So we just bought a new Jeep Renegade for $2,000 less than its invoice price. Put another way, two weeks ago, after some tough negotiating, we nearly bought the car for nearly $4,000 more than we ultimately got it for. More for my reference than for yours, this is how we did it.
First (Failed) Encounter
C’s wanted the Jeep Renegade since before they entered the US–she used to have a Wrangler, but I think the Wrangler Unlimited is uncomfortable on long trips, and this one caught her eye. It’s new as of 2015, and the moment she learned that it’d be released in the US, she contacted every dealer around and asked them to keep her updated (they never did). It showed up in March, and we test drove it with a really nice salesman at Pearson Jeep who fell asleep in the backseat. C determined that based on what she wanted her monthly payments to be, the car needed to be a certain price. So, she wrote to some random dealer and said ‘hey, you have a car I want, but it’s price is too high—I need my payments to be $x.’ He wrote back immediately and said ’no problem—I can get your payments there easily.’ And he did. $30,000 over the course of an 8-year financing.
We spoke to my brother, who used to sell cars, and he gave us these main points on how to reverse-engineer fucking people over:
- Don’t focus on monthly payments. You can get any payment you want based on the financing terms.
- Focus on total cost of the vehicle. Once you negotiate to the number you want, then you can figure out the monthly payments from there.
- If you’re dealing with a trade-in, work on that transaction separately.
- Get a quote from Carmax on the car you’re selling, and then you’ll know if you’re being screwed by the dealership or not.
Armed with our new knowledge, we went to Carmax and got a quote on the car we were selling—$2,000. Less than what we were hoping for—because we owe more than that on it. Anyway, we headed to the new-car dealership, Pearson Jeep and began negotiating for the vehicle we wanted, following my brother’s tips.
We got totally confused. How do you separate the transactions if not just in your brain?They said they’d give us $4,000 for the old car. Great. And when you calculate that all in, the cost of the new car is $23k. Before payoff and fees. That’s super cheap! It also means that the cost is $28k + our current car. We said that wouldn’t work—couldn’t they go lower? This is when they began playing “good cop, bad cop” with us.
Things their finance manager told us included “you need to get your finances in order” — “here’s a tip—next time you go shopping for a car, don’t focus on the price, focus on the monthly payments.” — “If we go below the invoice price we’ll be losing money.”And we basically left with our tails between our legs and felt like big failures. C apologized a whole lot to the salesman, who we thought was great, even if he did fall asleep in the backseat during the test drive.
By this point, we couldn’t even discuss the situation anymore. I had a big plan, but I usually have big plans that don’t work out, so C was preparing to just get a car she didn’t want, or grease up for us to get totally fucked over by the finance manager. I felt like a bad husband.
Sunday: Prepping to Beat the System
I made a list, in order of distance, of every dealership within 100 miles of us. I went to each of their websites to determine who had the precise vehicle we wanted. I took the top 15 as my targets, making sure I knew who the General Sales Manager or a Sales Manager of each store was.
I called every dealership on my list and told them I’d be buying a car Wednesday and would like to know if they want to compete for my business. All said yes. I told them the deal was as follows: I’ll email them my ideal car specs, and they have until tomorrow morning to send me their best quote. I’d call them the following day to let them know where their quote stood compared to the best. A few asked me to come in, or wanted to discuss what I was looking for in a car, financing terms, the benefits of their dealership over other dealerships, etc. I refused to engage in those conversations, and got them all off the phone quickly, aside from telling them that the only thing I care about is the moonroof and the color. (I was lying).
Next, I sent them all a letter with my specs, showing both that I knew the MSRP (sticker price), as well as their invoice prices for each and every line item. I also included the $995 delivery charge so they couldn’t say my numbers were wrong. I mentioned that I know they have a 3% holdback (this is an accounting trick—basically, the dealer “buys” the car for the invoice price, but the “invoice price” is actually not how much the car costs them. So when they tell you they bought it for “invoice” price, they’re lying. They get 3% sent to them during the next quarter so that they can maintain that lie. And in addition, they receive other financial incentives via secret means. The result: if they sell a car at a loss, they still receive huge payouts from the manufacturer. The dealer always wins. I let them know that I understood this.
I insisted that the bids be sent to me as the “out the door” price, with a full breakdown.
Bids began rolling in via email, text, and phone calls. Dealing with Sales Managers was best—they were well-spoken, and understood completely what I was doing: leveraging capitalism to make them compete for my business. Sales Associates, on the other hand, were generally lazy, deceptive, and stupid. For instance, Brian Raffetto, an Internet Sales Associate, at Haley Chrysler Dodge Jeep Ram refused to give the “out the door” price, emailing me: “I see no reason to get the out the door price at this time as both of these are at a price point that is greater then what you are looking for. If you want to consider these, then I would consider coming up with a ‘out the door price’, but not before.” By which he meant that he did not want to tell me how much they’d charge me. Great salespersons did creative work, locating cars at other dealerships they could trade for, asking me long lists of questions to find me rebates, getting me photos of the window stickers with detailed descriptions of the car’s features, and sending me multiple quotes for various configurations. Poor salespersons sent me a link or two off their website.
When people asked how I’d be paying for it, I’d tell them it wouldn’t matter if I didn’t purchase the vehicle from them. I refused to give numbers. When they told me about features that would drive the price up, and started selling me on them, I told them I didn’t care. I don’t care about the subwoofer, or about the 4×4, or about the remote start, or about the leather. No, I won’t come in. No, I won’t come in. No, I won’t come in.
I called the dealerships who hadn’t responded and asked if they were planning on participating. The rest of the responses rolled in.
I made a list of every Scion dealership, or independent used-car dealership within 25 miles. It turns out that the feces of the dregs of society work in independent used-car dealerships. Most places didn’t answer their phones. Most places didn’t actually even have voicemail boxes. I’d call and ask to speak with their purchasing manager, and tell them the specs on the car we were selling and ask if they’d be interested in seeing it.
East End Auto Sales wouldn’t even consider looking at it until I told them how much I wanted for it. To be clear—this means they immediately stack the deck in their favor. “It’s a waste of our time to even talk to you unless you tell us how much you want for your car.” Okay, says I, “Then you’re selling the same one online for $X, and I’ll assume you marked it up 25%, which means I want $Y for it.” There was just silence. And finally, “well, our purchasing manager isn’t here anyway.” I made a list of the places I’d be visiting to get quotes.
I called back all the dealers, in order of highest-to-lowest quote, to thank them for participating but to inform them that I’ll be taking the lowest bid, which was $5,000 less than the highest bid. Some of them said things like “But I don’t understand how you could get that good a price! We have the best prices on the whole east coast!” Others said they could do better if I’d just come in this afternoon and insisted that they’d offered me the most competitive rate and that nobody could do better. A few dealers began whittling their quotes down significantly. At all points, I insisted on out the door prices, saying I’d write a check for that amount to the cent and don’t want any surprises.
I brought our current car to the dealerships on my list, and got a range of quotes varying by nearly $3,000. Everyone would ask me “what are you looking for, for this car?” Again, when you give the first number, you will lose. So my answer always was, “I’m looking for a competitive quote from multiple dealers.” I went with the highest, which was higher than the trade-in value of the original dealership we spoke to, and higher by $2,000 than Carmax. So we paid off the car, made a tidy profit, and went out to celebrate.
I stayed on the phone until nearly 10pm with salesmen, letting them negotiate not against me—but against each other.
As I mentioned above, I was lying to them about the only thing we wanted in a car. We wanted more than a moonroof. But we knew that the moonroof rarely comes by itself—it comes with other feature packages. So in the end, we got offered a great deal on all the features we wanted—they just didn’t know we wanted them. But this wasn’t even the best deal we were offered—we could have gotten a stripped down car with just the moonroof feature for $1,000 less than the offer we took. It was that offer that I used to get the other bids down.
We went to the dealership, and C says I was kinda scary and mean, not just to the people working there, but to her also. See, when we went to the first dealership, we were a team and we worked together to get our asses handed to us. This time, it seemed better to just be the decision-maker, although, unfortunately, that resulted in coming across as a dick. Also, I was incredibly bored and they kept trying to sell us upgrades or warranties or other things, and I’d had four espressos and my stomach hurt and I felt irritable. I checked my watch a lot. I fantasized about how if I was ballsier, I’d’ve insisted the finance manager have the financing conversation with me while I was taking a shit, which is the sort of thing Lyndon Johnson would do to maintain power over people. Anyway, we walked out of there paying precisely what the salesman’s quote to me was by phone, and, as I mentioned at the beginning, it was $2,000 below invoice, $4,000 below the best price we got from Pearson for the exact same vehicle. We didn’t have to negotiate. We made a profit on our old car. We got our payments way better than our goal. And the total cost of the vehicle was way better than our goal.
As we drive around, we now notice how many cars there are. And that every single one of them was purchased by someone who had to go through the demeaning process of going to a dealership and fighting through the fact that the actual cost of a car is a secret and salespeople are liars, and it’s all a game of chicken.
I know this from experience. I used to be a travel agent, an industry that’s suffered similarly to auto sales. When you sit on a plane, you might have paid $200 for the ticket that the guy beside you paid $2,000 for. This is how we’d do it: if you came in and said “my relative just died and I have to buy a ticket to get to their funeral”—what you do is tell them you’ll make a few calls to get the best price for them. And then you find the best price and mark it up 10 times, because the guy has to go to the funeral, right? And then you change the “invoice price” and print out tickets with fake pricing info on them, and bam—you just made a nice commission. I quit because I couldn’t sleep at night. As an interesting parallel, the lazy salesman I quoted above spent most of his career selling coffins.
Anyway, that’s just how it works: when consumers are uninformed, they can be taken advantage of very easily. The internet showed up, told consumers the truth, and now I wouldn’t know where to find a travel agent if you held a gun to my head. Car dealerships were briefly in trouble for the same reason: consumers knew the truth about prices. But dealerships recovered by resorting to creative tricks.