By on August 10, 2017

used car sales, Image: alptraum/Bigstock

 “The internet has ruined the car business.”

“I’m not interested in a race to the bottom.”

“There’s an ass for every seat.”

Yes, my friends, in the year 2017, dealership general managers still say these sentences. What’s worse is that they’re not even being ironic. And in this era of record-setting car sales (yes, despite what you’ve heard, 2017 is going to be the fourth-best sales year in history), some of them are even able to keep their jobs.

But smart dealers know better. They know that the internet is their friend, that being the cheapest sometimes really is the best strategy, and that no, there most definitely is not an ass for that 2013 Malibu that’s priced at 117 percent of the market average.

Why are they so smart? Because they understand a seemingly simple concept that can get quite complicated when dealers try to execute it. That concept? It’s called “turn.”

What’s turn? It’s most easily understood as this: Turn is how quickly a dealership disposes of a vehicle — notice I didn’t say sells a vehicle. Turn is calculated from the day a dealer acquires a vehicle, whether it’s at the auction or via trade-in. Each and every day that a car sits on a dealership’s lot, it’s costing him money to own it, due to a combination of depreciation, interest, and fixed operational costs (the average daily holding cost for a franchise dealership is roughly $30 per car per day). Therefore, the quicker the dealer sells it, the more money he makes on it.

Easy concept, right? Well, yes, but not as easy for either you or the dealer to take advantage of as you might think.

Ideally, it should take no more than 3 days to ready a car for sale, but a number of things can keep a car from even making its way onto the lot. If a dealer buys a used car from an auction, either in person or online, the clock starts ticking the minute he pays for it. Transporting the vehicle sometimes takes several days, depending on the location of the auction. Even trade-ins can be held up by things like having to get the title from the lienholder.

Then, nearly all used cars need some level of reconditioning. Reconditioning, or “recon,” is the process in which dealers prepare a car for sale. This means anything from a simple wash and vacuum to a brake job to significant body and mechanical work. Smart dealers employ newbie service techs and detailers to handle recon exclusively — they know that the time they save by dedicating headcount to this process more than pays for itself in the long run. However, old school dealers kick newly acquired inventory to the back of the service bay, only to be serviced when all of the warranty and customer pay work is done.

After the car is reconditioned, it must then be photographed for the dealer’s website, as well as any third-party sites like Cars.com or Autotrader. Savvy stores employ an intern or entry-level person to photograph each car the minute it’s through recon — some even snap a set of three exterior photos before recon is performed, so they can throw it up on the website immediately. Slightly less savvy dealers employ a third-party, like Dealer Specialties, to take pictures of inventory for anywhere from $15 to $25 per car. This can be a problem, as they typically only visit a lot once per week. So if the photographer comes out on Tuesday, and the dealer acquires a car on Wednesday, six days is automatically added to the turn on that car — nobody will even click on a car online without a photo. You might as well throw a blanket over it.

And the old schoolers? Why, they will go weeks without a photograph of a car. Many of these old-timers won’t take pictures of new cars, period, relying on stock photography instead. Tick, tock. Every day a car sits unphotographed is a day its chances of being sold are significantly reduced.

But let’s say our old school dealer friend finally gets his car through reconditioning, and he’s taken photos of it. Now he’s ready to sell! So he throws a price on the windshield that’s 10 percent above the market average, hoping to hit for a big gross profit up front. And yes, about one out of 50 times, the dealer sells the car for that inflated number, padding his pockets slightly and justifying his decision to overprice his entire inventory.

However, the other 49 times, the car just sits there. According to J.D. Power, nearly 90 percent of car shoppers research online before visiting a dealer. There’s just no way that a buyer will see a car that’s priced significantly over market and select that car. In fact, cars that are 10 percent or higher over the market average get clicked on less than one percent of the time on classified sites.

So, after 30 days of just taking up real estate on the lot, the dealer will adjust his price to be more in line with the market’s valuation. And as we learned earlier, it’s costly to the dealer to have that car sitting there — that 30 days could have cost him as much as $900 in holding costs. Now he’s only got another 30 days or so before he has to start paying interest on that car to the bank. Not good.

What does a smart dealer do? He prices the car to sell from day one, putting his car slighty under market average. Mr. Smart Dealer knows that he doesn’t have to be the cheapest car in the market — he just has to be within range. He knows how much gross profit he makes on each car, and he prices accordingly. He doesn’t try to hit home runs, because he knows he’ll strike out more often than not if he swings for the fences. Rather, he’s happy to make a smaller profit and then reinvest that money in another car, where he can profit again. Wash, rinse, repeat. By the time our old school dealer finally sells his car at a price the market deems fair, our savvy dealer could use that same money to turn two or three cars, making triple the money.

But let’s say that, for whatever reason, the car doesn’t sell, and we’ve reached the 60-day mark. What does the old school dealer do? Why, he just keeps on keeping on, believing that someday, there will be the right customer for that 2013 Honda CR-V that’s exactly like every other 2013 Honda CR-V within 100 miles of his rooftop. 90 days come and go. 180 days. Soon, the dealer is decorating a cake celebrating that CR-V’s birthday, the car having depreciated thousands of dollars over that year. Not only that, it’s cost him interest on his floorplan loan and taken up valuable real estate on his lot.

Our savvy friend is having none of it. Once the car hits 60 days on the lot, he’s dumping it. He’s got what’s called a “hard turn policy.” It’s either getting sold to a customer at a wholesale price, traded to another dealer within his group, or dumped at an auction. Is it possible he’ll lose money this way? Yes — even probable. Does he care? Not at all. Better to lose a thousand dollars now and reinvest that money into a car he can sell then continue paying the costs of interest and depreciation. You win some, you lose some.

So how does knowing any of this benefit you, the customer? Well, not in the way you might think. There are some third-party sites that reveal how long a car has sat on a dealer’s lot. You might be thinking that if a car sits on a dealer’s lot for 100 days or more, you’re more likely to get a good deal on it.

Not so.

That car that’s been on the lot longer than it takes the NHL to play a season is probably being sold by an old school guy who’s gonna stick to his guns in hopes of recovering some of the margin he’s lost by owning the car for so long. What you want to do is find a dealer that turns inventory quickly — look for a dealership that doesn’t have a single car over 75 days old. Those guys are constantly monitoring the market and adjusting prices accordingly. When a car reaches 60 days, they’d rather sell it to you at a loss than have to transport it to the auction.

So be patient, be smart, and look for a dealer who knows that for every car, there is a season.

[Image: alptraun/Bigstock]

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80 Comments on “Bark’s Bites: Turn, Turn, Turn...”


  • avatar
    indi500fan

    Most of this sounds like common sense.
    But common sense is often uncommon.

  • avatar
    427Cobra

    I don’t doubt these practices on “the turn”… tho some dealers are particularly stubborn. A little over a year ago, I was in the market for a new truck. One dealer had a leftover ’15 Super Duty crew cab gasser. Equipped just the way I wanted. Best they would do was $3300 off sticker… and this was on a truck that was about to be TWO model years old. Now, I realize they’re only going to do so much dealing over the phone & on the internet, but I’m not driving an hour unless there’s a little more incentive. Ended up buying a better-equipped ’16 Ram HD crew cab 4×4 with the 6.4L hemi… with next to no negotiation, I got $10.6k off of sticker. I was through F & I in less than 20 minutes… no upselling. One of the smoothest transactions I’ve ever had… dare I say pleasurable? Couldn’t be happier with the truck OR the deal.

    • 0 avatar
      arach

      Not to defend the dealer… they probably “should” let them go, but way too often there ARE NO OEM incentives on 2 year old inventory.

      So for example, there may be OEM incentives or $10,200 off of the 2016, but $0 off of the 2015. For the dealer to sell the 2015 for $10,200 off, they’d have to take a $7000 LOSS on the books. The salesman would get paid nothing, maybe not even a mini. They needed to move the ’15 in ’16, and couldn’t wait until ’17 to move their ’15.

      Once again, still bad dealership operations, but I’m not surprised if the manager honestly couldn’t do more than 3300/4000 off.

      Its the problem with Cost + pricing. If your cost i $10,000 and your price is cost +, then its literally impossible to sell under $10k even if you “technically should”

      • 0 avatar
        pinkslip

        Most OEMs offer a “Final Pay” incentive on outgoing model year inventory. As the [2018] models start rolling in, the OEM will put a final pay dealer incentive on the remaining [2016] inventory. This is often paid out to the dealer in one lump sum check for however many units that dealer has. So, for example, a dealer with four remaining 2016 Silverados would get $12k ($3k per unit). This money is usually pocketed by the dealership owner and rarely seen by the sales managers, making them reluctant to consider the final pay in their sale prices, but the money exists and only an old school dealer principal would not pass that along for the sake of unloading aged inventory.

        Also, I’ve never heard of a salesman not getting paid at least his/her mini on any deal that wasn’t a “house” deal done by the managers. In fact, many dealers put bonus spiffs on aged units- “Sell this car by this weekend, get double your mini!”

      • 0 avatar
        427Cobra

        I don’t doubt that they sold it… they just weren’t going to sell it to ME… not for that price. At the time, I had a 2000 Super Duty supercab V10 4×4… 86k on the odometer. I knew what the used truck market was doing at the time, so I was kinda floored when the Ram dealer offered me $1500 for it. Yes, it had a branded title & they’d probably wholesale/auction it, but still… it was a good truck with a lot of useful life left… & there was no way I was letting it go for that. Suspended negotiations at that point & put the truck on Craigslist for $5k. Within 2 hours after the ad went up, I had 3 calls. First person that came to look at it the next morning bought it for full asking. Several people said I should’ve asked more, but I didn’t want to be too greedy, seeing as I only paid $4200 for it four years earlier! The key (to me) is to buy smart. I’ve MADE money on the last two cars I’ve sold… and sold others that only cost me about $750 per year in depreciation… I can live with that.

  • avatar
    arach

    I bought my car out of the “auction lot”. I knew the dealership had a hard 90 day policy, and bought it on day 89. The dealer lost money on me, but it was worth it to them to move it because I paid about auction price and they had a chance to go after F&I.

    You can tell if they have a 60 or 90 day policy by watching their inventory. Since I buy several cars a year, I actually mapped out the policies of the dealerships in my area. The author is right, if they don’t move them by 93 days or so, they are an old school lot who believes theres an “ass for every seat”. If they let them all go at the 60 or 90 day mark, you can use that to your advantage.

    In my area, most dealers do 90 days and not 60 days, but I’m sure thats regional.

    Some dealers who do follow a 60 – 90 day policy will hold onto CPOs because they incur CPO costs and sell at a premium. Others however will let them fly at 60-90 days with the others. I know a BMW dealership that will let all used inventory go at 90 days but holds onto CPO BMWs closer to 120.

  • avatar
    arach

    Mark: Is there any way you can explain to us where you got the $30/day factor for inventory holding costs? I haven’t been able to establish this in my own research, and didn’t see a source for it above.

  • avatar
    bikegoesbaa

    “I’m not interested in a race to the bottom.”

    In general, this statement from a seller is a roundabout way of saying “I don’t know how markets work”.

    You see that same “old school” sales mentality with many private sellers, too. They price the car based on what they owe or how much they have in it, and evidence that this price is above market only causes them to dig in deeper.

    I recently ran across a seller asking $22k for a 30k mile unmodified 2015 Fiesta ST, because $22k was his current loan payoff amount. He was not pleased when I told him I didn’t care what his payoff was and that I could buy a new version of the same car for $18k.

    • 0 avatar
      brettc

      Yep, not your fault they they’re underwater on their vehicle.

    • 0 avatar
      turbo_awd

      If you want to find lots of examples of this, try looking for WRX STIs ’15 and up (the last redesign). I see people with a ’15 with 30k miles asking AS MUCH as the quotes I got from two volume dealers for a NEW ’17/’18 model with the same specs. Sure, I’d have to pay $1k for shipping across the country, but.. It’s a brand new car.. Even at $1-2k less than “new” price, I know which one I’m going with.. Just because you paid $4-5k OVER MSRP, doesn’t mean I have to..

    • 0 avatar
      brn

      This is why I hate private sales.

      Many sellers look at how much above market dealers are advertising cars for and they expect to get that much. Those above market dealers often put a lot of recon into the car and will even offer a warranty. The private seller?

      Private buyers are the opposite. They look at the wholesale value of a vehicle and then try to lowball even lower than that. They expect me to take time off work so I can wind up teaching them how to drive a stick.

      I’m so very fed up with private sales that I just don’t do them.

    • 0 avatar
      brn

      duplicate post

  • avatar
    Arthur Dailey

    Had a client who made many millions in cheap clothing/fashion retail, using basically the same strategy.

    Sell it high for the first 2 to 4 weeks. Mark down immediately after. Then if it hadn’t sold after 60 days sell it for cost, sometimes even in bulk to liquidators and/or flea market/independent sellers/retailers

    This allowed him to make room for more/new product and pay off the old stuff before it started costing him as his conditions with his suppliers were payment in full 90 days after delivery.

    Cash flow is king.

  • avatar
    Scout_Number_4

    Bark: another behind the curtain question here–how does the floorplan loan work? I’ve always wondered about who (bank? dealership? OEM?) owns what on a lot and the percentages.

    • 0 avatar

      That’s another epic post I’d have to write, but you’re not the first to ask. Maybe I’ll dig into it for early next week.

      • 0 avatar
        Land Ark

        I’m a click for every article about the inner workings of dealerships. It simply fascinates me to get an understanding of how/why “the other side” deals with my nonsense.

        • 0 avatar
          MrKiwi

          Same here. (I also really enjoyed Jack’s article yesterday about brakes. I’m totally the wrong target audience, but I found it fascinating. Go figure.)

          Some of these articles which are common sense…well, they are common sense, and as I read through this one and through Jack’s brakes article I was nodding and saying to myself “yes, I get it”, but they’re both topics I’ve never really thought about.

          Which is a lot of words to say “me too, I liked this article and would read more”.

      • 0 avatar
        healthy skeptic

        @BarkM

        Yeah, I can’t get enough of these “inner working” stories. Same with dealership war stories. For some reason, they’re like crack to me. Maybe it’s just a vicarious peak into a fascinating world, like watching a gangster movie, only without the violence and for somewhat lower stakes.

    • 0 avatar

      Its a universe of fees and individual floorplan terms vary, but one of mine is a 60/60/60 at 6.25% APR.

      Here’s an example on one of my units:

      2014 Cadillac CTS 2.0T Luxury
      Purchased on 7/13/17 for $15,200 + auction fee ($455) = $15,655.00
      Floored for $15,655.00
      $99.00 – Floorplan Fee
      $15.75 – Document Processing Fee (See? Dealers get it, too)
      $119.03 – Interest (as of today, 8/10/17)

      When the unit hits 60 days, I have to curtail it – or buy it down – for ~6.5% ($1,016.53)

      60 days hence, I curtail it again for a larger amount

      60 days hence, I curtail it again, plus a nominal extension fee, and that’s it.

      After that, I have to pay it off, whatever balance remains.

      If you’re not careful and are vested in a lot of stale high-dollar units, curtailments can eat you alive, especially if you purchase high-dollar units that need extensive reconditioning.

      The best way to run a small independent, IMO, is own your $10k and under units so you’re not throwing away money on fixed-rate fees for cheaper cars you can afford to hold and use floor to turn $10k+ units so you don’t tie up a bunch of cash.

      Our boat dealership has four different floorplans with $4.5M in inventory. THAT gets crazy.

      Discussions of ‘turn’ can also lead easily into discussions of ‘float,’ which has put many a small dealership asunder quickly if caught out of trust. I’ve bought quite a few units from auction owned by NextGear Capital, CARBUCKS, and other floorplan companies who run their seized inventory from former dealer clients.

      The much-overlooked scenes of FARGO where William H. Macy is trying to pussyfoot around GMAC is an example of being caught with your pants down trying to float, except GMAC was looking for titles on cars funded, not floored. Same theory though.

      • 0 avatar
        JMII

        I would imagine boat turns are SLOW and not just in the Titanic sense either. Your dealing with a luxury item that nobody needs, but might spurge on. The used market is flooded with them as many people who buy a boat then have no idea how much the upkeep (storage/maintenance/fuel) was going to be so you have the classic high inventory with low demand. Way too many seats and not enough butts to fill them.

        • 0 avatar

          You would be very surprised actually. Again, speaking only of my market in West Central Florida, boats are hot, hot, hot right now – both new and used – and center consoles, pontoons, and deck boats move very quickly. Where I do between 23-30 units a month in cars, our boat dealership often does 13-20/mo as well.

  • avatar
    S2k Chris

    In 2008, we bought a new VW Jetta. Wife wanted white with black interior. Local dealer had black with tan interior. Salesguy offered black car for $500 off our previously negotiated price; white was a dealer trade. I said, we’ll take the white one with $500 off. Sales guy says “we can’t do that! I have to trade with the dealer in XXX city [50 miles away].” I got up to leave. “Where are you going?” “To XXX dealer, I can drive 50 miles to save $500.”

    Think we ended up settling at $450 off for the dealer trade.

  • avatar
    cheezman88

    The thing that annoys me the most is that some of the dealership managers expect you to just accept their crap. They play it off as if them ripping you off is just the way of life, and fighting that at all supposedly makes you the customer, an asshole. I’ve heard advice on car buying from some of these managers and it almost always goes along the lines of “you shouldn’t expect to pay invoice, it’s just not reasonable and asking for that makes you an asshole. And you have to understand this is just how it is”. Or that asking for true and honest price quotes is a waste of their time, and as a customer I have no right to get price breakdowns because it would decrease their profits and ability to rip you off.

  • avatar
    SearMizok

    I used to go round and round, to needle the dealer down the their absolute minimum, I consider it a challenge :-)

    But, now, I’ve given in to the fact the dealer does have to make a living. So, now I end up going 2 rounds(3 if you count the starting price), something like this(totally made up numbers):

    First Round:
    Dealer’s advertised price, maybe $2,000 below sticker.
    My Offer: $3,000 below their advertised price($5,000 below sticker).

    Second Round:
    Dealer Counters with $3,000 below sticker.
    My Offer: $2,500 below their original advertised price($4,500 below sticker).

    Third Round:
    Dealer Again Counters with $3,500 below sticker.
    My Offer: $4,000 below sticker.

    At this point we’re only $500 apart. If they refuse to come down to my $4,000 below sticker, then I may accept their $3,500 below, if I like the car enough. I at least got them to come down $1,500 from their starting point, which was already $2,000 below sticker. Most of the time, if they think they can end it and get the deal at the $4,000, especially if I get up and walk out of the office at least one time, they are likely to accept it.

  • avatar
    Scout_Number_4

    I recently bought a slightly used Ram 2500 from a Chevy dealer. During negotiations, the sales manager (never came out from behind his computer) said something to the effect of “my price on this truck is already 91% of average for this area” when I was asking for more. Thanks to the internet, I was pretty sure his price was good (not great). Also thanks to the internet, we both knew there was another very similar one down the street for about the same price. I kept telling Mrs. Scout, “let’s go see the red truck at XXX motors before we decide.” Not wanting to let us off the lot without making a deal, he didn’t come down on his price, but instead offered me way too much money for my old truck SIGHT UNSEEN. Asked me about 20 questions (does it run? how many miles? does the AC work?) It would’ve taken me the rest of the summer to move Old Brown on CR for 2/3 of what he was offering me…I happily took the deal without revisiting the other truck down the road. I brought my K3500 in later and drove away in my new (to me) rig.

    • 0 avatar
      PrincipalDan

      Reminds me of the deal that was made for my wifes 2016 Terrain. Dealer wouldn’t budge on price but offered her about $1200 more for her trade than what it was worth.

      That actually brought the out the door price down to what I was comfortable with. Whatever helps you sleep at night Mr. Car Dealer.

  • avatar
    hamish42

    I have had my final experience with the lower life forms that seem to gravitate to car dealerships. I will buy my next new car only when I can go online and order it over the web. You can already do this in Montreal and it can’t get here (Toronto) fast enough. I have been lied to, upsold and disrespected for the last time.

    • 0 avatar
      SearMizok

      I do my haggling now via email. This takes away the pressure they can apply when you’re sitting there in front of them. Give me time to think about their offer/counter-offer.

      • 0 avatar
        Publius

        Email negotiating can be very effective, for the reason you stated. And you get the price you want, then when you see the car if it has some undisclosed (real; don’t make shit up) flaw, you can do a little more haggling. Last time out I did visit the dealer, but left with a weekend test drive and finished up negotiation via email.

  • avatar
    28-Cars-Later

    Nice piece Mark.

    “What does a smart dealer do? He prices the car to sell from day one, putting his car slighty [sic] under market average.”

    Indeed, and assuming he’s selling something worth buying he can set himself up for the nice trades. The shop stocking the fleet W-Impala is less likely to get something worth selling on trade than the one selling the Crew Cab pickup, Subbie, CR-V, etc.

    “But let’s say that, for whatever reason, the car doesn’t sell, and we’ve reached the 60-day mark”

    Unless its an oddball or extremely cheap or clean, the smart dealer would dump it around 30-40 days. Turnover is key for cashflow.

    “Why, he just keeps on keeping on, believing that someday, there will be the right customer for that 2013 Honda CR-V that’s exactly like every other 2013 Honda CR-V within 100 miles of his rooftop. ”

    He’s smoking hopium, but this is right on the head of some of the dealers I knew.

    “Does he care? Not at all. Better to lose a thousand dollars now and reinvest that money into a car he can sell then continue paying the costs of interest and depreciation.”

    Those old timers do/did not think like that, they would rather it collect dust for a year and never broke it down in terms of interest and depreciation. Although in fairness, the people I knew did not buy on credit from Manheim as everything was cash out of their accounts. These people also owned their lots so no lease costs, just building/utilities and employee overhead.

    “You might be thinking that if a car sits on a dealer’s lot for 100 days or more, you’re more likely to get a good deal on it. Not so.”

    Yes because when you’re dealing with idiots, pragmatism is a foreign concept. Ask me how I know.

    “When a car reaches 60 days, they’d rather sell it to you at a loss than have to transport it to the auction.”

    May or may not be true. Lot boys are roughly 7.75-9/hr and are only gone a few hours at the auction. Auction fees used to be $250, so assuming I can get the right money on something I know I can sell, am I going to lose say $1000 to you (assuming no trade, $600 + pack I won’t get) or 350-5 + pack I won’t get on the block (fees plus lot boy wages and fuel)?

    • 0 avatar
      SearMizok

      I’ve read on several occasions, dealers really make their money on the used car lot.

      With selling a new car, they are(for the most part) limited on some amount they can make. Somewhere between their actual invoice they paid for the car-cost+advertising+holding and the sticker price. They most likely aren’t going to sell for close to sticker these days, so it’s even smaller potential margin.

      On a used car, there’s virtually no limit.
      It’s limited to between what they can screw the person trading it in, and how over priced they can get a buyer to pay for it. But, compared to a new car, I think there’s much more margin to be got from a good used car than a new one.[IMHO]

      • 0 avatar
        28-Cars-Later

        I have heard the same thing, but more for the franchise dealers with a used car division. Indys it is a different story I think, you can lose your shirt esp when first starting out. Employee overhead, transport (assuming no employees), floorplan financing, auction fees, recon costs, lot lease, wholesaler commissions, and don’t forget organized crime wanting a piece all of the time (both the legal and illicit mafia).

  • avatar
    srh

    I’ve experienced several dealers who don’t understand sunk costs.

    The longer they’ve had a car on the lot, the less likely they want to deal. Because they want to get their investment back. Not gonna happen.

    • 0 avatar
      JohnTaurus

      There is a dealer who constantly advertises in “by-owner”, and he’s had the same HHR for over two months. The price has gone UP. He relists it sometimes 4-5 times a day. I want to email him and tell him, it isn’t that it isn’t advertised enough, its that there are 5 more with lower miles that are cheaper, and are actually by owner, not a dealership lying by passing themselves off as private party.

      Idiot. And now he has a PT Cruiser he’s posting several times a day, also very much overpriced. Maybe one day in 20 years or so, the HHR will sell for $60k and he can retire. I mean if it gets more valuable as time goes on, he should wait it out! Sure, the business will go under, his wife will leave him, his kids will laugh at him, and he’ll be in a room at the Y, but it’ll all be worth it when that big money HHR payday comes in! Oh yeah buddy! Big money. Any day now. He can *feel* it.

  • avatar
    brettc

    Very nice/helpful article, Mark. The $30 a day thing is a useful thing to know.

    Can you explain why a dealer would initially list a car at $14444, drop it to $13600, then bump it up to $14500 and then drop it to 13950? Is it just because the dealer is stupid, or could there be more to it than that?

    http://bit.ly/2vSVL1R

    • 0 avatar
      Land Ark

      Watch the price of a lot of cars from the 30th to the 2nd of each month. Incentives “end” and the price goes up. Then, new incentives which are almost identical show up and the price drops right back to the end of the month level.

      I’ve been shopping recently and tried to leverage the end of the month to no avail. I was told prices would go up, which they did. Then I was told their manager agreed to the end of the month pricing a few days later. It can be pretty off-putting.

      you can’t have your car show up online as “Price reduced!” if you don’t raise it every now and then.

    • 0 avatar

      Sometimes dealers raise prices if there is a fair amount of activity on the car online. If the price of a car is raised or lowered more than a certain percentage, a customer who has “saved” that car on one of the third party sites will get an email notification.

  • avatar
    sportyaccordy

    Or, be like me, and overpay in a panic at the sight of the only clean G37S sedan for hundreds of miles, despite it sitting on a lot for over 3 months…..

    Derek Kriendler said it best when he said car guys overpay…. but I got a good rate and get my money’s worth every time I see the car twist to the right on startup, or I dip into the brakes from triple digit speeds.

    I also really liked my experience with Carmax. Bypassing the generic sleazeball used car dealership experience is worth a lot… though I have had generally good experiences with small lots.

    • 0 avatar
      JMII

      When getting my wife’s 2014 Infiniti Q60 from CarMax I watched them and several other dealers go thru a few rounds of pricing dropping. Because not all sites tell you when a price drops happens or how long the car has been around I made a spreadsheet and tracked every Q60 within 500 miles of me for about 3 months. So when a good deal showed up I knew it. Her car had only been listed for 2 days and thus didn’t have the full set of recon pictures yet… just the exterior. However it had the sunroof and nav option, plus it was red (Venetian Ruby) which made it stand out in a sea of boring grey, white and black models. My calculations indicated its price was on target for only one drop before it would sell, but that required waiting another month. The wife grew tired of waiting so we jumped.

      It was interesting to watch the price adjustments over time. Some dealers dropped $200 a week like clock work. Others would suddenly cut $1000 then let it sit for a month. A few never dropped the price in the 3 months I monitored things. During those 3 months of watching I could almost predict when a car’s price reach critical status and sell.

      Another trick I saw was the “newly listed” BS. Dealerships would actually pull the add as if the car sold. A particular car would go missing from the internet for a few days then pop back up. Sometimes at a higher price. I believe these were deals that fell apart or the dealer knew that the “newly listed” status gave them a bump in inquires about the vehicle.

      Something I learned doing the same trick when I bought my 350Z (which was a 6 month research project) was the large number of errors in listings. Many vehicles were labeled as a “Touring” model for example when it was clearly a “Base” model. Stuff like cruise control and which wheels are fitted gives this away once you now the little particulars of certain model.

      • 0 avatar
        bullnuke

        I get a kick out of advertising vehicles that aren’t available on Cars.com and Cargurus.com. “New 2014 Dodge Avenger. 5 miles on the odometer”, read one entry about three weeks ago and was still there last week. I cheat and go to the dealer’s website. Nope, ain’t there and probably never was. Good way to get a contact from a prospect though, I guess. Perusing the interesting-sounding entries shows that this happens fairly often.

  • avatar
    Fred

    “being the cheapest sometimes really is the best strategy, ” sometimes should be replaced with something like “most always” I think I’m one of the few left who shops with convienence and service in mind and that includes cars.

  • avatar
    matt3319

    I tend to use the “free carfax” the dealer offers. It tells you when the dealer bought the car. So that shows you how long said dealer has had the car.

    Also when looking at the photos you can Right clip on a photo and you can find out the date the photo was taken. Usually rather close when dealergot the car.

    • 0 avatar
      SearMizok

      I think the sticker in the door jam, that has the tire pressures on it, also has the date(at least Month and year) the car came off the manufacturing line.

    • 0 avatar
      SearMizok

      Don’t bet the farm on the CarFax. I know of a couple cases where a car had body work done. One from $2,000 damage from being rear-ended, and it never showed up in the car’s CarFax when the dealer went to resell it.

      • 0 avatar
        S2k Chris

        ” One from $2,000 damage from being rear-ended, and it never showed up in the car’s CarFax when the dealer went to resell it.”

        Honestly, labor rates being what they are, $2k is such a mild hit these days that who cares unless you’re buying something uber-special.

        • 0 avatar
          brn

          Labor rates for body work are down quite a bit from 20 years ago. You’re point still has validity, as the cost to perform accident repairs is pretty darned high. $2K is easy to hit.

      • 0 avatar
        The Comedian

        My i3 took over $10,000 in damage when I got rear ended and pushed into another car.

        Dealer did mechanical repairs, certified body shop did the rest.

        I turned the lease back in to the same dealer in early June. Dealer CPO’ed car with a clean CarFax.

    • 0 avatar
      srh

      I leased a “dealer loaner” BMW with 4000 miles on the clock. Carfax was clean.

      Oddly it had a few issues with the left blinker; took three trips to the dealer to resolve.

      18 months later (a few months back), I took it into Carmax to see about selling it and getting out of the lease. They pulled up Carfax and what do you know! It had a frontal impact crash before I acquired it, with body work to repair. I’m pretty sure the dealer must have known about it, but sold it with a clean carfax regardless.

      I’ve been curious if I can somehow use this to break the lease early (this car is now redundant in my garage)

  • avatar
    TDIGuy

    It’s funny that you mention pictures, because a few times I have worked that to my advantage. At least living where I do where you are already into summer and the pictures of the car show snow on the ground.

    Or for the dealer that does the online thing but doesn’t manage it well. Rather than cycle all their ads, they leave them up where the site shows the number of days the car has been listed, or the number of times the price has dropped.

    • 0 avatar
      SearMizok

      My current Lease, the dealer’s image clearly showed the exact car I was leasing, at their dealership, with snow on the ground. I started my Lease in April, so, I know it was at their dealer a few months.

  • avatar
    SearMizok

    I once heard a car salesman say:

    He had a customer that came in and said he just wanted the best deal, and didn’t want all this back and forth with the Sales-Manager.

    The Salesman said: that’s just fine and dandy, we’ll be happy to accept you buying this car for the amount right here on the window sticker.
    If you want to pay any less than the window sticker, then, Yes, we will be going back and forth with the Sales-Manager.

    • 0 avatar
      bikegoesbaa

      I’m always surprised when people say they want to buy a car, but don’t want to have to haggle.

      I inform them that they can avoid all haggling though the simple expedient of buying the car for the dealer’s published asking price.

    • 0 avatar
      eggsalad

      I double-dog dare you to walk into any dealership in Las Vegas and try offering MSRP (less manufacturer rebates) + sales tax and expect to be sold a car.

      $400 DOC fee, $2500 for the Tru-Coat, window tint, and nitrogen-filled tires. etc, etc.

      They’ll laugh you right out of the showroom for your “MSRP + tax” offer.

  • avatar
    dal20402

    I’ve actually sold two cars to the same dealer in suburban Seattle. They seem well run if very sharkish, and are a great example of the aggressive turn philosophy. I got fair wholesale price for both cars after a bit of negotiation. They sent one of the cars to auction about two weeks after I sold it to them, and it turned up at a shady dealer in California a couple weeks later. They listed the other (a Forester XT, worth its weight in gold in Seattle) at a price that was high but market-reasonable given its low miles and condition. The Forester sold within a week.

    During the time when I was thinking about replacing my LS460 with a Lincoln MKT, I called them and asked them for a quote on the LS460. They gave me a number I didn’t like, but then followed up several times. On the last call, the buyer said “We make our money on volume and are always looking for good cars.”

  • avatar
    readallover

    The internet has ruined the car business can be interpreted as:
    I can no longer lie with impunity.

  • avatar
    Steve Lynch

    “Is it possible he’ll lose money this way? Yes — even probable.”

    But Mark, every dealer I know say they make money when they wholesale 60 day units.

    Um, that would be Lie #287 the Dealer tells the Factory…

    • 0 avatar
      SearMizok

      The last car I purchased(2015 Mazda CX-5), the salesman gave me the old sob-story, we lost money on your deal.

      NO YOU DIDN’T!!!! Or, you wouldn’t have done the deal!!!!

      • 0 avatar
        SearMizok

        I supposed at some point, new or used, after holding on to inventory long enough, the dealer may have to take a loss just to unload the inventory. I could see them making bad decisions that cost them on used inventory. I would think it would be much more difficult for the dealer to lose money on new stock. Of course, depends on the economy and such.

      • 0 avatar
        brn

        Sear, did you buy new? Once they take into account all their costs (rent, utilities, salaries, etc), it’s quite possible they lost money on the deal. Happens a lot more than you’d think on new cars. Dealers make money on repairs and warranty work (not so much anymore, now that cars are more reliable), financing, and used cars. New car sales are there so they can put that emblem on the building to get customers for areas where they do make money.

        • 0 avatar
          SearMizok

          I bought new. They gave me the first two or three oil changes free, which was nice. Especially since full synthetic oil changes are a bit pricey. I know, I know, it’s to get me used to taking my car there for service, so I’ll continue in the future.

  • avatar

    I worked for a dealer about 9 years ago that had units on the lot for 600, 700, 800, 900 days. Didn’t want to sell them for less than $X.

    “I aint loosin’ money on them! I’ll let ’em fu*kin’ ROT!”

    Well, that’s exactly what he was doing.

    One of them was a ’90 454 SS pickup w/58k actual miles. Had it for 480 days. I sold it within two weeks of starting there. For full sticker. Why? Never was on the internet. About twelve of his 90 cars were. Who’d-a-thunk it?

  • avatar
    kenwood

    What website tells you how long a vehicle has been up for sale?

  • avatar
    brn

    Bark, I never thought I’d say this. Welcome back.

    The article is informative and generally accurate (multiple sides to everything). Your demeanor in the comments is helpful. Keep this up and I’ll look forward to your articles, rather than avoid them like I wound up doing before.

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