Tuesday, December 4, 2007

A new way to buy a car?

This may or may not be new to some of you, but I thought I would share with you my recent new car buying experience. By utilizing the internet, I was able to cut out alot of the *pain* in buying my new car (a Toyota Prius). Like most people, I dread going to the car dealership (new or used) because I know that I'll immediately be attacked by a sales-starved car salesman. However, if you want a new car, you'll eventually have to goto the dealership.

Here are the 5 steps I used to make this experience as painless as possible:

1) Research the car you want. Spend a few hours looking at the various websites that devote themselves to cars and car pricing. Sites such as Edmunds.com and KBB.com can give you a very good idea on what invoice pricing is for a car as well as the prices for the option packages. Sites such as Autoblog and Motortrend provide some decent write-ups on the various new car models. The one thing that was missing when I was looking, was a website like PriceHub. While KBB and Edmunds provided a good idea of what invoice price was, I really wanted to know what people were really paying, given the fact that the Toyota Prius was super popular (and very hard to get). However, right as I started my search, there seemed to be a glut of Prius(es) available. It seemed that Toyota had finally caught its supply up with its demand. The crazy premiums people were paying only a few months prior, didn't seem to make sense to me when there were 35 cars sitting on the car lot. A site like PriceHub could have helped me determine how much of a premium I should be paying (if any).

2) Goto Craigslist to find a NEW car dealer. As a frequent user of Craigslist, it was natural for me to use it to look around for cars. At first, I figured I would be able to see what some of the used Prius(es) were listed for. To my surprise, there were actually new car salesman (from all of the Toyota dealerships in my area) posting ads for the models they had in stock. Some advertised super low teaser prices, while others said they had 30 models of all colors and configurations (but no price). Since each of these salesman had an email address, I figured it couldn't hurt to email a few local dealers to see what kind of response I got. I figured out the color and options I wanted and sent off a few emails. I never gave them my phone number, so I didn't have to worry about them calling me 10 times a day. Within about 12 minutes, I received several email responses back. Some of the responses were the typical cheesy "Come in now! We've got what you're looking for". Others said that they wished they could help me, but they didn't have the right color, however they had other similar vehicles. Two dealerships near my house had exactly what I was looking for.

3) Respond to a few to get your best price. So I responded to both of these dealerships, telling them that I was interested but that I wanted to see what their best price was. Using email, over the course of two days, I was able to negotiate my price with both dealerships. Ultimately, I ended up going with the lower price dealership, not only because of the price, but also because I felt that the salesman was honest and more upfront (at least via email). My final price wasn't too far off of what he initially offered, ending up at about $500 over invoice. I was even able to get some floor mats thrown in. At this point, I hadn't even left my computer to actually see the car. I did come to the realization that a few car salesman have whole-heartedly adopted the internet as a good source of customers and that they realize that internet customers are more educated about the cars and car pricing. Not once did I get anyone trying to sell me on a *Dealer Markup* line item.

4) Go see the car that you are going to buy. After negotiating the price, my wife and I finally went to the dealership to see the car we were going to buy (verbal commitment). We spent about 10 minutes looking at it and playing with the controls. We were satisfied and went home.

5) Pick up the car up and drive home. I arranged to meet the salesman to purchase the car. When I arrived at the dealership, the price was already set and agreed upon. He didn't try to up-sell me on any additional options. I spent about 45 minutes at the dealership, mostly signing paperwork. There was no further haggling or negotiation. It was about as painless as it could get.

Again, the only thing I would change is that I wished I had a site like PriceHub which would have given me a general idea of what other people were ACTUALLY paying for their new Prius. I think I got a decent deal after looking at the 60+ actual Prius prices posted on PriceHub, but during my email negotiation period, it would have been great to see some actual data to help guide my expectations and decision.

Is this process going to work for everyone? Probably not. Craigslist worked out great for me, but the smoothness of the transaction can be largely attributed to the car salesman I used. As the shark-skin suit type car salespeople begin to make their way online, others may not be so lucky.

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Anonymous said...

Good idea. I never thought to look on Craigslist for new car dealers. There are a ton there.

Anonymous said...

How about using the Smart Target Price on Cars.com? I have found it to be quite useful.

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