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F55/F56 How to Buy a New Mini -- The Art of the Deal

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F55/F56 How to Buy a New Mini -- The Art of the Deal

  #76  
Old 12-11-2016, 04:20 PM
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The Desk, the Pencil and the Four Square

The constant theme throughout this thread has been DO YOUR HOMEWORK BEFORE NEGOTIATING with a car dealer. Know all the numbers. Calculate the estimated invoice of the car you want, research the options you want, determine the approximate wholesale and retail values of your trade, get your credit in order, and know how any manufacturer incentives can be applied to your deal. This way, when you sit down to finalize your deal, you know your numbers and there should be no bad surprises – only a pleasant surprise if the dealer comes in with a better offer than you were already prepared to accept.

Dealers fully understand that many consumers are well-schooled and well-prepared. In response to this, the old selling tactics have been finessed. The goal of the dealer is to lead you into negotiating against yourself without your realizing what is happening. Let’s see how the traditional selling system is designed to throw the buyer off his/her game.

THE FIRST PENCIL

The floor salesperson is expected to use a range of strategies and techniques, starting with the “meet and greet,” then moving the customer through a walk around and a test drive, and culminating with “putting the customer in the box,” which involves getting the customer to sit down and commit to a set of proposed numbers on a specific car.

The goal of the salesperson is to get the customer committed, on paper, to some numbers, any numbers, and then take those numbers back to the “desk,” where the sales manager will overwrite a new set of numbers (the “first pencil”) to begin a back-and-forth negotiation designed to wear down the buyer and obfuscate the true cost of the transaction, often reinforced with a trial close such as, “if we can do this for you at this price are you ready to proceed today?” Or, more subtly, “I’ve never seen my manager say yes to a deal like this. I’m willing to try but you’ve gotta help me out here. The only way we have a chance is if I can tell my manager that I have your commitment to do this. Okay?”

This starts a process, when, after a few back-and-forths, with ever-changing numbers, the relieved customer thinks a deal is done. Then the F&I sales pro enters the negotiation and starts selling add-ons and has more opportunities to move the numbers around to add profit for the dealer.

THE FOUR SQUARE

The numbers a salesperson is going to use to get the customer committed and will then take to “get the manager to approve,” are often laid out on paper in what is called a “four square” grid.

Each of the four boxes, or squares, of this grid will contain numbers that can be manipulated. The four square process creates opportunities for a salesperson and sales manager to get a customer to negotiate. And each step of the process is designed to help the skilled sales manager work behind the scenes to support the salesperson’s efforts to gain increasing control of the sales situation.

One of the boxes on a four square worksheet shows the proposed trade in value. If there is no trade involved in the deal, this box is left blank or the salesperson writes in “no trade.”

The second box contains the price of the car. This can simply be the customer’s offered purchase price or it can be the MSRP taken directly from the window sticker or it can be the MSRP with a discount number written in as a subtraction with the offered price circled, or any variation that results in a written number that the buyer has stated he/she is willing to pay for the car.

The third box contains the proposed down payment.

The fourth box contains a proposed monthly payment.


What the dealer wants to see happen is for the salesperson to get some numbers – any numbers – onto the four square so those numbers can be taken back to the manager who will then “pencil” a counter-proposal by using a Sharpie to write over the numbers in such a way as to obfuscate and confuse and get the customer focused on whatever key number the dealer wants the customer to lock onto, be it the down payment or the monthly payment or the trade or the selling price of the car.

The game for the dealer is to get the customer focused on one number and then move the other numbers around unnoticed. For example, if the customer appears stuck on a monthly payment but hasn’t thought to be firm regarding the length of the loan or lease, the payment can remain but the length of payments can be extended. Or the dealer can over-allow on the trade value or under-allow on the trade but appear to offer a greater discount on the selling price.

For example:

Salesperson: “Now, seriously, the best number our used car manager put on your trade is $5,000. So I’m going to use that number because he’s not going to go any higher if we take your trade. Okay?”

Customer: “Well, if he’s not going any higher, then go ahead, I guess.”

Salesperson: “The sticker price on your new Mini is $32,500. Let’s try $1,500 off and see if I can get it past my manager. No promises, but I’ll try for you. Okay?”

Customer: “I was hoping to do a little better than that. Can we try for, say, $2,000 off?”

Salesperson: “Well, I can try. I’ll tell the manager if he goes 2 grand off we’ve got a deal. Right?”

Customer: “But it’s got to be $2,000 off.”

Salesperson: “Okay, we’re proposing $2,000 off. To give us any chance of making this deal fly with my manager, we need to sweeten your offer with a little more down. I’m pretty sure 2 down will get his attention. So let’s go 2. Okay?”

Customer: “During the test drive we were talking a thousand down.”

Salesperson: “We need to see a higher down if we have any hope of getting the discount you want. So let’s leave it at $2,000 for now and I’ll tell my manager you will only go, say, $550 a month on the payment.”

Customer: “That’s a little higher than I had hoped.”

Salesperson: “Fair enough. We can try $500. I don’t know how they can make this work. But let’s do it your way and see what happens. Just initial here and I’ll tell my manager that this is a deal you’ll do.”

Customer: “Okay. Try that.”

The customer in the above exchange has been so worked over by the four square that it’s just sad. Numbers not really connected to anything relevant are being tossed around and put on paper. The salesperson pulled a $550 per month payment out of the air and the customer agreed to $500, without any exploration of the connection between the payment amount and the other relevant numbers or moving parts of the total deal. The salesperson got the customer to counter, and start negotiating payments, before the sale price of the car was agreed upon or any other closing costs were discussed! The sales person is in total control of the conversation and the customer is behaving as if the steps of the four square and the proposing of numbers in that format is the only way to put together an offer.

So let’s have the customer take control of the four square. For example:

Salesperson: “Now, seriously, the best number our used car manager put on your trade is $5,000. So I’m going to use that number because he’s not going to go any higher. Okay?”

Customer: “Let’s leave the trade for later. I’ve only got a rough estimate of the invoice on this car from the internet and I’d like you to go get a copy of the actual invoice so we can go over it together. I’m ready to buy today if we can agree on the numbers. Let’s start with the invoice.”

Salesperson: “I don’t know if the manager will let you see the invoice unless he knows you’re committed to purchasing the car.”

Customer: “I understand. Then let’s use the Edmunds invoice printout for now that I got from the internet. When we agree on the price I’ll pay relative to actual invoice, then you can show me that real invoice and we can confirm all the numbers for our deal. Okay?”

Salesperson: “Man, we’ve never done it that way…”

Customer, standing up calmly, using body language to signal to the salesperson that the dynamic needs to change right now: “I totally understand. I’m telling you I’m ready to buy today. Let’s go tell your manager and we can skip all the back and forth and just look at the invoice and write up the deal I’ll say yes to right now. Sound like a plan?”

Or, if the customer is confident of the invoice numbers and the current market and knows what a great price for the car would be, here’s another way to go:

Salesperson: “Now, seriously, the best number our used car manager put on your trade is $5,000. So I’m going to use that number because he’s not going to go any higher. Okay?”

Customer: “Let’s do this to save time and hassle. I’ve worked out all the numbers on a deal I’d agree to today. You can write it up however your manager wants you to do it. Here’s the deal that will work for me, that I’ll say yes to, and that we need to get onto your paper.”

At this point the customer, knowing available interest rates for which he/she will qualify and lease money factors and residuals and the fair prices for any desired add-ons, dictates the relevant numbers to the salesperson and then tells the salesperson, “If you can do better than this, we have a deal right now. I don’t need to spend any time in finance other than to sign the paperwork. So, write up this deal with the tire ‘n wheel insurance included, throw in a folding sunshade and nitrogen fill on the tires and give me free car washes for the life of the loan. My trade plus the MINI USA rebates need to cover all drive off and down payment costs necessary to get my payment to $X/month for 60 months, including everything, and we are good to go. The only counter-offer I want to see is if your manager can do better than what I’m proposing. Now, before you go see your manager, I want you to understand what I’m saying and I want to make sure that the offer sheet you’ve been filling out shows everything I need to see in this deal. Let’s confirm it says $X/month for 60 months out the door, including the tire ‘n wheel and the sunshade and carwashes, all taxes and DMV fees, and whatever other costs need to go into the deal. You get my trade and the MINI USA incentives. My checkbook never comes out. It’s this deal or better, no back and forth, and this needs to be done quickly. Do not make me wait. Just go get this deal in the works, get the car prepped, and get me out of here as quickly as possible and if this all goes as I’m requesting, you get all 10’s on the satisfaction survey. Is this something you are prepared to do for me or would it be better for you if we go directly to your manager and have me do it with him?”

If the proposed deal represents a profit for the dealer, this customer will most likely get the deal. However, often the manager needs to be convinced that the customer is truly not going to negotiate further and can’t be “bumped” up on any aspect of the deal. The manager will test the customer’s resolve by sending the four square paper back with a counter-offer “penciled” over the original numbers.

Before walking out, GIVE THE DEALER THE OPPORTUNITY TO MAKE THE SALE. If the salesperson comes back from the “desk” with a “penciled” offer sheet with a bunch of new numbers from the manager, it is reasonable to say, “I understand I’m asking for a very thin deal here. I’m giving you an opportunity to sell me this car and I’m ready to do the deal now. If there’s any way you can do this deal, now is the time. If not, I’ll shop around and see if I can find a dealer who can do this deal.” Sometimes this can save a deal because the manager needs to be convinced that the customer really can’t be “bumped” up and that if the customer’s proposed deal isn’t approved, the sale will be lost.

If it truly is not possible to do this deal, the only way the customer can be sure it can’t be done is if the customer politely thanks the salesperson for his/her time and courtesy and then walks out of the dealership and the dealership does nothing to stop the customer from leaving.

Before walking, the customer can make the manager prove why the deal can’t be done, the customer can listen to a reasonable counter-offer, or the customer can thank the sales person for his/her time and say, “If it turns out the numbers change and the proposed deal can be done, let me know” and then walk.

Of course, this all hinges on the reasonableness of the customer’s proposed deal. If the customer’s trade is truly only worth $5,000 at best yet it would take $10,000 in trade equity to get close to the proposed deal, then why waste everybody’s time? The key to getting this deal is for the customer to know all the numbers cold, have decent credit and reasonable expectations on any proposed trade value, and for the proposed numbers to allow a modest profit for the dealer, even if the only dealer profit is on the back end. Fair is fair.

The best thing is to not get caught up in a four square negotiation. Or, if you’re really on your game and want to have some fun, play the four square game but subtly take control of the process by knowing the right numbers to get onto that four square grid. If you know the payment, and the down payment (if any), and the manufacturer incentives, make sure the number of months of the lease/loan is also written onto the four square along with any other out-of-pocket drive-off costs you are willing to pay. The same for any other relevant contract detail which INCLUDES all costs, add-ons and any other promises.

The four square and first pencil are used by dealers to confuse and to negotiate. Either don’t let them use it or you use it to lay out the exact, AND COMPLETE, deal that will work for you. Then get that deal and motor!
 

Last edited by 2017All4; 12-12-2016 at 01:02 PM.
  #77  
Old 12-12-2016, 08:20 AM
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Nice write up. Jeez, I sold cars for about 4 months in the 70's and not much has changed! Back then we didn't use monthly payments, just the sticker price, the trade value, and the "downstroke". The financing part was turned over to "the mouse house" after the sale. And you NEVER let the customer get the sheet of paper in their hands so he'd show it to another dealership after he walked. We had these names for different types of customers too, like stroker, skate, 3rd baseman, laydown. Terms like "worked over" and "I really put that guy together". Car salesmen can be a different breed. I remember one sales manager pretending to call the owner of another dealership asking him how much he'd give for the customer's trade in that was purchased there. It was hard not to laugh. Like the owner is really gonna take a call from some sales mgr. about a deal he's trying to make. Right?
 

Last edited by TheBigNewt; 12-12-2016 at 08:31 AM.
  #78  
Old 12-12-2016, 09:11 AM
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Originally Posted by TheBigNewt View Post
Nice write up. Jeez, I sold cars for about 4 months in the 70's and not much has changed! Back then we didn't use monthly payments, just the sticker price, the trade value, and the "downstroke". The financing part was turned over to "the mouse house" after the sale. And you NEVER let the customer get the sheet of paper in their hands so he'd show it to another dealership after he walked. We had these names for different types of customers too, like stroker, skate, 3rd baseman, laydown. Terms like "worked over" and "I really put that guy together". Car salesmen can be a different breed. I remember one sales manager pretending to call the owner of another dealership asking him how much he'd give for the customer's trade in that was purchased there. It was hard not to laugh. Like the owner is really gonna take a call from some sales mgr. about a deal he's trying to make. Right?
All the terms and slang you remember are still used. And worse!!

My thing is not to be enraged by this but rather to master the process, which makes it happier for the purchaser and the dealer. No, the dealer can't survive if all customers are savvy and have excellent credit and have high-quality, low-mileage, paid-off trades. But for those who have "put themselves together," they can avoid being put together by the dealer!!

Thanks for reading and for commenting!!
 
  #79  
Old 12-12-2016, 09:12 AM
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The Three Step Four Square

In a previous post the role of the four square was explored. It is a closing tool which, when used by a skilled car sales team, can control the negotiations and confuse (and trick) a car shopper. Unless the customer is very clear about all the numbers in a car deal and mentally disciplined throughout the process, the four square negotiating tool can trip up even a seasoned car buyer.

Okay, so the customer wants to be in control. The salesperson is ready. Using the four square offer sheet system, coupled with a series of “three step” number adjustments, the sales team creates the illusion that the customer is running the negotiation. For example:

Salesperson: “Our used car manager will go up to $5,000 for your trade.

Customer: “That’s not enough.”

Salesperson: “What if I can get them to go up to $5,100? (This is step one in the three step $100 bump technique)

Customer: “No way.”

Salesperson: “I can try for $5,200. Would that do it?” (step two)

Customer: “That’s not even close to what I need.”

Salesperson: “Well, my used car manager told me he was stepping up to get to $5,000. I can try for $5,300. How about that?” (the third bump)

Customer: “That’s still not even close to what I need for my trade.”

Salesperson: “Well what is the number you need?”

Customer: “Well, my payoff on the trade is $6,200. And I’m hoping to get about a thousand over that to cover the down payment, so let’s say $7,200.”

Salesperson: “If that’s the number you need then all we can do is try. I’ll write ‘customer needs $7,200’ here in the trade box and we’ll see what they can do for you.”

What happened in this example is the classic three step. The salesperson threw down three successive numbers, bumping them $100 with each round, creating the illusion that the customer was somehow forcing the number higher. After three rounds of this silliness, the salesperson then asked the customer for a number. There is no way the trade is worth $7,200 but that number is very easy for the dealer to work around. The salesperson is creating the illusion that the customer is controlling the numbers and the negotiations.

So the customer “wins” the first round and the salesman moves on to the next box in the four square.

Salesperson: “Most of the better banks like to see 20% down. The price of the car you chose is $30,200 so lets put $6,200 for the down.” The salesperson writes $6,200 in the down payment box.

Customer: “Even with the equity from my trade I can’t put that much down.”

Salesperson: “We can try $5,200 plus trade.” (the $1,000 cut technique)

Customer: “That’s still way too high for me.”

Salesperson: “Well, I’m not making any promises, but I can drop it another thousand and try $4,200 plus trade.”

Customer: “I really wasn’t planning on that much down.”

Salesperson: “$3,200?”

Customer: “That’s still out of my range.”

Salesperson: “What sort of down are you comfortable making?”

Customer: “I was thinking a thousand down.”

Salesperson: “Okay. I’ll write in ‘customer says try $1,000’.”

Once again, the salesperson threw out three numbers after the initial 20% down payment proposal and then asked the customer for his number. Without saying the obvious, which is there is no way to buy a $30,200 car for $1,000 down and no trade equity, the salesperson went with the customer’s numbers and has now established where the customer’s comfort zone is and has also created a written document with a bunch of crossed out numbers which show a huge difference between the dealer’s numbers and the customer’s requests.

Also, in the above dialogue, when the salesperson said, “the price of the car you chose is $30,200," he/she quickly entered ‘$30,200 plus tax & fees’ into the vehicle purchase price box. This was done because the salesperson was trained to avoid focusing on the price of the vehicle as a means of “holding the gross” profit – the profit upon which the sales commission is based. The higher the gross, the higher the commission for the salesperson.

So now we have only one empty box and the customer is fully engaged in this process of finding numbers to put in the four square.

Salesman: “With the down you want I’m estimating a payment of about $750 per month. How does that fit into your budget?”

“Customer: “That’s not even close to what I can afford.”

Salesperson, pausing to let the shock of $750 per month sink in: “How about $740?”

Customer: “No way. Your gonna have to do way better than that.”

Salesperson: “So $730 won’t do it for you?” (this is the third step, once again)

Customer: “I never planned on that kind of payment.”

Salesperson: “What payment were you planning on?”

Customer: “I was thinking around $300.”

Salesperson: “You were thinking around $300. Would $350 be within your range then?”

Customer: “Well, if I had to I might be able to stretch to $350.”

The salesperson writes ‘try $350’ as the final entry in the box.

Now this should be a time for truth and honesty. The salesperson could spend a few minutes going over the payment calculations which would demonstrate the challenge of delivering a $30,200 car, plus taxes and fees, for $1,000 down and $350 per month. It would take at least 8 years of payments to make this deal work!!

But instead, the savvy salesperson moves into the first phase of the close:

Salesperson: “Let’s see where we are. We’re looking at your trade plus $1,000 down from you and then payments of $350 per month. I’ve never seen this kind of deal approved before, but it’s worth a try and I’m willing to fight for you on this. If I can pull this off are you ready to take delivery of this car today?”

Customer: “So, you’re saying you’ll try and get me this deal?”

Salesperson: “Absolutely. All you do is initial this offer sheet which tells my manager that you’re serious. Don’t pull out your checkbook yet. All you’re saying is you want the car and you’ll take this deal.”

The customer puts his initials on the sheet, relieved that he/she hasn’t been asked for any money, and the salesperson tells the customer to sit tight because this is going to take a few minutes while the salesperson goes, with the customer’s written commitment to buy, to “convince the manager” to authorize this deal.

The salesperson tells the manager that there is a commitment to buy, the customer is upside down in his trade, and is reluctant to go heavy on the down payment. The sales manager looks at the four square, pulls out his blue Sharpie, and does a “first pencil,” totally ignoring and overwriting all the other numbers the salesperson has entered into the four square sheet. The sheet is now such a mess and jumble of numbers that it would take a person several minutes of review to understand what it all means.

The sales manager writes ‘pay off trade 100% up to $6,200’ in the trade box, $2,000 down in the down payment box, and $499 in the payment box and sends the salesperson back to the customer after carefully “loading the lips” of the salesperson with exactly what the sales manager wants the customer to be told.

Salesperson: “Well, that was pretty rough. My manager said that to do the deal you want we’d need a nine year loan. And there’s no such thing as a nine year car loan. The good news is he did say yes to selling you the car you want and he figured out how to do it. Let’s go over these numbers.”

The salesperson slides the four square with the bright blue numbers across the desk toward the customer and waits for the shock to set in, as planned. The customer digests what he/she is seeing as reality sinks in that it’s going to cost more to get the car.

Customer: “No way can I do this.”

Salesperson: “Let’s go over these numbers. We checked with our used car manager and he is firm that the most your trade is really worth to us is $5,000 because, by law, for us to resell your car on our lot, we are required to put a bunch of money into inspection and safety upgrades like tires and brakes. But, even so, my manager is willing to step up and cover the difference between what our used car manager will pay and what it will cost to pay off your car. So we can take your trade and you won’t owe a dime on the payoff. That’s progress, isn’t it?”

Customer: “Well, I appreciate that if that’s the best he can do…”

Salesperson: “That’s more than I’ve ever seen him do. Either he’s in a good mood today or he really wants you to get into your new car. Either way, that’s good news for you. To make this work he needs to see $2,000 down because we want to get you financed with a good lender and this is the minimum down to get you into the place you want to be with the lender. How hard would it be for you to swing 2 on the down?”

Customer: “I could do $1,500 but I’ve got some other expenses coming up so that’s really my limit. And can we get the monthly payment down…”

Salesperson, interrupting: “Okay. Let’s try this, because now that my manager knows you’re serious, we can try one more time. Let’s change this payment to $479 and, instead of the $2,000 down, lets bring my manager a check for $1,500, or a credit card if you prefer, so he knows you’re ready to go at these lower numbers.”

And back and forth it goes, usually a minimum of three times, until the sales manager is convinced that the customer cannot be bumped any higher. And, if the salesperson can’t close the deal, the dealership has a closer waiting in the wings to take the turn over and do any number of routines to keep the customer in the box and get the deal closed. After which, all excited and relieved that he/she is going home in a new car, the lucky customer gets to meet the wonderful, friendly, and helpful, “I’m pretty confident we can get you financed” F&I pro.

Notice, throughout the negotiations the selling price of the car listed on the four square sheet has not changed, nor has there been any mention of taxes or fees or loan length. All the focus is on down payment and monthly payment. This is why so many people advise car shoppers not to be monthly payment buyers. It is because enough customers focus so much on the down and the monthly that they never pay attention to the total cost of the transaction. The reality is, it is great to be a monthly payment buyer, especially on a lease, IF the customer knows all the other costs and rates and doesn’t get tricked into putting additional cash into a deal or into a longer term to keep the payment fixed.

So, yes, many dealers use any number of variations of the four square because it works. Is this a bad thing? Well, it certainly opens the doors to deception and confusion and manipulation of numbers by people who do it every day and are very, very skilled at moving the numbers around while playing mind games with customer’s heads.

On the other hand, there are many car shoppers who have no idea what they can afford or how much they should pay for a new car. The decision to purchase a car creates anxiety. The four square selling system is a way to ease customers into the purchasing decision. It is a closing tool that is used because it works and it has the advantage for car dealers of creating opportunities to hold onto gross profit margins and to induce unwary customers into paying more than they should for new cars.

Any top notch motoring advisor would prefer to do a quick, clean, low-margin deal for a Mini enthusiast rather than spending half a day “playing four square” going back and forth between a sales manager and an uptight, evasive customer.

Dealers use the four square, and other shady techniques because enough customers come in to the dealership upside down on their trades, having little or no cash and shaky credit and no idea how much to pay for a new car. Sadly, those are the customers that help make it possible for better-prepared Mini shoppers to get great deals!! Once again, we see that mastering all the numbers, knowing the cost of credit, having finances and numbers in order, and clarity regarding the total cost you are willing to pay for the transaction, will protect you from the chutes and ladders of the three step four square close.
 

Last edited by 2017All4; 12-12-2016 at 01:51 PM.
  #80  
Old 12-13-2016, 12:19 PM
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Hilarious. I'll admit I was more or less a laydown both Minis. Part of it is the illusion that dealers usually get MSRP or very close. I think that's still true. So it then focuses more on the trade, and to be honest I don't want to screw around with selling my 6-7 year old car. But I know another Mini owner who gets a new car every couple years so she probably gets put together a lot worse than me in the long run and she usually leases, and buys herself out of the rest of the lease!
 
  #81  
Old 12-14-2016, 04:36 PM
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Why Do Dealers Do This???

Several posts on this thread describe, in gory detail, techniques used by car dealers to control, price-bump, and close car purchasers. Since everybody hates the process, why do dealers do this?

Short answer: Because it works.

Longer answer: Listen to what car salespeople say. They complain about “strokes” -- customers who spend a lot of the salesperson’s time without any intention, or capacity, to buy. They complain about customers “looking for a good bye,” meaning customers who have not adequately researched the current market and come in with ridiculously low offers, usually on high-demand, low-margin cars, as a means of negotiating a good price. They complain about “roaches” or “credit criminals” who know they have terrible credit but will let the dealership take them all the way through the process, hoping against all reality that somehow their bad credit won’t be discovered. They complain about customers who don’t know what they can afford and then, when a fair deal is offered, they are shocked that they can’t buy a new $30,000 car for nothing down, no trade equity, and a $300/month payment. They complain about “one-leggers” who come into a dealership alone and then, after a couple of hours of test driving and wheeling and dealing, announce that they can’t commit to a deal until their spouse or business partner or parent or rich uncle, or whomever, approves of the purchase.

But frequently car salespeople have to deal with people who, for all sorts of motivations, WANT to buy a new car but are SCARED TO DEATH to actually do a deal. Why are people scared? Well, a $30,000 purchase commitment is often one of the biggest, if not the biggest, financial decisions many people will make. When leasing an apartment for $1,500/month, few people stop to consider that they are committing to paying $18,000 per year for years, plus utility costs, for something for which they will never have any possibility of ever accumulating any cash value. Yet, most apartment leasees approach leasing an apartment using the decision train of, “I’d like to live in this area, this is a nice apartment, I can afford the rent, I’ve got the $1,500 security deposit, I’ve got the first month’s rent, so for 3 grand when can I move in?” Yet for a car salesperson to get the average car shopper to write a $3,000 down payment check and also get the customer to commit to $400 per month for five years for something they will OWN, it often takes half a day, or multiple interactions over time, coupled with the use of various closing techniques necessary to ease the customer, one baby step at a time, toward signing a contract to buy a new car.

For every car buyer who does the up front research, knows the numbers cold, has the necessary cash and good credit, knows what he/she wants in a new car, knows what a fair purchase price is, and has a well cared for, fully paid for, late model trade and a reasonable expectation of the value to be realized for that trade, there are going to be at least 10 prospective buyers who wander into a car dealership without an appointment and without the name of a salesperson with whom they have had preliminary contact (either by phone or internet), and who haven’t decided if they’re just looking or looking to buy.

So the salesperson who gets the fresh “up” has no idea if the new customer is a dead beat, a lunatic with a suspended driver’s license, or a wealthy trust fund baby who will lay down and pay full price, plus buy all the add-ons and give the salesperson a $50 gift card as a thank you.

People will deny this, but the reality is that we, as the American car buying public, taken as a group, are uninformed, deceptive, evasive, and generally unprepared to conduct a high-dollar business negotiation in a straightforward, professional, and expeditious fashion. Thus, the car business is full of sharks and slick salespeople who are well trained to shepherd unprepared and ambivalent customers through a series of well-proven steps with the goal of selling that customer a car for the most profit they can possibly extract. That’s the game.

Call a dealership. Tell the salesperson who answers the phone that their product is on your short list of cars you are considering for your next purchase. Tell them your time frame for the purchase. Tell them what you’re driving now. Ask them when would be a convenient time for you to visit the dealership to learn more about their product, take a test drive, and see if what they have on offer resonates with you. Tell them you are NOT planning to purchase on your first visit as you have several makes you are considering. If you are lucky enough to have contacted a truly professional salesperson, they will be delighted to accommodate you. And yes, they might not be able to keep themselves from floating some qualifying questions or trying a few trial closes on you. And they may have a sales manager who requires them to do the walk around and all the rest. That’s because car dealers really don’t believe that you are telling the truth when you say, “I’ll be back.” They’ve seen so many customers come in, test drive cars, play a couple of rounds of four square just to get a sense of what the new car might sorta/maybe cost, and then get on the “be back bus” never to return again.

The car biz is what the car biz is. The dealership is going to try and do what the dealership is going to try and do.

As a customer, you can fall into the dealer’s river of B.S. and be swept down their stream into whatever sort of deal they put together for you. Or you can be honest, ethical, well-prepared, reasonable, and ready to make a deal on terms YOU HAVE CAREFULLY RESEARCHED AND PUT TOGETHER before you ever sit down “in the box” to fearlessly and calmly pencil out a fair and reasonable deal with a salesperson.

The question is not: Why do dealers do this?

The question is: What sort of customer are you?
 

Last edited by 2017All4; 12-14-2016 at 05:08 PM.
  #82  
Old 12-15-2016, 07:53 AM
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I was a one legger skate! I test drove like 15 Minis and left. No seriously I actually test drove the car I eventually bought in 2/14 with the MA I bought my 2007 Mini from. He sold 180 Minis that year! Then I tried to hijack an F56 MCS via the Tempe Mini dealership without even driving it but somebody beat me to it. So I asked the original MA if my JCW Coupe was still there and bought it the following weekend. I had already driven an F56 MCS but the JCW was way faster.
 

Last edited by TheBigNewt; 12-15-2016 at 09:43 AM.
  #83  
Old 12-15-2016, 10:45 AM
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Originally Posted by 2017All4 View Post
In a previous post the role of the four square was explored...
Ugh. 4-square is so outmoded, outdated, and so time consuming.

Let's just get to the point. Tell me where you need to be/what you want to spend and if I can make it happen, I'll make it happen.
 
  #84  
Old 12-15-2016, 01:46 PM
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Originally Posted by Zillon View Post
Ugh. 4-square is so outmoded, outdated, and so time consuming.

Let's just get to the point. Tell me where you need to be/what you want to spend and if I can make it happen, I'll make it happen.
That's what I'm talkin' about right there, Zillon. It's so easy when the customer is ready to go and straight up and the salesperson cuts to the chase.

But, as you well know, customers can get wiggly and strange, and there are some general sales managers that still expect their teams to dance the old polka, silly and insulting as it is.
 
  #85  
Old 12-15-2016, 02:25 PM
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Originally Posted by 2017All4 View Post
Why Do Dealers Do This???

Several posts on this thread describe, in gory detail, techniques used by car dealers to control, price-bump, and close car purchasers. Since everybody hates the process, why do dealers do this?

Short answer: Because it works.

Longer answer: Listen to what car salespeople say. They complain about “strokes” -- customers who spend a lot of the salesperson’s time without any intention, or capacity, to buy. They complain about customers “looking for a good bye,” meaning customers who have not adequately researched the current market and come in with ridiculously low offers, usually on high-demand, low-margin cars, as a means of negotiating a good price. They complain about “roaches” or “credit criminals” who know they have terrible credit but will let the dealership take them all the way through the process, hoping against all reality that somehow their bad credit won’t be discovered. They complain about customers who don’t know what they can afford and then, when a fair deal is offered, they are shocked that they can’t buy a new $30,000 car for nothing down, no trade equity, and a $300/month payment. They complain about “one-leggers” who come into a dealership alone and then, after a couple of hours of test driving and wheeling and dealing, announce that they can’t commit to a deal until their spouse or business partner or parent or rich uncle, or whomever, approves of the purchase.

But frequently car salespeople have to deal with people who, for all sorts of motivations, WANT to buy a new car but are SCARED TO DEATH to actually do a deal. Why are people scared? Well, a $30,000 purchase commitment is often one of the biggest, if not the biggest, financial decisions many people will make. When leasing an apartment for $1,500/month, few people stop to consider that they are committing to paying $18,000 per year for years, plus utility costs, for something for which they will never have any possibility of ever accumulating any cash value. Yet, most apartment leasees approach leasing an apartment using the decision train of, “I’d like to live in this area, this is a nice apartment, I can afford the rent, I’ve got the $1,500 security deposit, I’ve got the first month’s rent, so for 3 grand when can I move in?” Yet for a car salesperson to get the average car shopper to write a $3,000 down payment check and also get the customer to commit to $400 per month for five years for something they will OWN, it often takes half a day, or multiple interactions over time, coupled with the use of various closing techniques necessary to ease the customer, one baby step at a time, toward signing a contract to buy a new car.

For every car buyer who does the up front research, knows the numbers cold, has the necessary cash and good credit, knows what he/she wants in a new car, knows what a fair purchase price is, and has a well cared for, fully paid for, late model trade and a reasonable expectation of the value to be realized for that trade, there are going to be at least 10 prospective buyers who wander into a car dealership without an appointment and without the name of a salesperson with whom they have had preliminary contact (either by phone or internet), and who haven’t decided if they’re just looking or looking to buy.

So the salesperson who gets the fresh “up” has no idea if the new customer is a dead beat, a lunatic with a suspended driver’s license, or a wealthy trust fund baby who will lay down and pay full price, plus buy all the add-ons and give the salesperson a $50 gift card as a thank you.

People will deny this, but the reality is that we, as the American car buying public, taken as a group, are uninformed, deceptive, evasive, and generally unprepared to conduct a high-dollar business negotiation in a straightforward, professional, and expeditious fashion. Thus, the car business is full of sharks and slick salespeople who are well trained to shepherd unprepared and ambivalent customers through a series of well-proven steps with the goal of selling that customer a car for the most profit they can possibly extract. That’s the game.

Call a dealership. Tell the salesperson who answers the phone that their product is on your short list of cars you are considering for your next purchase. Tell them your time frame for the purchase. Tell them what you’re driving now. Ask them when would be a convenient time for you to visit the dealership to learn more about their product, take a test drive, and see if what they have on offer resonates with you. Tell them you are NOT planning to purchase on your first visit as you have several makes you are considering. If you are lucky enough to have contacted a truly professional salesperson, they will be delighted to accommodate you. And yes, they might not be able to keep themselves from floating some qualifying questions or trying a few trial closes on you. And they may have a sales manager who requires them to do the walk around and all the rest. That’s because car dealers really don’t believe that you are telling the truth when you say, “I’ll be back.” They’ve seen so many customers come in, test drive cars, play a couple of rounds of four square just to get a sense of what the new car might sorta/maybe cost, and then get on the “be back bus” never to return again.

The car biz is what the car biz is. The dealership is going to try and do what the dealership is going to try and do.

As a customer, you can fall into the dealer’s river of B.S. and be swept down their stream into whatever sort of deal they put together for you. Or you can be honest, ethical, well-prepared, reasonable, and ready to make a deal on terms YOU HAVE CAREFULLY RESEARCHED AND PUT TOGETHER before you ever sit down “in the box” to fearlessly and calmly pencil out a fair and reasonable deal with a salesperson.

The question is not: Why do dealers do this?

The question is: What sort of customer are you?
Great post! As someone who has been in sales I really appreciate this. So many transactions would go smoother if customers kept this in mind. I understand they are under no obligation to (nor should they be expected to), but....salespeople are people too (most) and everything is easier when you: "Help me help you!"
 
  #86  
Old 12-17-2016, 01:23 PM
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Originally Posted by 2017All4 View Post
But, as you well know, customers can get wiggly and strange, and there are some general sales managers that still expect their teams to dance the old polka, silly and insulting as it is.
I've left jobs due to poor management tactics like that.

It's time to move forward from old school tactics.
 
  #87  
Old 12-19-2016, 05:38 PM
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Since I'm not quite ready to buy, I've been telling them that so that they can decide how to deal with me. Mostly, they've been pretty good about it. I don't want to string them along, thinking that they're going to to make a sure sale today. It also takes pressur eoff of me, without t hem nagging me to buy today. Strangely, though, out of several salespeople, only one has called me back. Normally, I don't like being hassled by them, but still, it seems strange.


So, recently I'm ready to buy... and they can't get me the car in the trim I wanted. Not only that, they wouldn't talk numbers with me. I understand, it's hard to talk numbers without the actual car, but in this case, the options are tied to the trim, so there's no mystery in the MSRP. Anyway, it's been an odd car buying experience this time around, but mostly good... because I'm not in the negotiations stage.

OK, I've seen it written that we have these crazy negotiations because people like the negotiations. There are some local dealers that have a no-haggle pricing with discounts already built into the price. I would buy from them without hesitation if they had the brand I was looking for. (I have already visited a couple of them...)

My personal opinion is that these games are there because it makes the dealers money. It's easier to shift the numbers around, as described above, and when it comes to negotiating a discount, you have to fight down from MSRP, never knowing if you got a good deal or not. I just assume not. It's designed to wear you down so you give up. Or maybe they really don't need to come down much. How am I to know?

It is about the worst buying experience I can think of, and I don't understand why the car manufacturers think this is the way to make happy customers -- people that don't want to buy your product because you feel abused every time you try. (My guess is that the dealer lobby ensures that it must be this way. As evidence, I present Tesla...)
 
  #88  
Old 12-19-2016, 08:50 PM
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[QUOTE=Vidgamer;4266704]"... when it comes to negotiating a discount, you have to fight down from MSRP, never knowing if you got a good deal or not. I just assume not. It's designed to wear you down so you give up. Or maybe they really don't need to come down much. How am I to know?"

Well, it can be a challenging experience, but it shouldn't be. You can discover if you are offered a good deal. Build the car you want on the MINIUSA website. That gives you the MSRP. Subtract the $850 delivery charge from your MSRP. Multiply the remainder by 92%, then add the $850 to that number and you are around invoice. You can confirm this by going to Edmunds.com and entering all the details of your build and reviewing the Edmunds summary of MSRP and invoice. This number should be close to your independent calculations.

True Car offers detailed charts of recent prices paid, which gives a general, but not always lowest, overview of prices paid in your region for specific brands and models.

If your selected MINI dealer can't find the car you want, they can order it and should be able to work out most aspects of the deal at the time the order is placed. The only thing they can't lock in are incentives, which vary each month and cannot carry over.

As this thread describes in great detail, anything close to an invoice deal on a current MINI model is usually a very good deal -- and participants have reported getting such deals, and sometimes better on prior model year holdovers.

Variables are the customer's credit worthiness and any trade-in issues. But if you've got your MINI specified, there will be a dealer who can help you get the car you want.

All of this can be confirmed with a quick call to an MA who participates in this forum. Try Zillon and good luck.
 

Last edited by 2017All4; 12-20-2016 at 04:26 PM.
  #89  
Old 12-20-2016, 07:54 PM
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Originally Posted by Vidgamer View Post
Since I'm not quite ready to buy, I've been telling them that so that they can decide how to deal with me. Mostly, they've been pretty good about it. I don't want to string them along, thinking that they're going to to make a sure sale today. It also takes pressur eoff of me, without t hem nagging me to buy today. Strangely, though, out of several salespeople, only one has called me back. Normally, I don't like being hassled by them, but still, it seems strange.


So, recently I'm ready to buy... and they can't get me the car in the trim I wanted. Not only that, they wouldn't talk numbers with me. I understand, it's hard to talk numbers without the actual car, but in this case, the options are tied to the trim, so there's no mystery in the MSRP. Anyway, it's been an odd car buying experience this time around, but mostly good... because I'm not in the negotiations stage.

OK, I've seen it written that we have these crazy negotiations because people like the negotiations. There are some local dealers that have a no-haggle pricing with discounts already built into the price. I would buy from them without hesitation if they had the brand I was looking for. (I have already visited a couple of them...)

My personal opinion is that these games are there because it makes the dealers money. It's easier to shift the numbers around, as described above, and when it comes to negotiating a discount, you have to fight down from MSRP, never knowing if you got a good deal or not. I just assume not. It's designed to wear you down so you give up. Or maybe they really don't need to come down much. How am I to know?

It is about the worst buying experience I can think of, and I don't understand why the car manufacturers think this is the way to make happy customers -- people that don't want to buy your product because you feel abused every time you try. (My guess is that the dealer lobby ensures that it must be this way. As evidence, I present Tesla...)
Where are you located?

If we don't have a car in stock that meets what you want - we're doing an order. Is that what you want?

Or are you willing to make some concessions (read, better price) for a car that isn't 100% what you wanted, but is in stock today?

A good deal is a state of mind. If you think you got a good deal, you got a good deal. If you don't, you didn't. And this is why some people are never happy with what they bought, or why some people never buy.
 
  #90  
Old 12-21-2016, 06:49 AM
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Well, when I think about trying to get a "deal", I am not thinking so much about my impending purchase, but some of my past experience. I am not against the dealer having some profit, so I'm not interested in getting the last dollar out of a deal. The process is not designed for the advantage of the customer, to say the least, and is often unpleasant.

Anyway, as for my current situation, I'm generally fine with finding something on the lot, but in this case, the dealer said that there wasn't that trim available within 100 miles. This was a non-Mini brand. They didn't seem to be able to get the next trim down, even. I've looked at some other cars, but maybe I needed an alternative.

Since then, I realized that I needed to re-think the finances, and I hadn't looked at Mini, and needed some alternatives. I'll miss out on the end-of-year sales while waiting for info, but in the meantime, I can at least go test drive a Mini or two and see what I think. I want something fun to drive, and it seems like Mini should qualify. If I decide that I need something cheaper, I'll have to shop used. It seems like a used Mini might be a great way to get a fun car on a budget. I'll have to go see....
 
  #91  
Old 12-21-2016, 11:03 AM
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Plenty of low mileage used MINI's are around. Best buys seem to be at non MINI dealers as the MINI dealerships don't want to let go of them at a discount.
 
  #92  
Old 12-21-2016, 12:12 PM
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Originally Posted by Zillon View Post
A good deal is a state of mind. If you think you got a good deal, you got a good deal. If you don't, you didn't.
This is well said. I'm of the mind that says a good bargain is one in which everybody involved is happy with it.

Last car I bought was off the lot. It was a model year leftover that had been sitting on the lot for over a year. MSRP was over $34k; invoice was somewhere around $31k. After looking at the car and talking to my spouse, I emailed my sales guy with a fairly simple offer: Get the out-the-door price under $30k and we would have a deal. They were welcome to use any combination of MINI factory "incentives" (aka discounts) to get there.

If they took the offer, great! If not, no big deal, there are other cars in the world. They took the offer.

They may not have made a huge margin, but they got a liability off the lot, and I suspect after the back end from MINI comes in they probably netted out a bit. I hope they did — bills have to be paid.

Could I have gotten them lower? Eh, probably some, but I was content that the car was worth that much money to me.

I'm happy. They're happy. What more can anybody ask for?
 
  #93  
Old 12-21-2016, 02:36 PM
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As stated at the start of the OP:

FIRST CONSIDERATIONS

* A "satisfactory deal" doesn't always mean you've squeezed every last dollar out of the dealer (You probably can't anyway). A satisfactory deal is a deal you can live with; one where you've realized acceptable value and ended up with the Mini you want with terms of sale that seem fair, reasonable, and will enhance your pleasure and excitement about acquiring a new Mini.
 
  #94  
Old 12-22-2016, 03:13 PM
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Thank you thank you so much for the great write up!

I just moved to the US so all these leasing terms were totally new to me. Read all your posts last night and armed myself today for my trip to the MINI dealer. Managed to walk away with a deal I was happy with!

2016 Clubman @ $35k MSRP on a 24 month lease for $238pm & $2500 due at signing.
Would have liked to have gone 36 months but my VISA expires before then.

Will be picking it up tomorrow! ��
 
  #95  
Old 12-23-2016, 08:46 AM
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Originally Posted by Wenovias View Post
Thank you thank you so much for the great write up!

I just moved to the US so all these leasing terms were totally new to me. Read all your posts last night and armed myself today for my trip to the MINI dealer. Managed to walk away with a deal I was happy with!

2016 Clubman @ $35k MSRP on a 24 month lease for $238pm & $2500 due at signing.
Would have liked to have gone 36 months but my VISA expires before then.

Will be picking it up tomorrow! ��

Forums like this help us help each other. Knowledge is Power!!

Congratulations on your new Clubman!!
 
  #96  
Old 12-23-2016, 08:48 AM
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When You Walk

Sometimes the deal you want just isn’t there.

In 1992 I was in the market for the new Honda Accord wagon. I was about 18 months from the end of a 42 month lease on a fully-loaded Jeep Cherokee Limited that was a fairly popular vehicle at the time. I needed to get out of the Jeep because the gas mileage was killing me and I was racking up miles at a rate that would put me way over the mileage allowance at lease end. And I could tell I’d be needing new tires soon.

Pasadena Honda had the Accord wagon I wanted but they let me walk away because they couldn’t get enough for my Jeep trade to make the numbers work and they couldn’t convince me to bump up another $50/month for the new lease on the Honda.

The Pasadena dealer handled it well. He said if there were any way he could swing the deal he would do it and he handed me back my Jeep keys. I told him that I would call a couple of other Honda dealers and I would call the Jeep dealer. He smiled at me, I’m sure thinking, “You think I haven’t already called the Jeep dealer and every wholesaler I know to see what they’d give me for your Jeep?”

I went straight back to my office and called a large Honda Superstore in our region, told them I had just walked out of Pasadena Honda, told them all the details on my trade and on the Accord wagon. I told them the exact numbers I had wanted, and told them that Pasadena Honda couldn’t do the deal and had allowed me to walk out without selling me the car.

The Honda Superstore salesperson asked me to give him 20 minutes to run some numbers and he promised to call me right back. Within 15 minutes he did call back and told me that they had the car I wanted in stock and that they could make all of my numbers work if my Jeep trade was exactly as I had described it. The salesperson was very careful to say that they needed to see my trade to determine if they could get enough for it to swing my deal. We agreed I would visit them at an appointed time the next day.

The next day I drove up to the Superstore as scheduled and the salesperson was standing with three or four other salespeople. He shot right over to me, called me by name and extended his hand, into which I placed my Jeep keys and said, “Let’s get this deal done.”

He excused himself and went into the showroom to give the Jeep keys to his manager and he came back with keys to an Accord wagon and invited me to follow him around back to the storage lot to see the Honda. (Note: At many dealerships still using old school tactics, that salesperson would have been in trouble for “losing control of the customer” because he didn’t have me follow him like a puppy into the dealership while he handed over my Jeep keys and fetched the Honda keys. Some sales managers watch to see how much “control” their floor sales people maintain and one of the ways they score this is by observing how effective the salesperson is at getting the customer to follow. Sick but still true!!)

Anyway, there was a red Honda wagon and a green one. I was pretty sure red was the one but I told the salesperson that, after he got the Jeep appraisal, if it looked like there was a deal to be made, I would go get my wife and we could do the test drive. I was a “one-legger,” without everyone with me needed to do the deal. I told him up front that the purpose of my visit was to determine if my trade had enough value to do my proposed deal. So I framed it as being respectful of his time – no need to do a detailed walk around or a test drive until the little missus was present.

Much to my surprise, the salesperson proposed that I select either the red or the green Honda, drive it home to collect my wife, and then bring her back to finish the deal. So we went into the showroom, he made a copy of my driver’s license and confirmed the insurance card was in my Jeep, and by then a porter had pulled the green wagon up front. I was handed the keys and sent to collect my wife.

Now, of course, they didn’t want me leaving in my Jeep because that could turn me into a “be back” who never came back. So they were being smart. But there was some risk in sending me off unsupervised in their brand new Honda. And, of course, after an extended drive home and the return trip back to the dealer with my wife, there would be plenty of time for me and my wife to smell the intoxicating ether of the new car and get ourselves hooked.

Before I took the Honda keys from the salesperson, I said something like, “There’s no point in me doing this unless we have agreed that the value of my Jeep is sufficient to do the deal as I proposed.” The salesperson smiled and said he had the green light from his manager to do the deal and that the only question was did I want the red one or the green one.

I collected my wife and as we drove back to the Honda dealer we reviewed the details of the proposed deal. I told my wife that I had noticed a car in the showroom that had chromed wheels with gold “H” crests on the hubs and that we should get those added. My wife said, “Watch me and learn.”

So we get back to the dealer in the green Honda and my wife asks to see the red Honda. As we are walking across the showroom making small talk with the salesperson, my wife stops and looks at the car with the chrome wheels and says something like, “Honey, did the green wagon we drove have those cute wheels? I didn’t notice them. They are really nice.”

The salesman quickly informed my wife that chrome wheels could be added to our new Honda for only about $20 a month or so. My wife turned to me and, with her hand firmly on her hip, said to me, “Now honey, we agreed we weren’t going higher on the payment but I really need those wheels.”

I looked sheepishly at the salesperson who again surprised me by saying, “We’re a high volume dealer and, not to be rude, but I’ll probably sell three cars today if I can get this deal done and move on to the next customer. If you’re ready to sign the papers right now, we can throw in the wheels for the payment you want, but that’s it.” My wife extended a loving hand to the salesperson and the deal was done.

This dealership was so high-volume that they gave you a number to wait for the F&I, and, when our number was called, the paperwork was ready, we declined all add-ons other than the alarm we had already negotiated into our original deal, and when F&I was done, the car was delivered promptly and we drove off, with shiny chrome wheels already installed during delivery prep. My wife chose the red wagon. Sweet little ride.

How was the superstore able to do a deal the other Honda dealer couldn’t swing? Perhaps the superstore had a buyer for the Jeep at the right price or maybe they wanted the Jeep, which was fully-optioned and clean, for their own used inventory. Most likely, the superstore business model, based on mind-blowing volume, allowed them to make money simply by moving a unit. Or maybe they didn’t make a dime on our deal but hoped that service visits over the life of the new lease would get them paid nicely. Maybe they knew that a happy customer tells his friends about being well treated and that means more Honda customers for the superstore. Who knows? Who cares? They did the deal as I had wanted it, and added value with the chrome wheels at no additional cost to me. And I was certainly confident I got a great deal because the first Honda dealer let me walk, so I knew we were at rock bottom. True story.
 
  #97  
Old 12-23-2016, 09:57 AM
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High volume dealer probably didn't need to wholesale the Jeep. That could be a few thousand dollar swing.
 
  #98  
Old 12-23-2016, 10:18 AM
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Originally Posted by Minnie.the.Moocher View Post
High volume dealer probably didn't need to wholesale the Jeep. That could be a few thousand dollar swing.
Could be. Whatever it was, I got my deal, they moved a unit, and there was happiness all around, which is the way I prefer all of my dealings to be.
 
  #99  
Old 12-25-2016, 06:12 PM
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What about buying a used Mini? A buyer could do a lot of the same kind of research regarding financing and comparable asking prices, but cannot do the comparison shopping at multiple dealers. How can you be sure you're getting a good deal on a particular used Mini?
 
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Old 12-25-2016, 07:47 PM
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Use KBB or other price guides to give you an idea. I've been thinking of buying used, and with the savings, I don't necessarily need to worry as much about getting the best deal, but I do wnat to be sure that I'm not getting a money pit. Are most dealers cool with having the car inspected, if you're ready to buy?
 

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