If you watch your mail closely, you’ve probably noticed something interesting recently – there has been a big increase in the number of letters and/or emails you’ve received from your local Rolls-Kanardly dealership or the local Poppaflat mini-car headquarters telling you of the great deals available and asking you to “come on down.”
While the numbers of letters don’t increase exponentially (in others words a whole bunch), you should still be able to see an increase in the letters such as the ones that have floated through the family mailbox from those dealerships offering us the best deals we’ve seen in years, but we have to act quickly, before the end of some weekend, month, holiday or quarter.
Reasons for timing
Aside from the fact that dealers – especially after the horror show that General Motors is facing with its mishandled recall — a situation that isn’t far different at Toyota and other automakers. Buyers, have long memories, and they remember what has happened at GM or Toyota and right now they are either going to other, smaller companies, or they are staying away in droves, leaving dealerships with large inventories that have to move now.
In truth, you can actually work the numbers so you can gain a great deal now because dealers are willing to go to whatever lengths they have to go to get cars off their lots. Yes, the recall fiasco is one reason, but another, equally compelling reason is that the 2015s will be here soon and they need room for the new inventory.
Indeed, dealers have a huge incentive to move their inventory now. It is so they can make money to pay off the lines of credit they had to take to buy their 2013 and 2014 inventory. You see, contrary to common belief – unless the car store is owned by the automaker as a captive – dealers have to layout money to purchase he vehicles they order. It is called floor-planning. It also determines how much investment they have in cars. So, the more vehicles they can move now where they can recoup money already invested, the more they have available to buy 2015s.)
There are definite reasons that dealerships offer great deals now that actually get better, if you can wait a little longer. Because dealerships do much of their business on Saturdays, look at Saturdays as the day you walk into the dealership to begin your dickering with the dealer.
Don’t be Stampeded
On the fateful Saturday you actually start looking at cars, you’ll be hit with all kinds of verbiage hoping that you’ll bite and jump at the “great deals” you are getting. You are going to hear phrases such as:
“I just got off the phone with another customer who is coming in to look at the very car you are looking at so if you want to ensure that you get it, I’m going to need some show of good faith from you, say $1,000. Do you have a credit card? I’ll just run the slip to hold the car so you won’t lose it.” The translation: I’m trying to pressure you into buying right now.
“The Internet department has had half-a-dozen calls on the car you are looking at because it has a lot of popular options and I can’t be sure that the car will be here later. If you are interested, I need is a show of good will and, while we are at it, let’s move the deal along by filling out the Purchase and Sales agreement. So, if I can see your credit card… ”
“The owner has told me a friend of his is coming in to look at the very car you just test drove so I’ll need something to hold it for you. We can swipe your credit card, write up a temporary Purchase and Sales agreement so we can make sure the car stays here for you. And, don’t worry, this is all temporary, we’ll just tear everything up when you come back in and start again… ” Translation: “I’m trying a different tactic to pressure you into buying right now.”
Notice how each conversation ends up with you being asked for your credit card and with a promise from the dealership that they will only run a slip and will tear the slip up before you and the dealership get down to serious work. Don’t believe it because when you come back to the dealership you’ll find that the person who can reverse a credit card deal is on vacation or maternity/paternity leave or the manager who can reverse things is at lunch and when he gets back he’ll reverse it.
If that actually happens you’re ahead of the game because most of the time, you’ll find that somehow the credit reversal is forgotten and “besides,” you will be told “you already have $1,000 or $1,500 invested in the car, so you may as well complete the deal.”
Is someone in the dealership fibbing? After all, during the weekend they have had potential buyers look at the same vehicle they have even worked potential deals on the vehicle. Don’t worry, though, because you will get the vehicle you are interested in because you will find that the customers who were “locked in” on the vehicle in which you are interested have purchased something else.
When to Buy Part I
Now, let’s fast-forward a couple of weeks to the point where it is coming up on the end of the month. And, let’s assume that vehicles that were expected to sell in droves are still sitting on the lot. These vehicles were ordered last quarter when people were seeking and could afford them. Because the SUV is, by its nature, a more expensive vehicle that a sedan, you will find this continues into the dealer side of the equation, as well, however, since the dealer pays a discounted price, it is a lower price than the consumer pays. We will be working with this in our buying the next part of our buying guide. This is also the area that has the owner concerned. Because the SUVs are more expensive, even discounted, due to their equipment and size – special electronic systems, navigation, entertainment systems and larger-than-average motors, along with real four-wheel-drive, for example, they are, of necessity more expensive than standard cars. However, due to various circumstances – recalls, pricing, gas pricing and other economic issues – top-of-the-line SUVs haven’t moved well. It’s time for the owner to become concerned and to reconsider his sales strategy.
Why is the owner concerned? When he filled out the order form last quarter, he guaranteed that his dealership would move all the special SUVs he ordered. The owner figured he could do it because he thought high sales figures would hold up for a few more months but sales are slowing and not matching projections. If the sales keep trending this way, there would be consequences, so the owner had to start cutting prices and adding further incentives to move the slow movers.
More in Part II
Buying a car depends on having a good strategy, education and knowledge of the business. If you are buying, be sure to watch when you do the sale as knowing the manufacturing sales strategy is a key to getting the best deal possible.