8 ms·

The truth about auto dealer invoice prices (2017)

• bingchenasian 8y ago
  Why are people still buying cars? Google's Waymo is going to be available to the public in less than a year... People buy cars and expect them to last between 7-10 years. With Waymo soon to be available to the general public, why would anyone want to buy a car and make a purchase that you pay for over 10 years?
  • uptown 8y ago
    Because not everybody’s life or needs are just like yours?
    • amyhorowitz 8y ago
      it's a fair question.
  • exabrial 8y ago
    Because not everyone wants to shell out the stupid amount of cash to live in an overcrowded intrusive California city where the government claims half your paycheck.
  • robbiemitchell 8y ago
    Because kids
    • taneq 8y ago
      Yeah, there's a whole load of gear that you need when taking kids on the road. Not just car seats but toys, sippy cups, spare nappies, snacks, etc. that you'd have to bundle into and out of the car every single time if you're not using your own vehicle.
      • KozmoNau7 8y ago
        Lots of people seem to do just fine with cargo bikes, or with baby carriages on public transport.
        • taneq 8y ago
          Lots of people seem to do just fine subsistence farming in mud huts, too. Doesn't mean I want to live like that.
          • KozmoNau7 8y ago
            Do you honestly and seriously align choosing a bicycle for transport where appropriate with "subsistence farming in mud huts"? Spoiled children we are in the western world.
        • robbiemitchell 8y ago
          We don't use the car for stuff where a bike or subway would do. We leave town, we stay with in-laws, we go to weddings, etc. We also do these things in bad weather. A suggestion that bikes replace a car for a family of 4 strongly suggests that the author doesn't have kids.
  • tomcam 8y ago
    In our case, because we live in the Seattle suburbs and we don't have a solution to the problems of street people shitting in the buses, threatening our children and causing fights; of banana republic hours and whimsical every two-hour-or-so schedules; of no room in the Park and Ride lots; or of miles-long walks to the bus stops. You sound pretty smart and probably have the solution to these problems. Please share it.
    • hprotagonist 8y ago
      Not to be glib, but a bicycle solves a lot of the medium range issues. I have a car but use it sparingly. Anything inside of 15 miles or so is fair game and I’m almost always faster than a car and guaranteed faster than public transportation. Kid and grocery hauling is well within reason. And my weather is about as weird as yours.
      • NikolaNovak 8y ago
        For people in good health, for people with flexibility of time and condition they arrive to target in, for people in cities with amenable climate, for select times of year. Not to be glib, but what about the old, the young, those who cannot come in sweaty to work, those who don't live in Caribbean / those who need to get out of their house more than 6-8 weeks out of the year, those of poor health or limited mobility, those in places which are not friendly to bikes, those who need to go with somebody, those who need to carry stuff, etc? My pregnant wife, my 73 year old dad, my waist-down-paralyzed nephew, my asthmatic self (no made-up examples) cannot take 15 mile trips in Canadian Winter through a place lovingly called "Halton Hills". I have two friends who can. They did for one season, they told everybody how awesome they are, and their bikes are now in the locker.
      • jimmaswell 8y ago
        I drive my car less than half a mile to a Wendy's on a regular basis. On a bike I wouldn't be able to bring my dog, it would be weird using the drive-thru, it would be uncomfortable on all but the few days of the year that are a perfect temperature, and I'd be much less safe in the case of an accident (people don't look at all coming out of this one place they're supposed to yield sometimes). And taking home the amount of groceries that I do on a bike would be impractical, and if put in a backpack, probably hurt my back. I cherish having the choice to take a car to these kinds of places. No way a bike would be faster because whenever there's someone on a bike in front of me on these routes, I have to slow down, and these routes are never badly congested. Admittedly riding a bicycle in a bike lane can be a lot faster in some of the most congested parts of the country like Manhattan, but there often aren't bike lanes and using sidewalks is a point of contention.
  • Spooky23 8y ago
    You don’t pay for 10 years, it has a 10 year life. Waymo will cost way more for a long time, assuming its street legal and available. You buy a car today because it saves you time and provides utility.
  • pkaye 8y ago
    How much will a 10 mile ride to work in rush hour cost on Waymo?
  • djsumdog 8y ago
    Because mass transit is non-existent or shitty in many American cities. Also, we're a good 10 years minimum from viable self driving cars, and people I know in that industry say it's more like 15+. It's a fucking hard problem, and one where you can't screw up. You screw up and people die. Self driving cars also will not clear up road congestion. Even if every car was self driving, they still take up a shit ton more space than a train and transport a fraction of the people. I wrote about this a while back: https://penguindreams.org/blog/self-driving-cars-will-not-solve-the-transportation-problem/ https://penguindreams.org/blog/self-driving-cars-will-not-so...
  • pretendscholar 8y ago
    Why can't you retrofit the car with self driving equipment?
  • NikolaNovak 8y ago
    >>Why are people still buying cars? Because (majority of North American cities, and many others around the world, are impossible, impractical, or difficult to live with without a car), multiplied by (variety of lifestyles, people, locations, conditions, health, jobs). [In reality, I assume you understand the answer to this question but there _are_ people who genuinely don't - their age, health, needs, job, location, lifestyle and wealth are such that they can get away without one, and lacking empathy or bother, don't understand not everybody is in that very specific slot] >>People buy cars and expect them to last between 7-10 years. I bought a new car in 2004 and am still driving it. I go to dealerships for fun with my dad few times a year, but am in no rush to replace. When I do, I'll expect at least 10 years out of it (tricky with the welded entertainment systems these days, but you can still get a car without a Touchscreen, if you try hard ;). >> With Waymo soon to be available to the general public See #1. Some people need a car now; some people need convenience, availability, particular size, etc; some people will be outside of target markets for years if not decades; etc etc etc. Again, I understand the question may have been meant to start a discussion, but I feel there could've been less intentionally provocative ways around it (or, if it were purely genuine, for your own sake, dear goodness, open up your eyes and empathy gland a bit and notice the world around you - talk to or make some friends who are in different positions, travel, watch some TV, etc :-)
    • vvanders 8y ago
      Also depends a lot on where you choose to live. In the city? Totally understand an on-demand car service. Out in the country/rural area? You're may want a truck that's matched to what you tow/haul/etc. Pretty sure it'd be against Waymo's ToS to haul your garbage into the dump in places where trash service isn't a thing.
  • jimmaswell 8y ago
    If self-driving cars were out and affordable, maybe I'd use that. Otherwise I'd never go without a car that lets me go wherever I want whenever I want and transport anything within reason inside it. I would never want to live the life of being beholden to the where&when of public transit and having to do grocery trips a few bags at a time, constantly surrounded by strangers. I drive half a mile to a Wendy's from my house fairly often, and I love having the freedom to do that instead of walking or biking.
  • AnimalMuppet 8y ago
    I would bet a moderate amount of money that I could not buy a car equipped with Waymo on July 22, 2019. But perhaps you didn't mean buy. Perhaps you mean "use it like Uber now". Well, I don't want to use Uber for all my driving needs now - why would it be different once it's Waymo instead?
  • seattle_spring 8y ago
    I guess because being stuck within a city and not being able to go hiking or whatever is my personal little hell.
  • taneq 8y ago
    What will Waymo provide except as lightly cheaper version of what Uber provides right now, which again is a cheaper version of what taxis have provided for a hundred years?
• exabrial 8y ago
  Dealerships are a state protected scam. They collude on prices and with Kelly Blue Book, as well as wholesale auctioneers to keep prices high.
  • koboll 8y ago
    If states allowed direct sales, an entire industry would vanish overnight. Auto dealerships employ two million people in the US. No politician wants that on their hands.
    • madengr 8y ago
      I don’t care. It’s sort of like wiping out a virus with a vaccine. If everyone in the pay day loan industry loses their job, who cares. Car dealers are at the same level.
    • mgkimsal 8y ago
      yet... i would think a sizeable portion of them would just be shuffled and reemployed someplace else in the auto chain. maybe not 100% but... most?
      • xeromal 8y ago
        Are you willing to stake your career on that guess?
    • lotsofpulp 8y ago
      There's lots of infrastructure work to be done if politicians were concerned about employment numbers.
    • brandmeyer 8y ago
      I'm not so sure. Cars need maintenance. Customers want to drive the cars before they buy them. So maybe the management and dealership owners lose out, but the rank and file should still come out OK. I think the same thing may be true with tech employers and their on-site benefits. Sure, the employees aren't eating out in town as much, but they are still eating. For the line cooks and other service workers, there's still work to be had. Its the people who are in the business of owning service industry businesses that are in trouble.
• tomcam 8y ago
  Our strategy is to let local dealers compete, then go in and offer cash at the last minute. But also we have a different agenda, which is: how much is the car worth to me? I've always assumed exactly what Clark says, which is that the dealer invoice is bogus. By paying cash we save a huge amount over the lifetime of the car, and the wiggle room isn't terribly important.
  • post_break 8y ago
    Cash is usually the last thing the dealers want because they double dip by getting kick backs by selling loans to people. By financing through a credit union you can usually get a great rate, invest that large sum else where, and pay the loan off early if you want. Some scummy dealers will also only give you a price based on you financing with them, cash is more expensive since they were expecting that kickback.
    • jacob019 8y ago
      Agreed. The last car we bought had 0% and a rebate on the loan making it cheaper to finance than to pay cash. I've heard of dealers pulling out of an agreed deal when they learn the buyer wants to pay cash.
    • everdev 8y ago
      Yeah, whenever I say I'm paying cash they get disappointed and stop negotiating as much. I've learned to save it until the very end when the real salesman, the "paperwork" guy.
    • pdonis 8y ago
      I always tell dealers that I already have financing when I ask them for a price. The ones that balk when I say that are the ones I don't go any further with.
  • TylerE 8y ago
    That is often not true, given how low the APR on a new car loan is if you have good credit. E.g. loan at 0.9% and you can get WAY more than that by sticking that $40k in even a safe mutual fund.
• brandonmenc 8y ago
  > Then 1995 happened, and any doofus with five thumbs and a keyboard could get invoice prices for free all over the Internet. My uncle was a top car salesman in his area at that time. He said guys would come swaggering in with a printout from the internet, and he'd be like "so what - go somewhere else, then" because it didn't matter - no one was going to sell you the car at zero profit. If they "secretly" raised the "invoice" price it was almost certainly so they wouldn't have to deal with boneheads constantly coming in and demanding to buy the car at cost. Anyways, his advice today? Lease. And if you're trading in, wait until the day you're supposed to pick up the new car, then call in and say, "you know, I think my trade-in is worth more than that" - they will always negotiate at that point.
  • jdblair 8y ago
    I hear people say leasing is the way to go, but I don't understand the math. Cars easily last 10 years now, and I drove my last car for 18 years. Please explain! Is it about always having a newish car at an optimal price?
    • steveeq1 8y ago
      Maybe it's incentive-caused bias from a person who makes more money selling leases?
    • NeedMoreTea 8y ago
      Leasing wins against having a new car every few years. It fails badly if you keep your cars longer or buy when they're a few years into the depreciation curve. Personally I decided buying cars a few years old made far more sense.
      • ianai 8y ago
        Leases are literally the option to purchase a car at a much later date at a predetermined price. You’re betting you can keep the value of the car above the price difference of the vehicle at that later date. The manufacturer is just raking it in - they’ll rarely not be able to fix a vehicle up for a great profit. I wouldn’t be surprised to learn the lease contract price (Ie sum total of downpayment and monthly payments) more than covers the manufacturers per vehicle cost.
• Xcelerate 8y ago
  I bought a new car last year, and the way I did it was to locate the car I wanted at all dealerships within 300 miles. I then emailed each dealership and asked for the lowest price that they could sell the car for. Then I passed the lowest number to the other dealerships, who counter offered. I iterated this process until no dealership would go any lower, and then I drove to the one with the best deal and picked up the car. It brought the price a few thousand lower than the supposed "invoice minus holdback minus whatever", but I suppose they wouldn't have sold the car unless they made some profit on it.
  • alanfalcon 8y ago
    Sometimes you can take a loss on the car, but make a profit on the sale: https://www.thisamericanlife.org/513/129-cars https://www.thisamericanlife.org/513/129-cars
    • ethbro 8y ago
      If you're interested in how dealerships actually work (and how perverse and stressful the incentive structure can be), I highly recommend listening to the above podcast. It was fascinating. One example: sometimes dealerships are selling you a vehicle at a loss, in hopes they'll hit the next volume tier, earning enough manufacturer rebates to make a net profit on the deal. And they have to cut their prices that low if they're in a competitive market. Which turns the entire endeavor into a monthly game of musical chairs. "And 3rd place? Third place is you're fired."
  • djsumdog 8y ago
    I have never bought a new car, but I suppose if I did, this would be a good strategy. I mean it's a lot of effort, but when you talk about something that expensive that you're going to keep for 5 ~ 10 years at least, it makes sense to put in that effort.
    • pbourke 8y ago
      It’s a few hours over 1-2 days - not that much effort to save a few thousand dollars.
• vvanders 8y ago
  One new trick I discovered last time around doing the new dealer quote matching game is to find a set of dealers in a different state. In our case all the dealers for one brand were owned by a single conglomerate(under different names) however as soon as we mentioned we had a lower quote from a OR dealer(this was in WA) they suddenly dropped their prices significantly.
• shartshooter 8y ago
  What is the most valuable resource a car salesman has? Time. She/he can’t make more of it and any time spent on something that likely won’t bring them a deal has a huge opportunity cost. Knowing that, the most effective way to get the lowest possible price is to spend as much time with a salesperson as possible. Test drive every model, have them dig up odd questions and get them convinced that you’re going to buy. After all, a serious buyer would never take so much time if they weren’t serious. The sales rep will see all the other potential buyers coming into the lot getting help from his competing reps. This isn’t a big deal if she/he is convinced you’ll buy. After spending all day, walk away. And do it at the absolute last minute. The sales rep and their boss will do everything they can to get you locked in because 1) they were already set on you buying and 2) they burned a huge amount of time helping you and missing out on other buyers. They’re too mentally invested in seeing you buy. There’s no guarantee you’ll get something at cost or at a loss but you’ll put the power in your hands and be working with someone who’s as invested in buying as you are. The idea that you can email your way to the lowest price is far less effective. The amount of time it takes for a car salesperson to reastart one to an email is trivial compared to burning an entire day test driving vehicles with you.
  • jghn 8y ago
    your time also has value. Spending a whole day to get a lower cost might not save as much money as it seems
    • twothamendment 8y ago
      Sometimes it is worth it. I spent 2 days to buy a truck. I flew to another state and drove it home. It mostly went according to plan except the leaky power steering hose that I spotted the first minute I looked at it - and then spent the next 5 hours waiting for them to fix it. I wish I could trade more weekends for $5,000.
      • blattimwind 8y ago
        > except the leaky power steering hose Great QA right off the bat.
• faster 8y ago
  My sister bought a new car in 2014. She used one of the services that shops your requirements to dealers within your area. The night before her scheduled test drive with the dealer who had the best price and didn't seem sleazy, a friend of hers told her to check with a fleet broker. Within a few hours, the fleet broker sent her a price that was about $100 less than the dealer's. I went to the dealership with her, we both drove the car and made sure it would fit in her driveway (steep with sharp angles, a recipe for ripping off front trim). On the way back to the dealership I asked how long the paperwork would take. The salesman (actually the sales manager) said it takes a couple hours because of 'state requirements'. She asked him to match the fleet broker's price, he said it had to be a scam and refused so we drove away. On the way to lunch, she called the fleet broker and had her insurance agent send him proof of insurance (she already had financing arranged). As we sat down to eat, the fleet broker called back and asked when she wanted the car delivered. She got it delivered 2 days later and spent less than 5 minutes doing the paperwork. I have always fantasized that the next time I buy a new car, I'll figure out a reasonable price and take a cashier's check for that amount to the dealer. I imagine telling them that I want to be on my way out the door with the keys in my hand in 15 minutes or I will leave. But really, why waste time on that when I can just call a fleet broker?
  • gautamdivgi 8y ago
    If you have a Costco membership and buy cars through them they always send you to the fleet or wholesale section of the dealership. There isn't any negotiation with fleet sales but their price is almost always at invoice or a few hundred less. In fact for one of the cars I bought through Costco the fleet sales guy threw in a manufacturers discount of $2k in addition to giving me a base price of about $500 below invoice.
• closeparen 8y ago
  The quoted price for the last used car I bought was a hair under what any third-party pricing resource said it should be, so I accepted. I then learned where the dealer profit margin lives - in a very aggressive upsell to a $2500 maintenance package.