Car Negotiation Tactics from a 33 year old entrepreneur millionaire.

[LS13]

I am sure most of you guys are familiar with Delivrd and Tommy Mikula. Here is an episode where he try to find and negotiate a new Tundra TRD Pro from various Toyota dealerships. I know its not our Taco but the tactics deployed here all outstanding.



If you dont know this 33 year old millionaire businessman, heres his segment on CNBC

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[TacoBirdinNW]

These dealerships are wild. People must still be paying these markups ?

 

[DENNISD]

These dealerships are wild. People must still be paying these markups ?

I would guess there are. I used to be on a different car forum, and I would see people post some of their deals and mention how their payment didn't change much even though they traded for a more expensive vehicle. What they sometimes don't realize—or don't pay much attention to—is that the dealership simply extended the loan term to keep the monthly payment about the same. Even though the total amount they'll pay over the life of the loan is disclosed, I would guess a lot of people ignore that little detail.


I credit my mom for helping me make good car deals over the years. Back in 1988, I was thinking about trading my 1973 Charger for a new car. I didn't have the cash to buy one outright, and she convinced me to wait until I did.


So I set up a "car account" at the bank and started putting what would have been my monthly car payment into that account. Once I had enough saved to buy a new car, I'd start shopping around. Back then especially, cash was king. After buying the car, I'd continue putting a designated amount into the account, and after a few years, I'd repeat the process.


The biggest advantage was that I wasn't paying interest, and I think having to actually hand over the money made me much more careful about what I was willing to spend. I don't buy add-ons, I've never paid a dime over MSRP, and I usually start seriously dealing toward the end of the month or year, when dealerships are often more motivated to make a deal.


I think people tend to be less careful with money when they're focused primarily on the monthly payment rather than the total purchase price. Ironically, buyers who are willing to accept high markups, long loan terms, and expensive add-ons probably make it easier for guys like me to negotiate better deals.


To each their own, but to answer your original question: yes, I definitely think there are still people willing to pay those markups—and make some questionable financial decisions to do it. IMHO.

 

[bsquaredMTB]

I'm sure this guy is REALLY good at what he does if he's a millionaire, but I watched that first video and didn't really see anything other than shopping around for the best deal. Admittedly I didn't pay 100% attention to the entire video but from what I can tell, he just shopped around and didn't settle for a bad deal. Am I missing something here? I don't want to sound like I'm hating on him because he's obviously been very successful. Just curious if I was missing something with his tactics.

 

[TacoBirdinNW]

I'm sure this guy is REALLY good at what he does if he's a millionaire, but I watched that first video and didn't really see anything other than shopping around for the best deal. Admittedly I didn't pay 100% attention to the entire video but from what I can tell, he just shopped around and didn't settle for a bad deal. Am I missing something here? I don't want to sound like I'm hating on him because he's obviously been very successful. Just curious if I was missingsomething with his tactics.

Had the same thoughts.
I've met a number of people (at work and such) who don't even know how to shop around, so it could be just that ? And if that's the case, I'm about to get rich

 

[OminousSkitter]

I'm sure this guy is REALLY good at what he does if he's a millionaire, but I watched that first video and didn't really see anything other than shopping around for the best deal. Admittedly I didn't pay 100% attention to the entire video but from what I can tell, he just shopped around and didn't settle for a bad deal. Am I missing something here? I don't want to sound like I'm hating on him because he's obviously been very successful. Just curious if I was missing something with his tactics.

The video is essentially an advertisement for his company and how great he is. It doesn't explain negotiation tactics like the title says.

Tl;dw
Guy has company to get you a good deal for $1000. He uses his previous work experience at a dealership for things like what the markup normally is and how much some managers are willing to budge, does market research for competing prices, and combines those when asking for a lower price.

 

[Briscoelab]

Guy has company to get you a good deal for $1000. He uses his previous work experience at a dealership for things like what the markup normally is and how much some managers are willing to budge, does market research for competing prices, and combines those when asking for a lower price.

Pretty much this. It isn't magic. He and his team are willing to do the leg work for you, negotiate out any BS fees, etc and present you with some options with zero headache on your part. Sure, you could do all of this. But it takes time and mental energy. Lots of people are willing to pay $1k just to have someone work it all out and make it less painful.

 

[BTAO]

Some people get it, some don't. Negotiating can be learned or experienced. There's nothing here that is new to me, but a few things stand out. I've bought 8 new cars I think now at least? And, my ex had a career in car sales and auto finance.

Be smarter. Research. Know more about the car you want to buy than the salesperson. It's not all that hard to do, unless you get an enthusiast. If you get an enthusiast, all the better, but for different reasons. Like early on, you can see he knows when the dealer is just making shit up. That's important, because when negotiating for anything you never want the other party to feel like they have the upper hand.

This guy is talking more than needed to sell his services, but here's the other side of things. There's two things to understand, the dealer needs to make some money, and the dealer gets perks and more premium allocations based on volume of cars sold, not margin.

If you can look up what invoice is, cool, but keep in mind there are a few things that are always added, like conveyance, holdback, and some basic profit. Then, there's always tons of things the dealers try to do as soon as it hits their lot, like add on the stupid coatings, films, insurances, markings, etc. Things you can't undo, but give them an excuse to claim higher value, despite nobody every asking for them. Also, go when there's a manufacturer sale, like president's day, because that applies to all dealerships, and will let you negotiate that right off the top at no loss to the dealer, it's a rebate to them.

The dealer will spend 100% of their time convincing you the opposite, but you are there to buy the car/truck, not there to buy the dealer. Tell them that. Tell them you are there for the brand, and could care less where you get it from, you're shopping on price, NOT monthly payment. Tell them you're there in the middle of the day on a saturday with nothing better to do than to drive around the state looking at cars for the best price. Make sure you have 1 or 2 competitor cars to what you want, and go to those dealers first, for recon for when they ask you about them.

When talking to them, sometimes you'll want to say the things you know directly, sometimes you just paint the obvious picture - that you don't care about anything they're trying to sell you on, you just want the best price. And be very clear to them that you don't want any of the extra stuff, including the extra stuff they probably already put onto the vehicle that you're interested in.

So they have what you want. I usually split the difference between invoice and MSRP as my target price. The guy was calling around, and Texas is big, but here's another thing from the Trailhunter experience. We drove across the state to see this one. I told him it checked off the boxes I wanted, but had more that I didn't want, and didn't want to pay for any of it. I told them the price I was going to pay for the options I wanted, that was fair, highlighting the above points. They still clung to their std sales strategy till I stood up, thanked them for their time, and headed to the door. The sales guy ran over and asked me to hang on for a second. He told me he knew the second I walked out he'd never see me again, especially since I wasn't local. Told me to sit tight, and he went upstairs. He came back with the price I wanted on the options I wanted, and threw in the rest at cost, and because I told him I'd want other accessories later, he wrote in that all future parts ordered through him personally would be at cost. He got a firm handshake immediately.

Hope that helps. I've never paid MSRP for anything. I've almost always bought trims that dealers were marking up, for well under invoice. In fact, usually I'd just tell them that I'd give them $500 profit, help them with their numbers, and buy all my parts there as I take care of all my own maintenance.

 

[franx]

I find it fun to negotiate with dealers, call me crazy. I too am tired of the dealer games, ridiculous mark ups, add-ons, lies, etc.

I just purchased my most recent car (not my Taco) over the phone and did all the work from home. I basically called a pile of dealerships and said I want X% off MSRP, can you do it? If not, ok thanks and I hang up, next...I did this about 5 times, took about 1-2hrs of my time and I scored over $6K in discount off MSRP. Did the same with my extended warranty, again I saved $1500. On my trade, I got low balled by all local dealers, contacted Carvana and got $4600 over all dealers trades. All in all I saved over $12K doing my own negotiating and couple hours of my time.

My wife has already told me I am negotiating her next car that she is looking for.

 

[DENNISD]

I find it fun to negotiate with dealers, call me crazy. I too am tired of the dealer games, ridiculous mark ups, add-ons, lies, etc.

I just purchased my most recent car (not my Taco) over the phone and did all the work from home. I basically called a pile of dealerships and said I want X% off MSRP, can you do it? If not, ok thanks and I hang up, next...I did this about 5 times, took about 1-2hrs of my time and I scored over $6K in discount off MSRP. Did the same with my extended warranty, again I saved $1500. On my trade, I got low balled by all local dealers, contacted Carvana and got $4600 over all dealers trades. All in all I saved over $12K doing my own negotiating and couple hours of my time.

My wife has already told me I am negotiating her next car that she is looking for.

I would agree with everything you mentioned other than the extended warranty. On average, you probably would have saved even more by skipping the extended warranty altogether.


Dealerships make a good portion of their profit on the extras—extended warranties, financing, service contracts, add-ons, etc. There usually isn’t nearly as much “meat on the bone” with the actual vehicle itself, especially on a competitively priced new car.


That being said, it sounds like you did a great job shopping the deal. Saving $12,000 for a couple hours of phone calls is a pretty good hourly wage!

 

[franx]

I would agree with everything you mentioned other than the extended warranty. On average, you probably would have saved even more by skipping the extended warranty altogether.


Dealerships make a good portion of their profit on the extras—extended warranties, financing, service contracts, add-ons, etc. There usually isn’t nearly as much “meat on the bone” with the actual vehicle itself, especially on a competitively priced new car.


That being said, it sounds like you did a great job shopping the deal. Saving $12,000 for a couple hours of phone calls is a pretty good hourly wage!

I debated the extended warranty and came down to how lucky do I feel. The car is a Porsche Macan S and nothing is cheap to replace and it gave me piece of mind in addition to not having to worry about a big expensive repair bill. Granted I baby my Porsches and take great care but replacing even the smallest things can cost thousands.

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