So, I’ve been kicking around the idea of getting a new car for a while now. I was (past tense, as I picked up my new car tonight) leasing a Subaru Outback for the past 3 years. The lease was coming up to an end in July, however, I was already 20,000 kms over my lease mileage. Oops. I do love a road trip, apparently too much so to be continuing to lease cars!
I love cars. I’m not an enthusiast in the sense that I keep my cars immaculate and wax them to a shine every weekend… no, I’m not that kind of car lover. I just love new shiny things, and I get bored easily so I tend to flip cars a lot more often than conventional wisdom would say is smart. Oh well. My Subaru was my 10th car, and since I’ve been driving for 31 years, that averages out to a car every 3 years. Yes, that is probably about right, even though I didn’t actually have my own car when I was a new driver.
31 years. Holy shit… scary thought. But I digress…
This time around, I really loved the Outback and considered keeping it and just buying it out at the end of the lease, keeping it for another couple of years perhaps. Then I looked at interest rates on used cars. When I see interest rates at 5% or higher, and new car financing rates as low as 0%, that’s enough of an incentive for me to start car shopping again!
I’ve always had my eye on the Mazda CX-5. When I leased my Outback 3 years ago, I actually test drove the CX-5 and was seriously considering it then. At the time, I got a way better price on the Outback than the Mazda so that’s what I went with.
Which brings me to the tale of shopping for a new car!
When I buy a car, I tend to use a service like Car Cost Canada or Unhaggle to get a sense of the dealer cost and markup, to arm myself with as much information as I can before making a purchasing decision. This time I tried both services and each one sent my contact information to a dealer they “recommend”, 2 different dealers in 2 different cities. I use the information both to get a fair price on the car and to assess the honesty of the dealer/salesperson.
On the recent long weekend, “Dealer 1” contacted me and I went out to the dealership, took a test drive, and then went through the typically annoying and uncomfortable process of going through the pricing process with the sales guy who contacted me.
He was nice enough, but suffice to say, he was a pure sales guy. His approach was all sales, all “let’s charm the customer into thinking I’m really working in her best interest”. It was pretty obvious, and it was even more obvious when he went over the pricing with me.
This is the part I found interesting: he already knew I had the dealer cost on the car I was looking at and yet he still tried to pretend that his pricing was amazing. “Better than the pricing I get if I want to buy this car” were his exact words. Gag. Yeah, right.
Side note relevant to the story: there is a Mazda promotion on this month, “free winter tires” with every purchase of a new car. Yet, the tires aren’t free, there is a $500 cost because the promo only covers the tires, not rims, not installation/balancing etc. I looked at the fine print on Mazda Canada’s website and sure enough it implies that there is a cost you have to pay. Their definition of free tires isn’t the same as mine.
He tried his “I’m your friend” routine again at this point. “Hey, if you want, you can just take the tires, without the rims, because you can get the rims cheaper elsewhere”. OK, I say, I agreed with him, I *can* get the rims cheaper elsewhere and besides, winter is almost done and I wouldn’t put them on this year anyway.
The song-and-dance routine was that since I had the “Unhaggle” pricing, they were going to cut right to the chase and give me the best pricing they can give me, 3% over cost. “We don’t usually go that low but you’ve been doing your research”. Then he showed me the pricing, with an $850 discount. That’s the first clue he’s not being honest, that is less than half of what the discount would be if he was really giving me 3% over cost. But it gets better, he explains that it’s actually a $1,350 discount because I don’t pay the $500 for the extra charge on the tires. For the rims which I’m not taking anyway? Hmmm. Riiight. I’m sure some people fall for that shit… if it doesn’t reduce the price of my car, it’s not a discount, buddy. There is also a factory to dealer incentive on financing that pays the dealer $350 if a customer finances the car. So, by my math, the actual real discount they are offering me out of their pocket is $500, not $850.
So far, he’s not being honest with me so I’m just playing along. Next step: let’s get my car appraised as a trade-in. At this point in the lease, if I sold it privately, I should easily be able to sell it for more than my current buyout. Trade-ins are another story, and I know that.
In this case, they did their next song-and-dance routine and, charm back on, came back to me and said, they made some calls and they were offered $x for my car but they were so generous, they were going to bump it up by $1,000 and give me $x + 1,000 for my car. That price was $3,500 less than what my buyout is. Uh, no thanks. Even being realistic with the fact that I may not make a profit selling my car, that’s ridiculous.
I made a note of the key pricing details before I left. “We’re not allowed to give the printout to you”. What a joke. No wonder people find buying cars stressful, with these tactics.
Fast forward a week and this time, the Car Cost Canada people passed me on to a different Mazda dealership. Off I went, and when I was just pulling into the dealership to take a look, the salesperson at Dealer 2 calls me to set up a time to meet him. Good timing.
I went inside, met him briefly and since he had a prior appointment set up already (and the customers just arrived as well), he got his manager to set me up with a test drive and hopefully by the time I returned, he’d be free again.
So, I happily took a second test drive and came back. The sales guy was busy so the manager had me come into his office, we sat down and he worked on some prices. Initially, it sounded just like the conversation at Dealer 1, we know you have done your research, our best deal is 3% over cost and all I’m thinking is, man, I can’t wait to see if this is the same old song and dance routine here too. The difference was the demeanour, it was a business conversation, not a sales conversation, and I was correct in my initial impression that this guy was being upfront with me.
He worked some numbers and printed it out, showed me the sales quote in detail, explaining all the charges and showing me the discount. The discount was literally 3% over cost based on the cost numbers I had from the two cost-sharing sites. Impressed so far. Point number two: he goes over the typical Freight, PDI etc. charges and has identified a couple as optional (an extra warranty and something else I’ve forgotten). We discuss it and he takes off the warranty and prints out another form. No bullshit, no charm, just straight up, here are my best numbers, take it or leave it.
Part 2, of course, is the trade-in. My buying history tells me that the better the price seems to be, the kicker is you usually are paying for it by reduced value on your trade-in. I was pleasantly surprised. He not only did a more thorough inspection of my car, including taking it for a test drive, he came back with a range in values that were lower than my buyout but close enough that the deal still made sense. He asked what my timing was and I said, if you can firm up the trade-in price, I’d be willing to do the deal today. I left, while he worked through his network to find a potential buyer.
The original sales guy called me about an hour later saying he has some great news: someone would be willing to pay even more for the car than they first thought, but he wants to see the car in person. No problem, all of the other pricing was bang on what I hoped for, I’ll come over right now and your guy can take a look.
When I returned to the dealership, the guy offered more than the initial quote and only $500 less than my buyout. Since I was getting out of my lease being way over the mileage, and getting free winter tires, and a hell of a discount, I did the deal that day and signed off.
In the excitement, all of the paperwork we didn’t include the winter tires. In the initial price discussions, I proposed the same “no rims” approach to save the extra $500 charges and the manager agreed it was fine. So, on Monday, I went back to the dealership to hand in my car for the buyout to be completed and had a chat with the manager. He realized he didn’t work that into the price and said he’d order the Mazda winter tires right away anyway as I was entitled to them. When I was talking about the tires with him on the weekend, he mentioned the winter tires were Michelin X-Ice tires, but when we talked about the tires on Monday, he said they were Dunlops. I asked him about the Michelins. He said, the Mazda promotion is for Dunlops, but in the deal, he usually tries to work it so they upgrade the customer to the better quality winter tire, which they stock every day in the service area.
Next question: how much would it cost me to upgrade to the better tires, if I paid the difference? $300 he tells me. Sweet, let’s do it. Winter tires on an SUV aren’t cheap, so even though it was more out of my pocket than planned, I was happy to do the deal.
I was thrilled with my experience and the business-like manner in which they dealt with me on the sale. It was not stressful, there was no pressure and I walked away with a great car at a great price.
Net difference: there was almost a $4,000 swing overall between what I bought with this guy between the difference in trade in and the discount, vs. Dealer 1. No brainer.
The Moral of the Story?
I’m sure there are many messages I can pull from this experience. Don’t treat your customers like they are stupid. Be honest and upfront with your customers. Don’t be a dick. (LOL). Whatever you get out of this, it’s pretty easy to see that people who don’t try to “sell” you will have more success because they are building a relationship that may last beyond this one transaction.
Now I am just waiting for Dealer 1 to call me back to follow up on our meeting. I can’t wait to drive in with my new CX-5 and show him what he missed out on selling me! 🙂
(originally posted on www.kuntzconsulting.ca, and migrated to this site in October 2017)