Negotiating custom car deals
August 30, 2010 9:11 AM Subscribe
How do I get the best deal when custom-ordering a new car?
I'm generally a pretty strong negotiator, but this is new territory for me. It seems obvious that buying a car already on the lot will give you a better deal, but how much flexibility does there tend to be in custom orders? Is it still advantageous to buy (or order in this case) at the end of the month? Do the dealer's costs change at all in a custom order (a possible negotiating point)?
I'm considering several makes and models at this point, so if you have company-specific info, go ahead and post it. If nothing else, it might be helpful for someone else in the future.
I'm in the greater Seattle, WA area.
I'm generally a pretty strong negotiator, but this is new territory for me. It seems obvious that buying a car already on the lot will give you a better deal, but how much flexibility does there tend to be in custom orders? Is it still advantageous to buy (or order in this case) at the end of the month? Do the dealer's costs change at all in a custom order (a possible negotiating point)?
I'm considering several makes and models at this point, so if you have company-specific info, go ahead and post it. If nothing else, it might be helpful for someone else in the future.
I'm in the greater Seattle, WA area.
Response by poster: Thanks. I have all the cost and holdback info (though in a couple of cases it hasn't been updated for the 2011 model year). I'm just curious about what changes about the process when you're custom ordering vs. buying from stock. I could be wrong, but my suspicion is that most dealers will be more flexible on price if you buy something from stock. I am willing to pay more to get exactly what I want (and it's likely to be unusual enough that it won't be in stock or available for transfer from another dealership), but I still want to negotiate the best deal I can within those constraints.
posted by sharding at 9:53 AM on August 30, 2010
posted by sharding at 9:53 AM on August 30, 2010
Do the dealer's costs change at all in a custom order...?
It occurs to me that 'dealer holdback' may require some explanation. Dealers don't own the new cars they've got on the lot, in much the same sense that you don't own the house you live in because you've got a big fat mortgage on it; you're the resident, but the bank really owns the house. Similarly, the dealer gets those cars on credit. "Dealer holdback" is an amount that's built into the invoice price to cover the cost of financing that credit during the time between when when the dealer takes delivery, and when the dealer sells the car. The important factor here is this: if the car is sold fairly quickly, the dealer gets part, most, or even all of that dealer holdback amount refunded. This is a major reason that you sometimes hear about people who've successfully negotiated prices below invoice -- the invoice price isn't the real price. I
If you're going to buy the car at almost the moment it rolls off the truck, which I assume would be the case with a custom order, then the dealer will be getting virtually all of that dealer holdback amount refunded, so his real costs will be significantly below invoice.
Obviously the dealer would much rather sell you a car that's on the lot, because his real costs of hanging onto those cars are going up every day. I would think that you'll find it easiest to negotiate if you establish very firmly that you won't be buying any of the cars he's already got.
posted by jon1270 at 10:02 AM on August 30, 2010
It occurs to me that 'dealer holdback' may require some explanation. Dealers don't own the new cars they've got on the lot, in much the same sense that you don't own the house you live in because you've got a big fat mortgage on it; you're the resident, but the bank really owns the house. Similarly, the dealer gets those cars on credit. "Dealer holdback" is an amount that's built into the invoice price to cover the cost of financing that credit during the time between when when the dealer takes delivery, and when the dealer sells the car. The important factor here is this: if the car is sold fairly quickly, the dealer gets part, most, or even all of that dealer holdback amount refunded. This is a major reason that you sometimes hear about people who've successfully negotiated prices below invoice -- the invoice price isn't the real price. I
If you're going to buy the car at almost the moment it rolls off the truck, which I assume would be the case with a custom order, then the dealer will be getting virtually all of that dealer holdback amount refunded, so his real costs will be significantly below invoice.
Obviously the dealer would much rather sell you a car that's on the lot, because his real costs of hanging onto those cars are going up every day. I would think that you'll find it easiest to negotiate if you establish very firmly that you won't be buying any of the cars he's already got.
posted by jon1270 at 10:02 AM on August 30, 2010
I've custom ordered a couple of times. How a dealer will treat you depends entirely on the dealer. You will hear a lot of stuff from salespeople along the lines of, "Well, you can special order, but you'll have to pay full sticker price." This is nonsense, but it is a pretty good indicator that should look elsewhere.
I ended up doing best with dealers who have some sort of flat pricing, no haggle system in place. Once it was just because that was the dealer's gimmick at the time -- "$100 over invoice!" -- and the other was because they had a deal in place with Costco to offer flat pricing to Costco members. In both cases, I did better with these dealers than any other dealer in town was willing to do.
You'll have to put a non-refundable deposit down, and if you ask for any features that the dealership considers out of the ordinary for their market, the amount of the deposit will rise accordingly. They don't want to get stuck with something that will be hard for them to sell if you flake out.
posted by spilon at 10:08 AM on August 30, 2010
I ended up doing best with dealers who have some sort of flat pricing, no haggle system in place. Once it was just because that was the dealer's gimmick at the time -- "$100 over invoice!" -- and the other was because they had a deal in place with Costco to offer flat pricing to Costco members. In both cases, I did better with these dealers than any other dealer in town was willing to do.
You'll have to put a non-refundable deposit down, and if you ask for any features that the dealership considers out of the ordinary for their market, the amount of the deposit will rise accordingly. They don't want to get stuck with something that will be hard for them to sell if you flake out.
posted by spilon at 10:08 AM on August 30, 2010
When I ordered a new Ford I was able to get a PIN for their X-Plan. Basically this means a fixed price with no haggling. I think the other U.S. manufacturers have similar plans. I got the PIN because I am a stockholder, but I also could have gotten one through my employer as we have a business relationship.
posted by leaper at 11:26 AM on August 30, 2010
posted by leaper at 11:26 AM on August 30, 2010
If you want to order the car as you like it, you should simply use the resources at your disposal (as noted above) to determine a fair price for the car if the dealer already had it on the lot, then use that as your offer to the dealership.
The downside to them ordering a car for you: they don't get to move a car they've already paid for and are paying insurance on. The upside to them ordering a car for you: they get an extra sale (and profit) for moving a car they didn't have to pay insurance on. It's more or less a wash, then, and you should really just call around to speak to the sales manager for each dealership. Say "I want the following car with the following options, and I'm prepared to place a deposit and order it through you. How much deposit do you need, and what would the turnaround time on the order be?"
Warning: just because you want a certain color/option combo doesn't mean the factory produces it, so you may not get what you want. Just don't trust one dealer's word on that -- ask them all in your larger area.
posted by davejay at 2:26 PM on August 30, 2010
The downside to them ordering a car for you: they don't get to move a car they've already paid for and are paying insurance on. The upside to them ordering a car for you: they get an extra sale (and profit) for moving a car they didn't have to pay insurance on. It's more or less a wash, then, and you should really just call around to speak to the sales manager for each dealership. Say "I want the following car with the following options, and I'm prepared to place a deposit and order it through you. How much deposit do you need, and what would the turnaround time on the order be?"
Warning: just because you want a certain color/option combo doesn't mean the factory produces it, so you may not get what you want. Just don't trust one dealer's word on that -- ask them all in your larger area.
posted by davejay at 2:26 PM on August 30, 2010
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posted by jon1270 at 9:18 AM on August 30, 2010