2010 Chevrolet MalibuEnlarge Photo
When I was Internet Manager for a major car dealer, we were careful that low-priced, advertised vehicles were always available for sale. We not only specified in our ad how many vehicles we had at the advertised price, but we listed the last six digits of the VINs to avoid any confusion. As long as an advertised vehicle is available for sale, flagrant, illegal bait and switch tactics are not being used.
However, car buyers should be aware that there is a kinder, gentler bait and switch tactic that is employed by some car dealers. It’s not fraud and therefore it is not illegal. Instead, it’s a marketing ploy that entices buyers with a remarkably low-priced, usually new car, truck, or SUV. It’s designed to get you to call the dealership, or even better: rush down and buy the car before someone else does.
What’s the catch?
What can go wrong with trying to get the best deal on a new vehicle that you plan to buy anyway? Imagine this scenario: you arrive at the dealership and discover that the low-priced sedan you want to buy does not have the basic features you need in a new vehicle. Who wants a manual transmission in a family sedan? And there’s no air conditioning; it even has crank windows.
You can’t believe that a dealership would advertise a car that no one wants. This is disappointing because you would have saved a few thousand dollars at the price that was advertised compared to what you thought you were going to pay.
Luckily, your salesperson understands. He acknowledges your frustration and suggests another vehicle just a few feet away. This upgraded model has an automatic transmission, air conditioning, power windows, and even has a moon roof, alloy wheels, and a premium sound system. This is more like it. The salesman suggests a test drive and a few hours later you find yourself driving home in your new car.
Unfortunately, you just fell for a well-designed marketing ploy. Nothing illegal took place. What did happen was you didn’t do your homework and make sure that the low-priced advertised car had the features you need. This led to a more costly mistake, one that probably cost you a ton of money.
How to negotiate price
Savvy car shoppers negotiate the selling price, trade value, loan interest rate, and any other costs before they walk into a dealership. In order to negotiate the price of the vehicle, you need to know the Manufacturer’s Suggest Retail Price (MSRP), invoice cost, what the dealer actually paid (this is usually lower than the invoice cost), what other consumers in your geographical area are paying for the same car, and the price you should pay if you want more than a good deal.
All this information is just a few clicks away, which is why negotiating price at home on your computer is a crucial step. If you begin your vehicle search by walking into a dealership and announce, “Help, I need a car now,” you’ll end up paying hundreds, if not thousands of dollar more than necessary.
Yet, the customer in the above example was switched to a higher priced vehicle and purchased it without doing any homework on price. Do this and it’s as if you willingly put yourself at a disadvantage prior to negotiating with professional closers. It sounds crazy, but car buyers do it every day.
The bottom line
Confirm the trim line and features of any advertised deal that carries a price that seems too good to be true. This should be done before you step foot on to the dealer’s sales lot. And if, for any reason, you switch vehicles while at the dealership, get up and walk out before you try to make a deal. This will allow you to research the price and other terms from home on your computer. Then, and only then, negotiate all costs from a distance. Do anything less, and expect to pay more.
I’ll offer more, savvy car buying strategies in upcoming articles.