly $1000-2000 ballpark, and to some, that's not much for avoiding the hassle factor - that's OK just understand the cost.

slclexus

Good gawd, JabberWock,

If I didn't know better I'd swear you were a fellow writer. Well stated post - fact-filled, unbiased, and to the point.

You are to be commended for such lucidity on a weekend, when, if you are a writer, you're undoubtedly recovering from over ingestion of some form of drug or ethanol.

Caveat: That's what I've read anyway ... not that I'd ever do that. No siree, bob, not me.

Doc Eye

Volantis

One thing to be careful of is carfax reports. I used to work at a body shop in high school and college and if the person pays for repairs out of pocket, which is about half the time, the accident won't show up on the carfax report.

They're useful if they show an issue, but if they don't show anything, it doesn't mean the car is fine.