New Car Deal - too good to be true?

[Midpack]

I have a deal pending on a new car. They have agreed to give me $9000 on my trade on (a 10 yo Honda Element). According to online estimates, it's worth about $5000, which means I am getting the new car well under invoice. It's a model that's in high demand, one dealer wouldn't offer any discount on the same model from their inventory.

I discovered that the car was originally delivered to another area dealer, so I assume it landed at the other dealer via dealer trade?

I am a little concerned I'm missing something!

It only has 37 miles, so it's not a demo. It looks fine. In my state, if it was damaged and repaired, they don't have to disclose it unless it's more than 4% of the value (that stinks IMO).

I don't want to falsely accuse anyone, but any suggestions? Thanks...

 

[W2R]

I think that getting a new car for $5K under invoice is a common enough occurrence that I wouldn't worry about it. You can always check on Edmunds.com to see what others are paying for a similar car in that zip code.

Enjoy your new car!

 

[Midpack]

I think that getting a new car for $5K under invoice is a common enough occurrence that I wouldn't worry about it. You can always check on Edmunds.com to see what others are paying for a similar car in that zip code.

Enjoy your new car!

Salesman says I got it for $300 under invoice plus a $698 protection package (no choice) - on a Prius with gas prices up!!! Doesn't make sense to me. Edmunds shows others are paying about $2000 more, though with a trade in it's hard to sort out.

 

[W2R]

Salesman says I got it for $300 under invoice plus a $698 protection package (no choice) - on a Prius with gas prices up!!! Doesn't make sense to me...

Oops! Careless reading on my part. The price makes plenty of sense to me. Check edmunds.com to see what others are paying in that zip code.

 

[MichaelB]

I too have used Edmunds to see what average prices are. You can also get a quote fron another dealer to see if the price is in the same ballpark or not.

 

[W2R]

Maybe you are just a really good negotiator! That would be my assumption. Pat yourself on the back, buy the new car, and enjoy your new Toyota Prius.

P.S. - - The invoice price doesn't really mean what they paid for it, as I understand it. There is some fudging room. My Toyota Venza was considerably discounted, and I didn't even do my best at bargaining. My only explanation is that I think the new model year was looming, and the salesman wanted to clear some room for the next year's Venzas. It has been absolutely perfect.

 

[JOHNNIE36]

Not knowing anything about used Honda Elements, I checked on Edmunds and see that the first year they made the Element was 2003. Just guessing at how it's equiped and using 75000 miles on your car, the trade in value is about $7500 for one in fair condition to $9000 for excellent condition. New cars generally aren't discounted as much as they used to be and I think 10% off the sticker price would be a good deal. The dealer can jack up the used car to compensate for getting sticker price for the new one. By the way, you can also get new car values on the Edmonds web sire.

 

[73ss454]

I think that getting a new car for $5K under invoice is a common enough occurrence that I wouldn't worry about it. You can always check on Edmunds.com to see what others are paying for a similar car in that zip code.

This is not common at all. Dealers are not in business to lose money. Sales Managers are paid on the bottom line and they are not going to let cars go out as loosers, as it comes out of their pockets.

You are correct that in most cases the dealer is getting other money back from the manufacturer, it's usually 3% of MSRP, but not with all brands.

Also the manufacturer can put out what's known as Retro money. How this works is the dealer may be offered to move a certain amount of a certain model. Let's use a Nissan dealer and say we use Altima. So the offer may be that if the dealer sells 50 of that model in one month they may get $600 for each one they sell if they hit the #. So at the end of the month, like today or this weekend, the dealer may be willing to lose a few bucks to get the retro money.

But to sell a car at 5K under invoice is not anywhere near the norm.

 

[ERD50]

Salesman says I got it for $300 under invoice plus a $698 protection package (no choice) ...

Maybe I'm not following, but if we assign a $0 value to the 'protection package' (probably what it is worth), isn't that effectively $398 OVER invoice? Or are you saying $300 under invoice including paying $698 for the package?

I'm not sure invoice means anything anyway, the dealer gets paid in different ways. My measure is - am I not over-paying compared to averages, and of course, getting a good value for my dollar (subjective, people place different values on different things).

Though I used the 'true-car' numbers when I shopped, I don't know if they tell me much. They say the prices reported are w/o any dealer add ons. So if Buyer A reported he got the car for $25,000, but bought a $2,000 package of crap dealer add-ons ($27,000 out of pocket, but $25,000 reported), and another guy paid $26,000 with no dealer add-ons that he didn't want anyway - which is the better deal? I'd say the $26,000 deal. The dealer is figuring those add-ons in their numbers, they are almost always close to pure profit for them. Money is money.

-ERD50

 

[Lakedog]

I have a 2007 Element and in the last few months I have had unsolicited offers from two dealers wanting to buy it. It seems that there might be demand for the Element now that it has been discontinued. Whenever a trade in is involved, it is hard to know what you are actually paying for the new one -- one reason I prefer to sell rather than trade in. Sounds like you are getting an okay deal on the Prius.

 

[ERD50]

...
Also the manufacturer can put out what's known as Retro money. How this works is the dealer may be offered to move a certain amount of a certain model. Let's use a Nissan dealer and say we use Altima. So the offer may be that if the dealer sells 50 of that model in one month they may get $600 for each one they sell if they hit the #. So at the end of the month, like today or this weekend, the dealer may be willing to lose a few bucks to get the retro money. ...

Heck, if you are there near closing, and the dealer is at car #49, he could practically give the car to you and be ahead (50x$600=$30,000; minus his cost of car #50)!

So how does a clever LBYM retired guy with time on his hands find these opportunities? Let a bunch of dealers know you are ready to buy, but in no rush, and to give me a call over the next year if you need to make a final sale for the month, and I'll come checkbook in hand?

-ERD50

 

[73ss454]

The other day I brought my Camry into the dealer for a repair. While I was there I was listening to the salespeople calling old customers telling them how much they need their current car. They were trying to make appts with these old customers to bring them in to sell them another car. Nothing wrong with this tactic at all. Once the customer is in the dealership in front of the salesperson there is a greater chance of selling them something than if they were home on their sofa.

The car they were pushing was the 2011 Prius as they must of had a ton of left overs and need to move them. A dealer doesn't need your trade as they can go to the auction and buy what ever they need, it just sounds good to the prospective buyer and does bring them in.

 

[W2R]

This is not common at all. Dealers are not in business to lose money. Sales Managers are paid on the bottom line and they are not going to let cars go out as loosers, as it comes out of their pockets.

You are correct that in most cases the dealer is getting other money back from the manufacturer, it's usually 3% of MSRP, but not with all brands.

Also the manufacturer can put out what's known as Retro money. How this works is the dealer may be offered to move a certain amount of a certain model. Let's use a Nissan dealer and say we use Altima. So the offer may be that if the dealer sells 50 of that model in one month they may get $600 for each one they sell if they hit the #. So at the end of the month, like today or this weekend, the dealer may be willing to lose a few bucks to get the retro money.

But to sell a car at 5K under invoice is not anywhere near the norm.

Well, if anyone would know I think it would be you. If I am not mistaken, you used to be in this business. Thanks for the information.

 

[73ss454]

Heck, if you are there near closing, and the dealer is at car #49, he could practically give the car to you and be ahead (50x$600=$30,000; minus his cost of car #50)!

So how does a clever LBYM retired guy with time on his hands find these opportunities? Let a bunch of dealers know you are ready to buy, but in no rush, and to give me a call over the next year if you need to make a final sale for the month, and I'll come checkbook in hand?

-ERD50

Well, yes and no. One of the things dealers do is report sales that they don't really have if they are close to the Retro #. Let's say they need 2 more cars at 11PM at the end of the month. Many of them will report the 2 cars and put them into rental service to get the money. Most dealers have a rental fleet for service customers.

Most times it's best to buy a car on the last day or weekend of the month, but not always. It's still buyer beware no matter when you buy. If you have some prices and know the real #'s and you're ready to buy then go to the dealer on the last day of the month and see what you can do.

 

[73ss454]

Well, if anyone would know I think it would be you. If I am not mistaken, you used to be in this business. Thanks for the information.

Yup, it's becoming a distant memory but I still remember a little.

 

[ERD50]

Well, yes and no. One of the things dealers do is report sales that they don't really have if they are close to the Retro #. Let's say they need 2 more cars at 11PM at the end of the month. Many of them will report the 2 cars and put them into rental service to get the money. Most dealers have a rental fleet for service customers.

Most times it's best to buy a car on the last day or weekend of the month, but not always. It's still buyer beware no matter when you buy. If you have some prices and know the real #'s and you're ready to buy they go to the dealer on the last day of the month and see what you can do.

OK, thanks. So it isn't the power of that incremental sale of one. But they are motivated to come as close as they can to avoid shelling out their own money to complete the count. So their motivation is limited by whatever their cost of owning those last few cars is, which could be minor if they sort of need a rental anyhow, or fairly major if they have to turn around and sell it (used/demo I presume, may vary by State laws).

-ERD50

 

[W2R]

Yup, it's becoming a distant memory but I still remember a little.

I would imagine! I just did a search and found this:

FD, working in a dealership for 7 years is more than enough.

I retired after 34 years working in a car dealership last friday. I think I'll also buy my cars on the internet because I don't want to go into a dealership ever again.

If you think you got a good then it's a good deal....

34 years is a long, long time. I just knew you were an expert on this.

 

[Midpack]

Not knowing anything about used Honda Elements, I checked on Edmunds and see that the first year they made the Element was 2003. Just guessing at how it's equiped and using 75000 miles on your car, the trade in value is about $7500 for one in fair condition to $9000 for excellent condition.

It was a 2003 in fair condition, but it had 124,000 miles on it! The online estimates were all in the $5,000-5,400 range on trade. They gave me $9,026!!!

Maybe I'm not following, but if we assign a $0 value to the 'protection package' (probably what it is worth), isn't that effectively $398 OVER invoice? Or are you saying $300 under invoice including paying $698 for the package?

I'm not sure invoice means anything anyway, the dealer gets paid in different ways.

$300 under invoice on Toyota MSRP excluding protection package. The protection package already applied was a $698 dealer add, though I realize the markup on those pkgs is astronomical, and I'd rather the car didn't have it frankly. So I got the car for $300 to $998 under invoice, closer to the former than the latter I am sure. Surprising given record high gas prices. Must have caught them wanting to reach some month/quarter closing target. Not all luck is bad...

Just left the dealer. The car was delivered 3/23 and then involved in a dealer trade. The sales guy assured me in no uncertain terms that the car had not been damaged in any way. I have no reason to doubt him, I checked the Toyota users site and only repair record was "pre-delivery prep" which sounds standard.

So I paid for the car, signed over my trade in title, and drove away. 54 mpg for my first 60+ miles.

Thanks to all who replied on short notice, much appreciated.

 

[ERD50]

Sounds good, congrats! Enjoy the ride!

-ERD50

 

[73ss454]

Midpack, are you saying under invoice or under MSRP? Since they over allowed on the trade about 4K I would guess under MSRP. What dealers do is give you too much for your trade and charge you too much for the new car, it makes the buyer feel better.

But if you like the deal, then it's a good deal.

 

[easysurfer]

Congrats Midpack. Now each time the news of the gas prices going up, you can just .

 

[Midpack]

Midpack, are you saying under invoice or under MSRP? Since they over allowed on the trade about 4K I would guess under MSRP. What dealers do is give you too much for your trade and charge you too much for the new car, it makes the buyer feel better.

But if you like the deal, then it's a good deal.

From post #18 above

$300 under invoice on Toyota MSRP excluding protection package. The protection package already applied was a $698 dealer add, though I realize the markup on those pkgs is astronomical, and I'd rather the car didn't have it frankly. So I got the car for $300 to $998 under invoice, closer to the former than the latter I am sure. Surprising given record high gas prices, the other two dealers nearby one was about $2,000 higher, the other almost $4,000. The difference between dealers in all my car purchases past were about $800 to $1600 apart. So the deal I just got didn't seem possible. Must have caught them wanting to reach some month/quarter closing target. Not all luck is bad...

I bought the car a few hours ago, so it's a done deal now...

 

[Alan]

I bought the car a few hours ago, so it's a done deal now...

Excellent - enjoy it.

 

[powerplay]

Congrats Midpack, I hope your new car provides great service and that you enjoy the new ride.

 

[MBAustin]

Midpack - if you like your Prius half as much as I like mine, you will be a very happy driver. Best car I've ever had.

You may want to check out the forums at

http://priuschat.com

as there are lots of little things about the Prius that are different from other cars. The people there are generally nice which is also a plus.

Enjoy!