The rise of 'stealerships' and the shady economics of car buying(npr.org)
npr.org
The rise of 'stealerships' and the shady economics of car buying
https://www.npr.org/sections/money/2022/08/30/1119715886/inside-the-rise-of-stealerships-and-the-shady-economics-of-car-buying
154 comments
Why engage in a back-and-forth with these people? Configure the car you want on the manufacturer website, note the list price, then send the configuration you want to a few dealers in your area and ask them to quote for delivering you that car. Accept the best quote. If they want to debate you about it, ask them to either quote you or forget it. There are even apps which enforce this - they get to quote you but can't communicate otherwise.
That's a great approach, and when there's a glut of cars sitting on dealer lots, you might even get responses. Right now, when most cars are selling for more than sticker, you won't. If you don't buy a car, that's fine, there are others who will.
People said this at the height of the used car shortage. It still wasn't true. In my experience, suckers were buying Corollas at 25%+(!) over MSRP. All I had to do was go to another dealership.
Let me put it this way: you've got the entire continental US you can buy a car from and shipping a vehicle coast-to-coast usually costs under $2,000.
So, what do you think is truer? Is the market excruciatingly tight, or are there just a lot of people making bad purchases out there?
Let me put it this way: you've got the entire continental US you can buy a car from and shipping a vehicle coast-to-coast usually costs under $2,000.
So, what do you think is truer? Is the market excruciatingly tight, or are there just a lot of people making bad purchases out there?
> So, what do you think is truer? Is the market excruciatingly tight, or are there just a lot of people making bad purchases out there?
At least for the Prius Prime someone wrote a script to grab the data which you can peruse[1].
E.g., for 6/30/22 there were 113 LEs, 99 XLEs, and 18 Limiteds that weren't listed as presold on that spreadsheet.
I spot checked both by enumerating through Toyota's list of dealerships and emailing roughly 50 dealerships. Based on the response I'd say even in July only 10% of those numbers were actually available. And cut that in half once I let them know I was inquiring out of state.
Average markup over MSRP was probably 5k. (Outlier was 20k "market adjustment" :)
So regardless of whether people are making bad purchases, the market is exceedingly tight.
https://www.reddit.com/r/PriusPrime/comments/vcajy9/2022_pri...
At least for the Prius Prime someone wrote a script to grab the data which you can peruse[1].
E.g., for 6/30/22 there were 113 LEs, 99 XLEs, and 18 Limiteds that weren't listed as presold on that spreadsheet.
I spot checked both by enumerating through Toyota's list of dealerships and emailing roughly 50 dealerships. Based on the response I'd say even in July only 10% of those numbers were actually available. And cut that in half once I let them know I was inquiring out of state.
Average markup over MSRP was probably 5k. (Outlier was 20k "market adjustment" :)
So regardless of whether people are making bad purchases, the market is exceedingly tight.
https://www.reddit.com/r/PriusPrime/comments/vcajy9/2022_pri...
Yup, last time, I just started looking for a particular few cars, got by parameters down (desired trim levels, cost limits, etc.) and emailed requesting quotes. Most wouldn't play, but I found one who was just "yup, this is what we've got, this is how we can configure it... cost is $xyz". After a few rounds of email, maybe a couple tel calls, I had a deal, went there for the first time to pick it up. When my wife needed a new car in the next year or two, guess who we called first? Same no-hassle deal.
It's a bit of a drive to get there in the adjacent state, but totally worth it.
Edit: Also, we made deals for vehicles they had in stock, not custom-configured from mfgr.
It's a bit of a drive to get there in the adjacent state, but totally worth it.
Edit: Also, we made deals for vehicles they had in stock, not custom-configured from mfgr.
You’ll get responses, just with quote that’s higher - and that fine it’s a market.
This has a finite window of viability.
Of course, and I really look forward to the eventual auto dealer winter, but if you actually need a car right now it’s a serious pain in the ass.
I did this in 2017 and none of the dealers I contacted would play ball. Every one of them told me I would need to come in. When I went in, they couldn't tell me the final price until they knew if I would buy a service contract, if I would be financing through them and if so, what my credit score was, etc...
I ended up leaving with the car I wanted and paid about $500 more than I wanted to but they wore me down.
I think if you buy through Costco you can avoid some of the bullshit, but you do pay more than you probably have to. It might be worth it though just to have an easier experience.
I ended up leaving with the car I wanted and paid about $500 more than I wanted to but they wore me down.
I think if you buy through Costco you can avoid some of the bullshit, but you do pay more than you probably have to. It might be worth it though just to have an easier experience.
Seriously. If they have a glut of the model they can't sell enough of then they'll probably play along -- but otherwise they know you know what you're doing and they'll make very little money on you, and they'd prefer to make more money with somebody else. They're maximizing profit, not number of cars sold, and for many cars it's supply that is the limiting factor, not demand.
> but otherwise they know you know what you're doing and they'll make very little money on you
This has the air of "That One Weird Trick" that used to work in the early 2010s before everyone had heard of it. But now that it's the lead paragraph in every single "how to buy the exact car you want, for so much less money" blogspam, of course it no longer works.
I'm not sure why people expected it to continue when the entire business model of car dealerships is to turn suckers into money.
"Having to interact with a dealership" is around number 4 or 5 on my list of why I will never buy a car again, after years of not having one.
This has the air of "That One Weird Trick" that used to work in the early 2010s before everyone had heard of it. But now that it's the lead paragraph in every single "how to buy the exact car you want, for so much less money" blogspam, of course it no longer works.
I'm not sure why people expected it to continue when the entire business model of car dealerships is to turn suckers into money.
"Having to interact with a dealership" is around number 4 or 5 on my list of why I will never buy a car again, after years of not having one.
I don't mind a market price - that's actually what I'm seeking they can quote me as much as they think they'll get from the people who haggle - I just want to avoid the haggle.
[deleted]
Costco seems to have suspended their car buying program. I tried to use it a few months ago and couldn’t even get started. Probably no dealers near me are even participating in the program in such a seller’s market.
I purchased my Jeep Wrangler in 2018. I found the color I wanted Online. Pre-qualified with my bank. Contacted the internet sales address, told them I wanted the car and I'd be by at 6 to pick it up and they had it ready.
My best car buying experience has been Tesla though. Ordered on the app. Put 500 down. Got a build date. Got a notification when it was in delivery. Added my payment info. Got a time to pickup car. Drove home.
My best car buying experience has been Tesla though. Ordered on the app. Put 500 down. Got a build date. Got a notification when it was in delivery. Added my payment info. Got a time to pickup car. Drove home.
The words "Meh, if you can't do this, I'm probably fine with a used one. CarMax doesn't haggle. Can you make a quote, or am I leaving" usually get them to move.
Right now, some might balk. But you know what? That salesperson cares about their quota, and if your purchases pushes them over today's goal number, they twitch. Because the inevitable next buyer tomorrow isn't going to get them over the quota they need to meet today.
And if your dealership really plays hardball? Move on to the next one. Or buy used from a place that doesn't haggle.
The way to lose this is if you want a specific year/make/model - they'll get you. If your entire attitude is "anything within that set of parameters", it's much harder for them.
Right now, some might balk. But you know what? That salesperson cares about their quota, and if your purchases pushes them over today's goal number, they twitch. Because the inevitable next buyer tomorrow isn't going to get them over the quota they need to meet today.
And if your dealership really plays hardball? Move on to the next one. Or buy used from a place that doesn't haggle.
The way to lose this is if you want a specific year/make/model - they'll get you. If your entire attitude is "anything within that set of parameters", it's much harder for them.
That’s how it used to work (and still does for some less in demand/in short supply models), but if you’re after something that’s even moderately popular (most SUVs and EVs), you’ll hardly see any replies nowadays. That was the case when trying to get my wife a new crossover recently. We ended up placing an order in person with a dealer that “only” charged MSRP without a bunch of crazy add-ons, albeit with an additional dealer fee (pure profit) of $800. But when the car showed up 3 months later it was missing power seats due to a supply shortage. We walked from the deal and are now shopping again. Fun times.
Just like mortgage brokers are obligated to send you an official, standardized "loan estimate" when you ask about a mortgage, dealership should have something similar with cars.
Specifically: the car is only the first part, then there's extra warranties from dealership, financing, etc.
A standardized quote that gives you the price of these optional items would go a long way in making the experience smooth.
Private companies can solve the issues themselves (Carvana), but that's coming at a significant $ premium so far.
The FTC rule mentioned in the article mentions this:
> Require full upfront disclosure of costs and conditions: The proposal would require dealers to make key disclosures to consumers, including providing a true “offering price” for a vehicle that would be full price a consumer would pay, excluding only taxes and government fees. It would also require dealers to make disclosures about optional add-on fees, including their price and the fact that they are not required as a condition of purchasing or leasing the vehicle, along with disclosures to consumers with key information about financing terms.
Specifically: the car is only the first part, then there's extra warranties from dealership, financing, etc.
A standardized quote that gives you the price of these optional items would go a long way in making the experience smooth.
Private companies can solve the issues themselves (Carvana), but that's coming at a significant $ premium so far.
The FTC rule mentioned in the article mentions this:
> Require full upfront disclosure of costs and conditions: The proposal would require dealers to make key disclosures to consumers, including providing a true “offering price” for a vehicle that would be full price a consumer would pay, excluding only taxes and government fees. It would also require dealers to make disclosures about optional add-on fees, including their price and the fact that they are not required as a condition of purchasing or leasing the vehicle, along with disclosures to consumers with key information about financing terms.
If we're talking about the US, why layer on even more regulation to an already unnecessary industry? Just eliminate the dealership model & allow people to order directly from the manufacturer.
In the UK, you have 28 days to change your mind and arrange your own financing. So for informed buyers, a common tactic is to agree to whatever shitty high interest loan they're selling to keep the sticker price down, then just call the loan company and cancel and pay it off with cash from the loan/savings you actually want to use.
The same can be done in the US -- just pay it off before it accrues any interest.
Just make sure there's no prepayment fees.
I also had the experience where I placed an order on ford website, routed it to a dealer who agreed to honor the online price. 5 months later, when the car was delivered onto the dealer lot, they wanted 10k more.
Be sure to report that to Ford; they're not happy with that happening.
Until they put some teeth into their “unhappiness”, forgive me for taking it as merely low effort PR noise. For $10k per car (or 30-50k on some models like the F-150 Lightning), a dealer would be willing to incur all kinds of unhappiness. But if those allocations actually start getting cut off, they’ll fall in line real fast. But Ford wouldn’t do that because the average dealer is far more important to them than the average customer.
Did you have it in writing? I would have politely reminded them that my state's consumer protection laws require them to honor it.
Even better, if you're a AAA member they will do the quote hunting for you. The last two times we bought cars, we test drove a few models, found the one we liked, and then relayed our preferences to the AAA guy. Picked up the car from his office with no dealership drama.
I did exactly what you mentioned - many didn’t play ball but one made an appointment with confirmed inventory. Drove 2 hours only to be told car I wanted “just” sold and by the way we add $10k to MSRP - classic bait and switch.
Get them to order the car you want - don't worry about their inventory.
Make sure to triple check the paperwork at the end, someone went viral yesterday for accidentally paying $6k over what they believed they were for their Toyota Corolla.
You really have to try not to read what you're signing for something like that to happen. My fiance bought a car less than a year ago and the final loan price was everywhere, even highlighted. I've bought cars in two other states and it was never exactly hidden.
Interesting - do you have the names of any of those apps?
TrueCar used to be a pretty good one, and was the service behind Sam’s Club and USAA’s auto buying programs. But it’s pretty much no longer worth the bother now. Don’t know of anything newer that’s better. Keep in mind that no app can work miracles in a crazy market. They all ultimately depend on dealers competing with each other to deliver any value, but dealers just haven’t needed to compete in the last couple of years.
In the UK there is Carwow. You may not like the prices you get these days, but it's a market, and at least it's a take-it-or-leave-it price.
I've been buying cars second-hand from private parties for my last three cars. It's been a great experience. Everyone's been honest so far, and I've never had unreasonable problems with any of the cars.
I'm not sure I'd ever go to a dealership again. They make things so painful, and wring as much money and stress out of you as possible. There seems to be zero benefit for the consumer.
I'm not sure I'd ever go to a dealership again. They make things so painful, and wring as much money and stress out of you as possible. There seems to be zero benefit for the consumer.
I anticipate moving to Los Angeles within the next 12 months and am absolutely dreading the inevitability of needing to buy a car. I haven't needed a car since 2007 since I've lived in a series of major cities with excellent train/bus/subway systems. Every single day, I've said a silent prayer of thanks that I haven't had to pay for gas or insurance / sit in traffic / deal with road rage (mine or that of others) / worry about someone keying my car or stealing my catalytic converter.
Reading the comments here about peoples' experiences at dealerships, I kept thinking "Do I really need to move to LA? Is there any other way I can accomplish my goals?" I'm glad to see you've had success dealing with private parties. This is absolutely the way I will go when it comes time for me to bite the bullet and buy a car.
Reading the comments here about peoples' experiences at dealerships, I kept thinking "Do I really need to move to LA? Is there any other way I can accomplish my goals?" I'm glad to see you've had success dealing with private parties. This is absolutely the way I will go when it comes time for me to bite the bullet and buy a car.
Well, LA has some nice weather...Have you considered maybe looking into a three-wheeler like a Can Am Spyder [https://en.wikipedia.org/wiki/Can-Am_motorcycles]? (As someone who is a big fan of motorcycles, I used to recommend folks to consider the wonderful life of 2 wheels, but i understand not everyone would be into it...plus LA traffic might make conventional motorcycles risky for new riders.) Of course, I'm assuming that an alternative like that a three-wheeler might be cheaper, or more obtainable (either new or used). Then again, if your job is not far from where you will live, could a bicycle fit the need - either electric or conventional?
Los Angeles resident here. Depending on where you work, there's actually some great options for biking here. For one, there's an awesome bike trail on the beach ranging from Malibu all the way down to Torrance. Occasionally there are creeks going inland that have protected bike lanes and act as "bicycle freeways". Look for Ballona Creek bike trail for example. Finally, there's a great Metro connection between Santa Monica and downtown Los Angeles (expo line).
I bike to work everyday on my electric bike and run most errands by bike (doctor, haircut, groceries). While I do have a car, I only use it for trips outside of town on the weekends (plus monthly Costco runs).
I bike to work everyday on my electric bike and run most errands by bike (doctor, haircut, groceries). While I do have a car, I only use it for trips outside of town on the weekends (plus monthly Costco runs).
LA has one of the best (if not the best) used car markets in the world. Prices are admittedly high for any vehicle right now, but if you do your research and are ready to jump when things pop up on CL, you can never overpay for a car again here.
Depending on where you live in LA, and your interests, you may not need a car. LA's public rail system can get you to Downtown, Pasadena, Long Beach, Inglewood, Redondo/Manhattan Beach, Santa Monica, Culver City, and Hollywood/Universal City. The bus system can get you to 95% of the county. The commuter rail system can get you out to Ventura, San Bernardino, Riverside, and Orange County.
I know a number of NYC and Chicago transplants who moved to LA without cars and get along fine. Pre-COVID I commuted to work by rail for several years, and occasionally take the rail to work now.
I know a number of NYC and Chicago transplants who moved to LA without cars and get along fine. Pre-COVID I commuted to work by rail for several years, and occasionally take the rail to work now.
Interesting. I lived in LA up until 2007 (Westwood, in particular) and commuted by bus to Santa Monica via Wilshire Blvd. Back then, even that was a PITA. Glad to hear your friends have had a better go of it.
I'm now working in tech, so I'm able to work from home and avoid commuting (thank God). I'm tentatively planning to move to East Hollywood, where my community (improv comedy folks) mostly congregates. My goal is to live within spitting distance of Barnsdall Art Park (near where The Clubhouse venue is), or, failing that, the UCB Theater on Franklin Ave. I figure there will be a Vons or Ralphs somewhere nearby, and I guess I could Uber for everything else. That said, I'm a huge foodie and having a car would allow me to explore the city in a way that public transportation just wouldn't.
I was planning to buy a classic car like an old 70's-era Ford Bronco / F150, Jeep Grand Wagoneer, or Chevy Silverado since I'm not a huge fan of modern auto aesthetics, and that kinda lends itself more toward a private-party transaction anyway. I feel like, as long as I find an apartment with gated garage parking, that should reduce most (but not all) of the risk, right?
I'm now working in tech, so I'm able to work from home and avoid commuting (thank God). I'm tentatively planning to move to East Hollywood, where my community (improv comedy folks) mostly congregates. My goal is to live within spitting distance of Barnsdall Art Park (near where The Clubhouse venue is), or, failing that, the UCB Theater on Franklin Ave. I figure there will be a Vons or Ralphs somewhere nearby, and I guess I could Uber for everything else. That said, I'm a huge foodie and having a car would allow me to explore the city in a way that public transportation just wouldn't.
I was planning to buy a classic car like an old 70's-era Ford Bronco / F150, Jeep Grand Wagoneer, or Chevy Silverado since I'm not a huge fan of modern auto aesthetics, and that kinda lends itself more toward a private-party transaction anyway. I feel like, as long as I find an apartment with gated garage parking, that should reduce most (but not all) of the risk, right?
Buy the car before you move. Southern California dealers are greedy.
You'll probably have to pay the difference between sales tax in your current state and CA tax when you register it in CA though.
You'll probably have to pay the difference between sales tax in your current state and CA tax when you register it in CA though.
This is the way!
When buying used from a private seller you really can find almost anything you want at a substantial discount if your timeline is not urgent.
When buying used from a private seller you really can find almost anything you want at a substantial discount if your timeline is not urgent.
My last two car purchases were off of Craigslist. So far they have both been good. But I did have to walk away from a few bum deals to get those cars. That said, the last time I tried to use a dealership they weren't exactly honest[1] so it's just part of the process of buying a used car.
[1] They insisted the car was in perfect shape and passed their 87 point inspection even though it was listed as totaled due to flood damage when I ran the Carfax. Plus it had this weird thing where it was listed as garaged in New York but titled in Florida and it seemed like nothing on the report matched up. That and the VIN was obscured by the black goop they used to glue the windshield on when someone replaced it, I had to use the VIN from the door. This was back around 2006-2007, so maybe the situation has improved, but I kind of doubt it.
[1] They insisted the car was in perfect shape and passed their 87 point inspection even though it was listed as totaled due to flood damage when I ran the Carfax. Plus it had this weird thing where it was listed as garaged in New York but titled in Florida and it seemed like nothing on the report matched up. That and the VIN was obscured by the black goop they used to glue the windshield on when someone replaced it, I had to use the VIN from the door. This was back around 2006-2007, so maybe the situation has improved, but I kind of doubt it.
The only benefit to the consumer is you can go to a location and see several different car models at the same place. If buying used you need to go to some person's house at a time that works for the seller and then hope the car is insured and if a big purchase price hope that they are not currently driving it so that you can take it to your mechanic to have it checked out.
But other then that the dealerships have no benefits in my opinion. The multi point inspections they do are basically a joke. The person doing it is some 10 month mechanical school graduate tasked with the jobs that don't make the company any money but that they are forced to do like warranty work and inspections. You would be much better off taking it to a mechanic that knows what he is doing and is being paid by you to find issues. I am very thankful I am a backyard mechanic and can buy used with much more confidence then the average buyer. I can also buy cars with known issues and fix them.
The last time I was at a dealership was with a friend and she was so set on a used car from them. I tried to convince her to buy elsewhere but she just had to have it that day. As you can guess they knew this and took advantage of it.
Here I think it makes sense for newish cars. Just check that there is some warranty left and it has full service history.
I would personally avoid private for cheap cars or those that transact often. As you might end up dealing with "jobbers" that is unofficial resellers.
I would personally avoid private for cheap cars or those that transact often. As you might end up dealing with "jobbers" that is unofficial resellers.
On the contrary, I only buy older used cars - the savings on a car with some warranty isn't near as much. I've always had good luck with merely taking a car I'm considering to a mechanic to get it checked out. One day the luck will run out, but whatever that will cost will come nowhere near the amount I've saved over the years.
The term I learned was "curbstoners". Learning how to spot them is important when buying off of Craigslist or the like.
Dealing with a dealership is all about psychology. They are playing a psychological mind game with you when they make you wait for so long while they're in the back doing "paperwork". They want you to get antsy so you make bad decisions.
The trick to making this interaction go your way is to not play their game. If they seat you at a table and make you wait, just get up and walk away. Go start looking at another car. This will freak them the F out. My last interaction with a car dealer was hilarious. When I started playing mind games with them (walking away while they made me wait, fake-scrolling through ads on my phone, wondering out loud about the dealer across the street) they literally bent over backwards. They lowered the price on the car I wanted significantly. They offered me more than KBB trade-in value for my old car. They even offered to buy my wife and I lunch because we acted like we were going to go think it over while we ate.
It's all mind games. Don't play theirs. The dealerships tactics are not very effective if you take control. They just get a lot of practice and they know that new-car-smell is addictive.
The trick to making this interaction go your way is to not play their game. If they seat you at a table and make you wait, just get up and walk away. Go start looking at another car. This will freak them the F out. My last interaction with a car dealer was hilarious. When I started playing mind games with them (walking away while they made me wait, fake-scrolling through ads on my phone, wondering out loud about the dealer across the street) they literally bent over backwards. They lowered the price on the car I wanted significantly. They offered me more than KBB trade-in value for my old car. They even offered to buy my wife and I lunch because we acted like we were going to go think it over while we ate.
It's all mind games. Don't play theirs. The dealerships tactics are not very effective if you take control. They just get a lot of practice and they know that new-car-smell is addictive.
The only winning move with the manipulative is not to play. Their games tend to waste your time and resources.
Somewhere, somebody interested in delivering customer value will sell you a quality car at a price that is respectful to all parties. Buy that one. Do note that a respectful price preserves a margin for the dealer.
Somewhere, somebody interested in delivering customer value will sell you a quality car at a price that is respectful to all parties. Buy that one. Do note that a respectful price preserves a margin for the dealer.
This is good advice. I discovered by accident a really good technique. Just tell them you don't make any big decisions without sleeping on it. Then don't budge. Once they know they can't get you to sign that day, a lot of the tension goes out of the process. They have to switch gears and be respectful to entice you back tomorrow.
Anything that throws them off their very-well rehearsed script puts the power back in your hands!
> To be fair to dealerships, they do provide important services. They offer a distribution and service network, which is vital to both manufacturers and car buyers.
Until they don't. Throwback to that time "the world's largest Chevrolet dealer"[0] went under like Jacques Cousteau[1].
[0] https://web.archive.org/web/20070202025849/http://www.billhe...
[1] https://web.archive.org/web/20170901203212/http://www.tbo.co...
Until they don't. Throwback to that time "the world's largest Chevrolet dealer"[0] went under like Jacques Cousteau[1].
[0] https://web.archive.org/web/20070202025849/http://www.billhe...
[1] https://web.archive.org/web/20170901203212/http://www.tbo.co...
Disclaimer; I run a popular youtube channel educating consumers on car buying.
Greg did a good job documenting the challenges of buying a car in today's market. Fortunately, we are starting to see a softening in consumer demand which has led to used car prices to begin to drop in some areas and for certain types of vehicles.
We expect that as automakers increase production we'll go away from markups. The timeline for that is tricky since Asian brands (Toyota and Honda especially) are struggling MUCH more than American automakers. MSRPs are rising fast too, so while dealer markups may disappear as demand weakens and supply increases, don't be surprised if you see MSRPs that are 5-10% higher year over year.
Wait times right now for hybrid vehicles are over a year. The push to PHEV and BEV will continue to be delayed due to ridiculous prices. The average transaction price for a new EV last month was north of $66,000. Not affordable.
Great insights in Greg's article. I wish we could have helped him before he embarked on the journey.
Greg did a good job documenting the challenges of buying a car in today's market. Fortunately, we are starting to see a softening in consumer demand which has led to used car prices to begin to drop in some areas and for certain types of vehicles.
We expect that as automakers increase production we'll go away from markups. The timeline for that is tricky since Asian brands (Toyota and Honda especially) are struggling MUCH more than American automakers. MSRPs are rising fast too, so while dealer markups may disappear as demand weakens and supply increases, don't be surprised if you see MSRPs that are 5-10% higher year over year.
Wait times right now for hybrid vehicles are over a year. The push to PHEV and BEV will continue to be delayed due to ridiculous prices. The average transaction price for a new EV last month was north of $66,000. Not affordable.
Great insights in Greg's article. I wish we could have helped him before he embarked on the journey.
The current supply shortages made the process less bothersome for me in some ways because I didn't really expect to have much luck haggling. Wasn't perfect. "In transit" meant it wasn't built yet and I was in a bit of a hurry. (Had car but car had problems.) Doc fee was high. A couple of 50% BS sets of "factory installed options." (Though got price tacked onto my pretty generous trade-in.) Some annoying attempts to upsell but "no" worked fine. Didn't need financing.
But overall, it was a couple of visits and a few hours and I got the vehicle (Honda) in six weeks.
But overall, it was a couple of visits and a few hours and I got the vehicle (Honda) in six weeks.
Are Japanese manufactures supply constrained due to chip shortages in particular?
Hey Zack, I was about to plug your channel. Good work bro!
I hope the example of Tesla's successful direct sales model, and Ford and GM's current frustration with dealers marking up popular EVs, will result in the large auto companies lobbying to remove the protectionist laws that force the dealership model on consumers.
Unlikely -- Saturn had consumer-friendly no-hassle pricing (and vehicles) in the 1990s. That model hasn't returned.
(Also, the superlative owners' manual for my wife's Saturn was a user-friendly document designed with the end-user in mind. Never seen anything like it before or since.)
(Also, the superlative owners' manual for my wife's Saturn was a user-friendly document designed with the end-user in mind. Never seen anything like it before or since.)
During my studies when I was overseas we had a seminar on how to buy a car in NZ. The guy was absolutely awesome, he told us about a lot of the tricks employed by dealers from subtle things like mirrors where you are supposed to park the car (you see yourself in the mirror) to things like working you with two people (it's much harder to resist 2 people arguing with you, also why you should never go by yourself). He also gave some good tips: go at certain days of the month when they are about to get new stock in, try to find the underperforming salesperson (they get away with worse deals, because the others feel sorry for them), give the impression you are planning to buy for much less than you really want, because they always try to get you over your budget.
I managed to use those tricks when I bought my first car. Managed to get it at about 40% of the sticker price (used car). Haven't been as successful since though.
I managed to use those tricks when I bought my first car. Managed to get it at about 40% of the sticker price (used car). Haven't been as successful since though.
I find it strange that dealerships can be so scammy, and the manufacturer acts like it has no impact on how people view their brand.
> At least some automakers know this. Earlier this year, Hyundai Motor Company sent a letter to its dealerships urging them to end deceptive practices, such as advertising a low price online and then charging a much higher price when customers go into the store. The company complained that sky-high markups were "damaging our brands' long-term ability to capture new customers and retain loyal ones."
Manufacturers know it has an impact on their brand, but they're legally compelled to put up with it.
Subaru cares. They’ll take away the cars
From the vehicle owner or dealership? I had the worst experience with Toyota. I don't think I'd ever buy a Toyota again. The manufacturer was like... We only make the cars and don't care what happens at the dealership.
Also what is up with dealerships and mandatory arbitration agreements? So you can't buy a car now without signing an arbitration agreement?
Also what is up with dealerships and mandatory arbitration agreements? So you can't buy a car now without signing an arbitration agreement?
They threatened to cancel contracts with dealerships who don’t provide the expected Subaru experience.
Subaru’s brand value is so high that Fuji heavy industries renamed themselves Subaru after their car mfg division
Subaru’s brand value is so high that Fuji heavy industries renamed themselves Subaru after their car mfg division
I know Carvana has issues but this is why I love using it. I have bought and sold without all the slime of entering a dealership
I know some people have had good experiences with Carvana (especially when they already know what they want, and said car that is configured just-so is halfway across the country) - but I hate the idea of online shopping for the test-drive phase of car shopping. Seeing a panoramic view of the car's interior isn't enough, I need to feel it.
"Oh, don't worry, Carvana has a 7-day money back guarantee" - yeah, I don't want to have to unwind a major transaction just to test-drive a car. Especially if I'm trading in a car as part of the transaction - from what I've read if you trade in a car to Carvana and then decide to return the car you've purchased, they don't bring your old car back.
I wish there was a service where you could give them say a hundred bucks and they'd deliver maybe your top 5 cars to your house to poke around and test drive. The Zappos experience (they encourage people to order multiple sizes to try on and make the returns easy) but for cars instead of shoes.
"Oh, don't worry, Carvana has a 7-day money back guarantee" - yeah, I don't want to have to unwind a major transaction just to test-drive a car. Especially if I'm trading in a car as part of the transaction - from what I've read if you trade in a car to Carvana and then decide to return the car you've purchased, they don't bring your old car back.
I wish there was a service where you could give them say a hundred bucks and they'd deliver maybe your top 5 cars to your house to poke around and test drive. The Zappos experience (they encourage people to order multiple sizes to try on and make the returns easy) but for cars instead of shoes.
> I wish there was a service where you could give them say a hundred bucks and they'd deliver maybe your top 5 cars to your house to poke around and test drive.
Trying to imagine the logistics of getting this done - profitably - within a Carvana-like model for anything close to $100 just broke my brain.
Trying to imagine the logistics of getting this done - profitably - within a Carvana-like model for anything close to $100 just broke my brain.
Hertz has (or used to have) a "rent to own" deal with cars.
You go to their lot of used cars, you poke and prod them, then you rent one you think you'll like for a week for a couple bills.
If you decide to keep it, the rental cost is put against the purchase and you keep the car, if you don't like it you return and try again.
You go to their lot of used cars, you poke and prod them, then you rent one you think you'll like for a week for a couple bills.
If you decide to keep it, the rental cost is put against the purchase and you keep the car, if you don't like it you return and try again.
The problem with buying from Hertz or any rental car dealership is that many people (myself included) take rental cars on the highway and immediately press the pedal to the floor to see what it can do (or how loud it gets). People have zero incentive to drive rental cars nicely and Hertz has no incentive than to do the bare minimum of maintenance to keep the car on the road. They're gonna wear out faster than a privately owned car.
See Jeremy Clarkson of former Top Gear glory describe it: https://youtu.be/NYt9DO5WXr8?t=65
See Jeremy Clarkson of former Top Gear glory describe it: https://youtu.be/NYt9DO5WXr8?t=65
Really?! Am I unusual for not being even a little bit tempted to drive like an asshole just because I don't own the car I'm driving and have a damage waiver through my credit card?
The worse maintenance a rental agency does, the more likely customers experience problems, never rent from them again, and trash them in reviews. I'd say there's plenty of incentive to do more than the bare minimum of maintenance.
The worse maintenance a rental agency does, the more likely customers experience problems, never rent from them again, and trash them in reviews. I'd say there's plenty of incentive to do more than the bare minimum of maintenance.
Is this what you're referring to?
https://www.hertzcarsales.com/rent2buy.htm
https://www.hertzcarsales.com/rent2buy.htm
Yep, that's the one! Seems it's 3 days now, or 2 hours free.
Not all locations offered it, however, but it can be nice.
Even if you don't use it, renting the car or type of car you're thinking of buying can be a good strategy.
Not all locations offered it, however, but it can be nice.
Even if you don't use it, renting the car or type of car you're thinking of buying can be a good strategy.
They'll tend to be low-end trim models but a lot of what you're evaluating in a test drive isn't how the heated seats work. I informally did that before my recent purchase but mostly in terms of what I didn't what to buy. One vehicle I knew I didn't care much for. And another, which was the same as I owned, I got hadn't really improved in 11 years, infotainment unit notwithstanding.
I live fairly close to the cluster of car dealerships in my area so maybe my perception is skewed, but it doesn't seem crazy to me that 2 sales guys from the Honda dealer would drive 5 minutes to my house to drop off an Accord (and then go back in 1 car), 2 sales guys from the Toyota dealer would drive 5 minutes to my house to drop off a Camry, etc... Seems like they're constantly making little trips to pick up cars from satellite lots, drop off cars for maintenance, fuel up cars, etc.
This might only work for dealerships within a certain distance of course.
But right, the part about doing it profitably would probably require a dealership that gets a successful sales lead to pay a fee to such a service.
This might only work for dealerships within a certain distance of course.
But right, the part about doing it profitably would probably require a dealership that gets a successful sales lead to pay a fee to such a service.
I wish there was a service where you could give them say a hundred bucks and they'd deliver maybe your top 5 cars to your house to poke around and test drive. The Zappos experience (they encourage people to order multiple sizes to try on and make the returns easy) but for cars instead of shoes.
I think a lot of people end up using Turo for evaluation purposes. I'm a little surprised that no one has attempted to disintermediate/democratize car sales as well as rentals. If I had the option to buy the car I rent on Turo, that would scratch the itch you're referring to, wouldn't it... at least for the used market?
I think a lot of people end up using Turo for evaluation purposes. I'm a little surprised that no one has attempted to disintermediate/democratize car sales as well as rentals. If I had the option to buy the car I rent on Turo, that would scratch the itch you're referring to, wouldn't it... at least for the used market?
That's not a bad idea. I've used lensrentals.com to rent camera gear before, and they generally also have a price to keep the particular item you're renting: https://www.lensrentals.com/keeper
That'd be a neat option on Turo - "ok, I'm looking at buying a Jeep - I want to test-drive one to validate this desire, but ideally one I could buy if I fall in love with".
That'd be a neat option on Turo - "ok, I'm looking at buying a Jeep - I want to test-drive one to validate this desire, but ideally one I could buy if I fall in love with".
Oh... I used dealerships for the test drives. I had a price from Carvana on each of the models I wanted to try and I went around and tried them. Once, I landed on make and model. I gave the sales guy a chance to beat the Carvana price he didn't.
Additionally, if the old car is paid off and you don't need it for down payment you could hold on to it for the break in period where you can return the purchased car then just sell the old one on Carvana and they will just come pick it up.
I don't personally understand the appeal. While some dealerships are certainly sketchy, I've found high-volume traditional dealerships to be pretty straightforward. They price them to sell, you pay the price that's posted on the sticker/website.
for me it's the archaic 'sales practices' they go through. The bait and switching in advertising, the us vs them dynamic they try to create with the sale managers, finalizing a price with sales and then having finance try to wring more out of you, or saying the price isn't possible unless x y z. I'll never go through that again.
I've never had an issue with an a dealer honoring an ad. I always print it out and bring it with me. It's pretty illegal if they don't.
Financing is financing. It's not the car. If you show up without knowing how you're going to pay for the car, well... you showed up without knowing how you're going to pay for the car.
Yeah, they'll ask about extended warranties and such, but it's just a matter of saying "no" a couple of times while signing paperwork.
Financing is financing. It's not the car. If you show up without knowing how you're going to pay for the car, well... you showed up without knowing how you're going to pay for the car.
Yeah, they'll ask about extended warranties and such, but it's just a matter of saying "no" a couple of times while signing paperwork.
I had a wild experience on Carvana. Bought the car (used, with 14k miles), they were going to ship it to my local Carvana pickup and the day before I get a message to effect of, "Hey we just tried to start your car and it's not starting so we don't recommend you buy this car" . All fees refunded, I was confused but grateful, no one followed up to try and get me to buy another car (other than garden variety email list marketing). Ended up buying a friend of a friends old car for way less two weeks later.
Wish they would stop clogging all the local Craigslist boards but at least they correctly mark them as "by dealer," making them easy to filter out
Which issues have you experienced, or know about?
Here's one(two?)
https://www.autoblog.com/2022/07/20/carvana-illinois-license...
PS - they've been reinstated again. Maybe.
https://www.autoblog.com/2022/07/20/carvana-illinois-license...
PS - they've been reinstated again. Maybe.
This is why when you buy a car, you go in with a person that knows cars. Or consult them whilst you browse online.
Be frugal with options/extras. Don't show excitement. If you're poor at negotiating, try the brute force approach of an exit. Doesn't matter what the offer is, just laugh, mumble something, and exit the venue. They'll normally stop you. Don't bite at the second offer either, they were already taking that into account. Hassle some more.
This assumes a market where the seller has a very strong incentive to sell, so not when there's lots of buyers.
Have bullet proof facts ready, like prices for the same car elsewhere. In short, come prepared.
Be frugal with options/extras. Don't show excitement. If you're poor at negotiating, try the brute force approach of an exit. Doesn't matter what the offer is, just laugh, mumble something, and exit the venue. They'll normally stop you. Don't bite at the second offer either, they were already taking that into account. Hassle some more.
This assumes a market where the seller has a very strong incentive to sell, so not when there's lots of buyers.
Have bullet proof facts ready, like prices for the same car elsewhere. In short, come prepared.
I recently went through a car buying process and it was extremely brutal. You signup paying for Doc fee ($600), even gas, other hidden fees, and outrageous charges. Another issue I noticed was you are forced into buying overprized accessories like first aid kit ($150), car mats and even cargo nets. After all this we ended up buying from craigslist as to my surprise some of these charges cannot be even waved, you don't stand a chance as people are willing to pay for these things and dealership just move to next customer.
Is the doc fees just the DMV paperwork? That's always a fee when you buy.
DMV, Loan, trade-in it all depends
I won't speak to this Covid period, as it is an exception. Not sure if it will go on for a long time or not, but right now I look at it as an exception.
But, first thing I did a long, long time ago was read all I could about dealerships, dealarship tactics, dearler salesperson tactics, info on how to lower the price, and everything I could get my hands on. This was before the internet and I'm positive there's a ton of stuff on this on youtube and elsewhere.
Homes and vehicles are the biggest ticket items that people purchase. Not to learn everything you can about buying a car is idiotic, with all the resources available out there.
I've known the trick about "trade ins" for a long time, this has always been known. So you don't even talk about trading in your car. You sell it privately. You will never get the same value from a dealer, it's impossible, why you even trying to do the trade in?
Never fall in love with a car and let them know, always seem like you don't care. Go to multiple dealers. Never do the whole "let me take your drivers license and credit card" trick so that they can keep you there waiting for the financial office to "finish processing" or whatever bullshit they spout. Then they have a second salesperson take a crack at you if you're not buying.
Anyways, read up. Watch up.
https://www.youtube.com/results?search_query=how+to+get+best...
https://www.youtube.com/results?search_query=car+sales+trick...
But, first thing I did a long, long time ago was read all I could about dealerships, dealarship tactics, dearler salesperson tactics, info on how to lower the price, and everything I could get my hands on. This was before the internet and I'm positive there's a ton of stuff on this on youtube and elsewhere.
Homes and vehicles are the biggest ticket items that people purchase. Not to learn everything you can about buying a car is idiotic, with all the resources available out there.
I've known the trick about "trade ins" for a long time, this has always been known. So you don't even talk about trading in your car. You sell it privately. You will never get the same value from a dealer, it's impossible, why you even trying to do the trade in?
Never fall in love with a car and let them know, always seem like you don't care. Go to multiple dealers. Never do the whole "let me take your drivers license and credit card" trick so that they can keep you there waiting for the financial office to "finish processing" or whatever bullshit they spout. Then they have a second salesperson take a crack at you if you're not buying.
Anyways, read up. Watch up.
https://www.youtube.com/results?search_query=how+to+get+best...
https://www.youtube.com/results?search_query=car+sales+trick...
Dealerships make it unbelievably painful as a matter of course. I bought my most recent car coming off lease. Even though I arranged all this online and arrived with a certified check, it still took me 3 hours to get the paperwork done when I showed up there - talk about captured. It was ridiculous.
I couldn’t agree more with the author. It’s my exact experience.
I’m in the market to get a car for my 16 year old daughter. Found a car she wanted online, made an appointment (after they confirmed the inventory with the dealership) - we drove 2 hours only to be told the car we wanted just got moved to sister dealership a few miles away… asked them if we could go see or buy it only to be told it sold (after a minute of “checking”) and by the way all cars are marked $10k above MSRP in the name of market adjustment!
I guess technically it’s not false advertising since the advertised car we wanted “sold”. What infuriated me is not even time wasted - with confirmation I started financing process!! Now I have an inquiry on my credit report for nothing.
It’s such an outdated sales model based on trickery and I hope dealerships go by way of malls in my lifetime!
I’m in the market to get a car for my 16 year old daughter. Found a car she wanted online, made an appointment (after they confirmed the inventory with the dealership) - we drove 2 hours only to be told the car we wanted just got moved to sister dealership a few miles away… asked them if we could go see or buy it only to be told it sold (after a minute of “checking”) and by the way all cars are marked $10k above MSRP in the name of market adjustment!
I guess technically it’s not false advertising since the advertised car we wanted “sold”. What infuriated me is not even time wasted - with confirmation I started financing process!! Now I have an inquiry on my credit report for nothing.
It’s such an outdated sales model based on trickery and I hope dealerships go by way of malls in my lifetime!
> I guess technically it’s not false advertising since the advertised car we wanted “sold”.
I worked at a car dealership and they absolutely lied about this stuff. They would say that the law lets them do it as long as it was sold within 24 hours, but they also kept advertising cars that had been sold weeks ago. Every time someone came in and asked they'd give the "Sorry it was sold within the past 24 hours" lie.
I worked at a car dealership and they absolutely lied about this stuff. They would say that the law lets them do it as long as it was sold within 24 hours, but they also kept advertising cars that had been sold weeks ago. Every time someone came in and asked they'd give the "Sorry it was sold within the past 24 hours" lie.
I purchased my current vehicle through an auto broker - for a fee, a description of the model/trim level, and the name of the dealership I want to pick the car up at (anywhere in Canada), they would negotiate on my behalf. Once they have a final price I sign off on it, and would be told the date to pick it up and make payment.
It was a stress-free experience and I would definitely recommend you look into that if you really hate the idea of buying a car.
It was a stress-free experience and I would definitely recommend you look into that if you really hate the idea of buying a car.
I feel like car buying can always be relatively low stress if you're willing to just pay the sticker price. It's the haggling that sucks. But that means paying more for the car than you really need to.
Some dealerships offer no-haggle pricing around here. Their sticker price is typically slightly lower than comparable cars in other dealerships, but people spend on average more for every car purchased at them, I think it amounted to around a thousand dollars or so. But that study was also from over a decade ago.
Some dealerships offer no-haggle pricing around here. Their sticker price is typically slightly lower than comparable cars in other dealerships, but people spend on average more for every car purchased at them, I think it amounted to around a thousand dollars or so. But that study was also from over a decade ago.
Subaru dealerships are supposed to stick to MSRP. They got a nasty gram from corporate at the beginning of the year during the big supply crunch
Some Subaru dealers in LA have been adding mandatory add-ons to goose the price (which is otherwise at MSRP). Glendale, for example, has a mandatory $3000 "protection package" on higher-trim Outbacks.
I know they’ve been getting the higher trim options because they’ve been selling them faster than they can stock them here in PA. But a mandatory protection package is BS
Who goes to a dealership to buy a car anymore? In 1991 I bought my Miata online (I think. Maybe it was over the phone), and they delivered it to a dealer near me, where I just picked it up. Alternatives to dealers have been around forever.
Well you just bought from a dealership, and what's more is that dealership was under no real obligation to sell to you. They could have accepted the car from Mazda and sold it to someone else.
The issue this article really looks into is that we invited government into auto sales for some reason who required dealerships (among other things) be mandatory and independent, so when Ford released the Bronco or Maverick and they turned out to be popular, Ford might say "this Maverick is worth 25k" and then the dealership would mark it up to 40k and there was nothing the buyer could do about it, even if you ordered from Ford. Dealerships would accept your vehicle, say you need to pay an additional 10k, and if you don't they won't let you leave with the car
The issue this article really looks into is that we invited government into auto sales for some reason who required dealerships (among other things) be mandatory and independent, so when Ford released the Bronco or Maverick and they turned out to be popular, Ford might say "this Maverick is worth 25k" and then the dealership would mark it up to 40k and there was nothing the buyer could do about it, even if you ordered from Ford. Dealerships would accept your vehicle, say you need to pay an additional 10k, and if you don't they won't let you leave with the car
That might be, but you don't have to have the most popular car that year, or do you?
The first year, that was happening with the Miata. The second year, things got back to normal and I paid sticker price.
The first year, that was happening with the Miata. The second year, things got back to normal and I paid sticker price.
Yeah, but that didn't happen. Those were normal times. These are not. Do you have some evidence that it does, nowadays?
I've heard of it happening with an electric car, but those are in such insane demand that normal rules don't apply.
I've heard of it happening with an electric car, but those are in such insane demand that normal rules don't apply.
People that can't wait 6+ months for a new car.
Was this before or after Al Gore invented the internet?
"And it's simply because there's high demand, low inventory, and they can do it."
Supply & Demand. It's the law.
Supply & Demand. It's the law.
Here’s my Stealership experience:
I bought a car from Shift.com and it was an absolute nightmare.
Originally I had decided on a Tesla that was in Oakland and put down my deposit. The rates Shift gave me were laughable so I contacted my credit union. Shift put every roadblock up trying to convince me to go with their financing and refinance at a later date. I declined and shortly after my car was sold to someone else. If I remember correctly it was within like 24hrs. They apologized profusely and told me that it shouldn’t have been possible for that to happen, but it did.
I found another car in San Diego and put down another deposit. I was contacted about shipping and told if I did it by a certain time they would ship the next day. I did. It took something like a week to arrive in Oakland and sat for a few days before they could inspect and schedule a delivery.
The delivery was a parking spot on a major street with a rushed employee. I mention that because I didn’t notice anything major with cars flying past me.
I immediately drive to a parking lot and start examining the car. The trunk alignment seems off and there was no mention of damage so I take some photographs. Maybe it happened in shipping? I take it to a car wash because it was filthy. The trunk has a leak. It’s gross and musky in there.
Shift blew me off so I emailed their CEO, legal, PR, etc until someone reached out to me. They paid for an inspection and I choose the Toyota dealership. Dealership was shocked that the damage wasn’t spotted during Shift’s initial inspection. There was a huge hit in the rear and the repair work was subpar at best. The body panel was leaking water and the advanced sensors weren’t working because the rear left one was broken. The initial quote was ~$10k.
Shift was provided the report and after some time they scheduled a pickup to have their team preform their own inspection.
Fast forward 8 weeks of very little communication I am informed they have fixed the car. I pressed for more info and they said they sent my car to a DETAILER. Not a mechanic. Not a body shop. Their detailer said the Toyota dealership was wrong. No leak. Sensors work.
Somehow they decided that my front bumper was the problem and “painted it”, or at least that’s what Shift told me. Turns out they lied about that too. Original paint that they buffed, but left compound everywhere and fucked up my headlights and Toyota badge.
When confronted with all of this, with photo evidence, Shift offered me $250.
That’s it. $250 after keeping my car for nearly 10 weeks and then not fixing it. During the time they had it the avg MPG dropped to 21 mpg (typically 40) and managed to break a bunch of fasteners in the trunk.
Now my car has a major accident on the carfax and I’ll be out at least $10k to fix it. Fuck Shift.com
I bought a car from Shift.com and it was an absolute nightmare.
Originally I had decided on a Tesla that was in Oakland and put down my deposit. The rates Shift gave me were laughable so I contacted my credit union. Shift put every roadblock up trying to convince me to go with their financing and refinance at a later date. I declined and shortly after my car was sold to someone else. If I remember correctly it was within like 24hrs. They apologized profusely and told me that it shouldn’t have been possible for that to happen, but it did.
I found another car in San Diego and put down another deposit. I was contacted about shipping and told if I did it by a certain time they would ship the next day. I did. It took something like a week to arrive in Oakland and sat for a few days before they could inspect and schedule a delivery.
The delivery was a parking spot on a major street with a rushed employee. I mention that because I didn’t notice anything major with cars flying past me.
I immediately drive to a parking lot and start examining the car. The trunk alignment seems off and there was no mention of damage so I take some photographs. Maybe it happened in shipping? I take it to a car wash because it was filthy. The trunk has a leak. It’s gross and musky in there.
Shift blew me off so I emailed their CEO, legal, PR, etc until someone reached out to me. They paid for an inspection and I choose the Toyota dealership. Dealership was shocked that the damage wasn’t spotted during Shift’s initial inspection. There was a huge hit in the rear and the repair work was subpar at best. The body panel was leaking water and the advanced sensors weren’t working because the rear left one was broken. The initial quote was ~$10k.
Shift was provided the report and after some time they scheduled a pickup to have their team preform their own inspection.
Fast forward 8 weeks of very little communication I am informed they have fixed the car. I pressed for more info and they said they sent my car to a DETAILER. Not a mechanic. Not a body shop. Their detailer said the Toyota dealership was wrong. No leak. Sensors work.
Somehow they decided that my front bumper was the problem and “painted it”, or at least that’s what Shift told me. Turns out they lied about that too. Original paint that they buffed, but left compound everywhere and fucked up my headlights and Toyota badge.
When confronted with all of this, with photo evidence, Shift offered me $250.
That’s it. $250 after keeping my car for nearly 10 weeks and then not fixing it. During the time they had it the avg MPG dropped to 21 mpg (typically 40) and managed to break a bunch of fasteners in the trunk.
Now my car has a major accident on the carfax and I’ll be out at least $10k to fix it. Fuck Shift.com
Sounds like it's time for small claims court?
Yes, I’m filing next week.
I wanted to give them an opportunity to fix it.
I wanted to give them an opportunity to fix it.
Every one I know hates car dealerships. Yet 90% of them refuse to buy a used car from a private party.
While it's true they have a lobby and have twisted the arms of legislators, it's also true that people prefer buying from them. And when they don't buy from them, they buy from CarMax which, for used cars, is even worse than buying from a dealer (pre-pandemic).
What keeps people from buying from private parties?
Unwillingness to plan and save money (i.e. refuse to buy car without financing). Even for under $10K
Being scared of getting a lemon because they lack knowledge about cars. I too lack that knowledge, which is why I get a trusted mechanic to check out any car I buy. Hasn't failed me in 20 years. Used car warranties are useless - they don't last long. And the last time I went car shopping, every used car from the dealer that seemed like a good price had serious problems when I took it to the mechanic. Never get a used car from a dealer if they don't let you take it to a mechanic.
Quicker process: It may take a while finding a good used car via Private Party. OTOH, there are plenty of dealers one can walk into. However, once you find a car you like, the process is much smoother with private party. You either agree on a price or you don't. No hidden fees. You know exactly what you're getting.
Edit: I just want to be clear: I'm not trying to convince anyone to buy private party. If you're happy with avoiding the "hassle", that's fine. My point is that for all the complaints about dealers, the reality is people prefer them.
While it's true they have a lobby and have twisted the arms of legislators, it's also true that people prefer buying from them. And when they don't buy from them, they buy from CarMax which, for used cars, is even worse than buying from a dealer (pre-pandemic).
What keeps people from buying from private parties?
Unwillingness to plan and save money (i.e. refuse to buy car without financing). Even for under $10K
Being scared of getting a lemon because they lack knowledge about cars. I too lack that knowledge, which is why I get a trusted mechanic to check out any car I buy. Hasn't failed me in 20 years. Used car warranties are useless - they don't last long. And the last time I went car shopping, every used car from the dealer that seemed like a good price had serious problems when I took it to the mechanic. Never get a used car from a dealer if they don't let you take it to a mechanic.
Quicker process: It may take a while finding a good used car via Private Party. OTOH, there are plenty of dealers one can walk into. However, once you find a car you like, the process is much smoother with private party. You either agree on a price or you don't. No hidden fees. You know exactly what you're getting.
Edit: I just want to be clear: I'm not trying to convince anyone to buy private party. If you're happy with avoiding the "hassle", that's fine. My point is that for all the complaints about dealers, the reality is people prefer them.
People don’t have trusted mechanics or know how to get one. For the majority of people, the dealer where they got the car is their “(somewhat) trusted mechanic”. That’s why they go to dealers or CarMax and pay a huge premium, just for the psychological comfort. And for certain premium brands, a certified preowned car that comes with an extended warranty might not even be that bad of a deal, at least during normal market conditions.
I buy at CarMax because... a) I hate bartering. b) I want to visit a website, look at the cars available, go test drive a few, buy the one I like best. IE. Convenience. My time is worth the few thousand extra I pay that would be spent tracking down private owners, driving around to all of them to test drive, getting a mechanic to check it over, dealing with all those people, etc.
> My time is worth the few thousand extra I pay that would be spent tracking down private owners, driving around to all of them to test drive, getting a mechanic to check it over, dealing with all those people, etc.
This is a common refrain, and while you can afford it, I doubt many people I know can really afford that cost of a few thousand dollars. If I offered a $1500 fee for doing the leg work for them, would they pay me the money? If not, then "convenience of saving time" is not the reason.
This is a common refrain, and while you can afford it, I doubt many people I know can really afford that cost of a few thousand dollars. If I offered a $1500 fee for doing the leg work for them, would they pay me the money? If not, then "convenience of saving time" is not the reason.
The convenience is a factor for some, but perceived safety is probably the primary factor for most. They may not be able to afford to pay thousands extra, but they can even less afford to be scammed or buy a lemon. So they will compromise on the model or age or mileage of the vehicle and get a little less car for their budget.
If there was a trustworthy service I could pay to buy me a car that, with their fee, would cost around the same as CarMax (or maybe even a bit more) I'd 100% try it. I love the concierge type services and take advantage of them whenever possible. There just aren't many of them to use.
I could talk to each of these points, but at the end of the day, you're agreeing with me: As much as people complain about it, they prefer dealers, or options even more expensive than dealers (e.g. CarMax) even if for very poor reasons.
All the problems you list are not difficult to overcome when it comes to private party. People do not want to overcome it - they would rather pay a few thousand dollars more.
All the problems you list are not difficult to overcome when it comes to private party. People do not want to overcome it - they would rather pay a few thousand dollars more.
I don’t disagree with you that serious money can be saved if one knows the correct way to buy from a private party. But psychological comfort also has real value for a lot of, maybe even most, people. It may seem like a poor reason to you, but for them it’s worth it. Plus, you should be happy to have fewer people competing with you to buy from private sellers, thereby further lowering your price.
Don’t forget about transaction costs.
IMO, buying an economic new car and then keeping for most of the vehicles lifetime is close to optimal. No need to stress about comparing a bunch of specific cars just a few models you can research online. It’s low stress because you have a lot of leverage at the dealership as you can get the same thing down the street or in 3 months if you chose to walk out the door.
IMO, buying an economic new car and then keeping for most of the vehicles lifetime is close to optimal. No need to stress about comparing a bunch of specific cars just a few models you can research online. It’s low stress because you have a lot of leverage at the dealership as you can get the same thing down the street or in 3 months if you chose to walk out the door.
> IMO, buying an economic new car and then keeping for most of the vehicles lifetime is close to optimal.
It sounds like you're adding the time searching, etc to your model (which is fine).
From a purely financial perspective, I do wonder. I think the key phrase is "keeping it for most of the vehicle's lifetime". If I look at the used cars I've bought, the total I've paid is $17000 in today's dollars over the last 19 years.[1] If you throw in various repairs, it adds a few thousand more (I'm too lazy to look up the actual numbers, but you can find it if you dig deep in my comment history). And that number includes routine maintenance everyone has to do (oil changes, replace brakes, etc).
A comparable new car today would cost more, but you get the benefit of having a modern car instead of old cars that I've driven. The down side is you're stuck with that car for a long time, whereas you can keep getting newer model used card every so many years.
[1] I didn't get lucky or find fantastic deals. These numbers are representative if you follow a few simple rules of used car buying.
It sounds like you're adding the time searching, etc to your model (which is fine).
From a purely financial perspective, I do wonder. I think the key phrase is "keeping it for most of the vehicle's lifetime". If I look at the used cars I've bought, the total I've paid is $17000 in today's dollars over the last 19 years.[1] If you throw in various repairs, it adds a few thousand more (I'm too lazy to look up the actual numbers, but you can find it if you dig deep in my comment history). And that number includes routine maintenance everyone has to do (oil changes, replace brakes, etc).
A comparable new car today would cost more, but you get the benefit of having a modern car instead of old cars that I've driven. The down side is you're stuck with that car for a long time, whereas you can keep getting newer model used card every so many years.
[1] I didn't get lucky or find fantastic deals. These numbers are representative if you follow a few simple rules of used car buying.
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It’s a big purchase and risk and most people don’t have a trusted mechanic. You know you’re getting a little scammed at the dealership, but the risk of a complete lemon feels much lower (and you have someone to complain to post-sale if things don’t go well). Interesting idea for a revenue stream for mechanics though (used car assessments for a fee).
> You know you’re getting a little scammed at the dealership, but the risk of a complete lemon feels much lower (and you have someone to complain to post-sale if things don’t go well).
But that's my point. It's only a feeling, and likely not reflective of reality. And in most cases, no: You have no one to complain to. A lot of used cars have fairly low warranties (a few months, maybe?). Most problems will not occur in that short window.
But that's my point. It's only a feeling, and likely not reflective of reality. And in most cases, no: You have no one to complain to. A lot of used cars have fairly low warranties (a few months, maybe?). Most problems will not occur in that short window.
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Craigslist. Facebook marketplace. Where else do people look for used car listings?
Nah, dealers are hiding inventory. NPR didn't bother checking in the back.
Why do people get all worked up over a difference ± a few hundred dollars on a very expensive purchase? When I want to buy a car, which I admit rarely happens, I look at the advertised price and if I'm willing to pay that price then I call the dealer and if I'm not, I don't. If the paperwork shows up with a different number on it then I tell them to leave, and it's their time, not mine, that was wasted.
I just really don't get the whole haggling thing. If you want a lower price, wait until one is being advertised, or substitute a different model, or get a bicycle.
I just really don't get the whole haggling thing. If you want a lower price, wait until one is being advertised, or substitute a different model, or get a bicycle.
> Why do people get all worked up over a difference ± a few hundred dollars on a very expensive purchase
The size of the purchase shouldn't affect how worked up you get about a few hundred dollars of overcharge, only the regularity with which you make the purchase. For example let's say you buy a new TV and a new car every 5 years. Let's say the TV "should" cost $500 and the car "should" cost $25,000. Why would you be ok with paying $25,500 for the car but not with paying $1,000 for the TV (or, maybe you're ok with both?)
The size of the purchase shouldn't affect how worked up you get about a few hundred dollars of overcharge, only the regularity with which you make the purchase. For example let's say you buy a new TV and a new car every 5 years. Let's say the TV "should" cost $500 and the car "should" cost $25,000. Why would you be ok with paying $25,500 for the car but not with paying $1,000 for the TV (or, maybe you're ok with both?)
That's one of the many biases explored by behavioral economics. People absolutely look at percentage premiums even though it's the absolute numbers that "should" matter--issues like fairness aside.
Yes, the difference absolutely does not matter. Most people who own cars have experienced a big exogenous shock in operating costs due to fuel recently, that would have more than wiped out the average advantage from negotiating. Furthermore, the unforeseeable supply shortage greatly benefited existing car owners, again much more than any reasonable amount of haggling could have done. And other exogenous factors such as housing costs will have been far more important to the lives of car purchasers than the nominal prices of cars. I mean, have you ever tried to buy a house? That shit is crazy.
The one and only way to save money on cars is to not buy them. The true cost of car ownership is massively, woefully underestimated by virtually all drivers. 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture.
The one and only way to save money on cars is to not buy them. The true cost of car ownership is massively, woefully underestimated by virtually all drivers. 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture.
> Most people who own cars have experienced a big exogenous shock in operating costs due to fuel recently, that would have more than wiped out the average advantage from negotiating.
This is a ... weird way to look at it.
The increase in fuel costs affects you roughly equally whether you negotiated or not - so it's not at all a factor in the decision making process (unless simply not owning a car is an option). I mean, the price of goods went up a lot too due to rising fuel costs, but we don't consider those when buying a car, right?
> The one and only way to save money on cars is to not buy them.
Ah, your reasoning makes sense now. Unfortunately, not buying a car is not an option for many.
> 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture.
I would strongly recommend taking a course (or reading a textbook) on engineering economics. Your way of thinking is precisely what they caution against. If anything, the fact that things have gotten quite expensive makes it more important to cut costs where you can.
This is a ... weird way to look at it.
The increase in fuel costs affects you roughly equally whether you negotiated or not - so it's not at all a factor in the decision making process (unless simply not owning a car is an option). I mean, the price of goods went up a lot too due to rising fuel costs, but we don't consider those when buying a car, right?
> The one and only way to save money on cars is to not buy them.
Ah, your reasoning makes sense now. Unfortunately, not buying a car is not an option for many.
> 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture.
I would strongly recommend taking a course (or reading a textbook) on engineering economics. Your way of thinking is precisely what they caution against. If anything, the fact that things have gotten quite expensive makes it more important to cut costs where you can.
I might agree with your last sentence but not the rest of it. Car owners systematically underestimate the total cost of ownership by ~50% (i.e. the true cost is ~2x the perceived cost). Under those conditions it is completely bizarre that buyers agonize over 1-2% of the purchase price. It would make sense to micromanage that purchase price if, and only if, the rest of your expenses are known and managed to very unusual accuracy.
https://www.nature.com/articles/d41586-020-01118-w
https://www.nature.com/articles/d41586-020-01118-w
> Car owners systematically underestimate the total cost of ownership by ~50% (i.e. the true cost is ~2x the perceived cost).
Fortunately, that's not me. I've been keeping all financial records for all non-cash transactions for over 15 years, and so I know exactly what I've spent on my car - fuel, repairs, addons, everything. I've posted breakdowns far down in my comment history (perhaps in the last year - not sure).
What I can say: It's not even close to whatever Edmund's TCO calculator reports - so I'm a bit wary of these estimates. I'm not frugal, and I'm not a car guy, and I do whatever the mechanic suggests.
Fortunately, that's not me. I've been keeping all financial records for all non-cash transactions for over 15 years, and so I know exactly what I've spent on my car - fuel, repairs, addons, everything. I've posted breakdowns far down in my comment history (perhaps in the last year - not sure).
What I can say: It's not even close to whatever Edmund's TCO calculator reports - so I'm a bit wary of these estimates. I'm not frugal, and I'm not a car guy, and I do whatever the mechanic suggests.
How do you overcome the uncertainty? I paid MSRP for my current car, $23500 in July 2020. Since then it has depreciated at -$300/month. That is to say, net of energy, insurance, and annual taxes my real cost of ownership has been -$150/month. I am being paid to own this car. But no amount of analysis could have told me that at the time, and a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being.
A recurring theme keeps coming up in your comments:
The notion that the amount you can save is only $500. As several commenters have pointed out, it could be a lot more (pre-pandemic).
> But no amount of analysis could have told me that at the time
That you are "making" money on this car is irrelevant to the analysis. Just as totaling the car within a few months of buying it is irrelevant to the analysis. You'd still have anywhere from $500 to $3000 more in your pocket regardless of the amount (or direction) of the appreciation. You'd still get the negative depreciation you're getting now.
Again: I really recommend reading an engineering economics textbook.
> a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being.
Well clearly, if $500 is irrelevant to your happiness, then it is irrelevant to your happiness. No one is trying to convince you otherwise. What people are pointing out is that the $500 (likely a low estimate) you are down has the same financial impact on you as buying a Pepsi and getting charged an additional $500 for the single Pepsi. That the latter case may make you upset (or not) is up to you. We're not trying to make you feel better - we're pointing out the financial outcome is the same.
Of course, if you're simply trying to say that it's not worth $500-3000 spending the effort to get a better deal - that's totally fine. But that should be phrased as "$500 wasn't worth the hassle" as opposed to "It shouldn't matter because it is a small percentage of total ownership cost".
The notion that the amount you can save is only $500. As several commenters have pointed out, it could be a lot more (pre-pandemic).
> But no amount of analysis could have told me that at the time
That you are "making" money on this car is irrelevant to the analysis. Just as totaling the car within a few months of buying it is irrelevant to the analysis. You'd still have anywhere from $500 to $3000 more in your pocket regardless of the amount (or direction) of the appreciation. You'd still get the negative depreciation you're getting now.
Again: I really recommend reading an engineering economics textbook.
> a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being.
Well clearly, if $500 is irrelevant to your happiness, then it is irrelevant to your happiness. No one is trying to convince you otherwise. What people are pointing out is that the $500 (likely a low estimate) you are down has the same financial impact on you as buying a Pepsi and getting charged an additional $500 for the single Pepsi. That the latter case may make you upset (or not) is up to you. We're not trying to make you feel better - we're pointing out the financial outcome is the same.
Of course, if you're simply trying to say that it's not worth $500-3000 spending the effort to get a better deal - that's totally fine. But that should be phrased as "$500 wasn't worth the hassle" as opposed to "It shouldn't matter because it is a small percentage of total ownership cost".
The article answered that question:
> I found some trucks that were literally priced $10,000-$15,000 over MSRP, and I encountered many of the shady business practices that the FTC is now trying to ban.
because it's not ± a few hundred dollars, it's thousands of dollars, and claiming online that it's one price and charging a lot more once you get there
> I found some trucks that were literally priced $10,000-$15,000 over MSRP, and I encountered many of the shady business practices that the FTC is now trying to ban.
because it's not ± a few hundred dollars, it's thousands of dollars, and claiming online that it's one price and charging a lot more once you get there
It sounds like you don’t purchase cars much if you think the price difference is only a few hundred dollars.
I went to look for a car recently and, ignoring the Covid shortage fee increase, they added a mandatory $1200 for some bs paint protection and an additional $1400 for some gps anti-theft that would, “pay for itself with insurance savings” (lol).
That’s an additional $2600 on every car ignoring all the other bs they try to sneak in.
Here’s something fun: go look up the reviews for all dealerships nearby and read for yourself how many talk about price bait-and-switches, mandatory fees, etc.
I went to look for a car recently and, ignoring the Covid shortage fee increase, they added a mandatory $1200 for some bs paint protection and an additional $1400 for some gps anti-theft that would, “pay for itself with insurance savings” (lol).
That’s an additional $2600 on every car ignoring all the other bs they try to sneak in.
Here’s something fun: go look up the reviews for all dealerships nearby and read for yourself how many talk about price bait-and-switches, mandatory fees, etc.
I agree. It's why Carmax did well even pre-internet delivery companies. Were they the cheapest? No, but the prices were fine, you could shop online, and no one did any hard sales job.
I hate the dealership experience and games they play and have always wanted to buy from carmax.
However , I have yet purchased a car from carmax, because they have been typically over $3.5K+ overpriced , for the same year ,model, and equivalent condition that I can get it at the scummy dealers.
Typical car shopping experience. Now this has to be modified a little depending if its a buyers or sellers market. However for the most part
1. Determine the car ,model,year, and condition of the car I want.
2. Browse carmax and set that as my highest price.
3. Email and go to local dealers and offer $3.5K- below carmax asking price than add tax and title to submit your offer as and out the door price.
4. Some don't responded but some do .
5. Go to dealerships ones that said they can do it at near the end of the month.
6. Then expect for them to do the bait and switch and send you to the backend manager who plays online games on his laptop for about an hour pretending to do something when they are really just trying to break you down. So when the manager comes into play I typically say great just give me a call or I come back after a couple of hours. so I don't wait there for no reason.
7. Manager plays the if he sold me the car for what I asked then they would be out of business. Then I say why did you agree to it and either I stay firm on my original offer or go up 500 bucks. they typically still don't approve at this stage which is expected and fine so I walk knowing they already have my contact information.
8. Play the wait game . Typically 1 or 2 weeks later I get a call back. They Agree for my original counter offer.
9. I go back in to sign the paperwork
10. The carsalesman is all giddy and sends me back to the manager and financier to close on the deal.
11. I get back and I see additional charges such as dealer fees and other bs which I say thank you but no thank you and the offer I submitted was out the door price. Sometimes I walk out again or they remove the charges .
fun stuff but like I said playing the stupid game has saved me $3.5K most times. The key is willing and having the time to play the stupid game with them, willing to walk, and not have an immediate need for a car.
There have been also times where I have been less willing to haggle on the price but even then I can typically get the car 1.5K below car max with little effort. When I buy new its a little trickier but I never pay anywhere near the msrp.
However , I have yet purchased a car from carmax, because they have been typically over $3.5K+ overpriced , for the same year ,model, and equivalent condition that I can get it at the scummy dealers.
Typical car shopping experience. Now this has to be modified a little depending if its a buyers or sellers market. However for the most part
1. Determine the car ,model,year, and condition of the car I want.
2. Browse carmax and set that as my highest price.
3. Email and go to local dealers and offer $3.5K- below carmax asking price than add tax and title to submit your offer as and out the door price.
4. Some don't responded but some do .
5. Go to dealerships ones that said they can do it at near the end of the month.
6. Then expect for them to do the bait and switch and send you to the backend manager who plays online games on his laptop for about an hour pretending to do something when they are really just trying to break you down. So when the manager comes into play I typically say great just give me a call or I come back after a couple of hours. so I don't wait there for no reason.
7. Manager plays the if he sold me the car for what I asked then they would be out of business. Then I say why did you agree to it and either I stay firm on my original offer or go up 500 bucks. they typically still don't approve at this stage which is expected and fine so I walk knowing they already have my contact information.
8. Play the wait game . Typically 1 or 2 weeks later I get a call back. They Agree for my original counter offer.
9. I go back in to sign the paperwork
10. The carsalesman is all giddy and sends me back to the manager and financier to close on the deal.
11. I get back and I see additional charges such as dealer fees and other bs which I say thank you but no thank you and the offer I submitted was out the door price. Sometimes I walk out again or they remove the charges .
fun stuff but like I said playing the stupid game has saved me $3.5K most times. The key is willing and having the time to play the stupid game with them, willing to walk, and not have an immediate need for a car.
There have been also times where I have been less willing to haggle on the price but even then I can typically get the car 1.5K below car max with little effort. When I buy new its a little trickier but I never pay anywhere near the msrp.
> Why do people get all worked up over a difference ± a few hundred dollars on a very expensive purchase?
Because $500 lets you buy $500 worth of goods whether you are spending $1000 or $30000.
Also, the difference can be a lot more than $500. I've known people to save a few thousand dollars.
> I just really don't get the whole haggling thing. If you want a lower price, wait until one is being advertised
I waited till too long to learn how to negotiate, and once I started doing it, I understood why your strategy is quite suboptimal. With dealers, it's simple: If you don't haggle, you will always pay more. The price you can get with successful haggling is often lower than the price will ever be advertised, in any nearby dealership.
Also, while haggling seems like a pain, it can actually save time. A friend was once buying a used BMW, and he wanted a price a few thousand dollars less than the dealer was offering. Just asking for that lower price didn't help. So he told the dealer he had found a dealer with the price he was looking for, but it was all the way in a nearby town and he would rather just by it locally. The dealer then agreed.
There was no dealer in another town selling at that price. I wondered why the local dealer didn't ask for proof. The likely reason: It wasn't an unreasonable price, and the local dealer knew that if the buyer could afford to wait, he will find a dealer somewhere selling at that price. There was utility in him getting rid of this car rather than wait for another buyer.
Haggling can save you a lot of time. The only reason I go to private party for used car is you'll almost always get better deals there. But I do pay a price: I have to wait a lot longer on average.
Because $500 lets you buy $500 worth of goods whether you are spending $1000 or $30000.
Also, the difference can be a lot more than $500. I've known people to save a few thousand dollars.
> I just really don't get the whole haggling thing. If you want a lower price, wait until one is being advertised
I waited till too long to learn how to negotiate, and once I started doing it, I understood why your strategy is quite suboptimal. With dealers, it's simple: If you don't haggle, you will always pay more. The price you can get with successful haggling is often lower than the price will ever be advertised, in any nearby dealership.
Also, while haggling seems like a pain, it can actually save time. A friend was once buying a used BMW, and he wanted a price a few thousand dollars less than the dealer was offering. Just asking for that lower price didn't help. So he told the dealer he had found a dealer with the price he was looking for, but it was all the way in a nearby town and he would rather just by it locally. The dealer then agreed.
There was no dealer in another town selling at that price. I wondered why the local dealer didn't ask for proof. The likely reason: It wasn't an unreasonable price, and the local dealer knew that if the buyer could afford to wait, he will find a dealer somewhere selling at that price. There was utility in him getting rid of this car rather than wait for another buyer.
Haggling can save you a lot of time. The only reason I go to private party for used car is you'll almost always get better deals there. But I do pay a price: I have to wait a lot longer on average.
There aren't a lot of other contexts in which I can effectively make $500-2000 for being willing to talk to an annoying, but harmless, person for an hour while saying "no" a lot.
The buying experience really varies depending on what end of the market you're at. A high volume Honda dealer will almost certainly have a very different buying experience than a low volume corner buy-here-pay-here lot, and a different revenue model. The former often won't haggle with you, and the latter is trying to pay their bills via margin off a small number of purchases by customers who don't have much ability to shop around.
I don't like being ripped off. I don't like it whether it's a mugger, or a car dealership, or a bank.
I also don't like being lied to. I don't like being told the deal is X for $Y, and finding out later that it's X for $Y + $Z. In fact, one of my major rules is that I don't do business with people who lie to me.
I also don't like being lied to. I don't like being told the deal is X for $Y, and finding out later that it's X for $Y + $Z. In fact, one of my major rules is that I don't do business with people who lie to me.
It’s not always a few hundred. On popular models it can be many thousands.
ive gotten 8k off of MSRP from haggling. haggling via email is very easy (this was in late 2020 before the car situation got crazy though)