Buying Your New Car – 10 tips to negotiate a better deal

When we buy a new car a good salesperson will make us feel valued and important—after all, they will be incentivized to make the sale. It is true that our leverage is small; we are just one buyer, buying one car, from a dealer acting on behalf of one of the global car giants.

In the great scheme of things if we choose to walk away because BMW won’t provide the discount we demand, then Harald Krueger, BMW’s CEO, won’t lose too much sleep. However the fact remains that, despite our relative insignificance, dealers still need to shift cars and there is always scope, within limits, to secure a better outcome.

Recently a friend asked me to help him negotiate the best deal on his brand new car. Initially he didn’t feel that he had much power. After working through some things he could try, however, it became apparent that he had more power than he realized.

The good news is that there are many things we can do to help us negotiate better. Keep focused on getting the deal that you want, perfect your negotiation skills using the following tips, and you’ll stand a better chance of driving away the car of your dreams for the price that you want.

Ten top tips for negotiating your new car:

1. Decide exactly what you need beforehand

It is easy to know which car model you want to buy, but few buyers think beyond this to the exact specification, particular options or the sort of finance arrangement required, relying instead on their engagement with the seller to finalize this. Here we risk putting ourselves in a ‘decide on the spot’ situation, finding we have been talked into things in the heat of the moment.

Information around specification, options and configurations are readily available online so work up a wish list of those things you ‘need’ to secure and perhaps some additional things you ‘want’ to get if you can.

2. Do your homework

Many prospective buyers walk into a dealership without understanding their position or the market. If the first thing you see is the dealer’s list price, then it is easy to assume that that is what you have to work with and any discounts offered will look attractive and tempting, which is a common dealer tactic.

So, having decided exactly what you want in terms of make, model, specification, and funding package, you can search the internet and find out which dealers you could buy the vehicle from. Then make some calls and get some quotes. This will inform you what the general market price range is, but remember, most new car manufacturers do a good job of ensuring any prices quoted by any outlet are broadly comparable so as to avoid undue competition between their dealers.

This initial price information is now your starting point to begin your negotiation. It can be easier for second-hand cars as there is no shortage of benchmark market price indicators available online, perhaps requiring a small payment to secure market insight.

3. List your ‘negotiables’

Negotiation is not just about price. In fact, in any situation we may be negotiating many different aspects of value within the overall deal at the same time (our ‘negotiables’) and work towards a final deal across all negotiables simultaneously.

Your negotiables might include: purchase price, options, finance, desired delivery date or anything else that is important to you or the seller. For each, decide what your ‘most desirable outcome (MDO)’ is, but more importantly, also determine the ‘least desirable outcome (LDO)’—in other words the point that you will not go beyond. Write these down, keep them with you and don’t lose sight of them during the negotiation.

4. Have an alternative

In negotiation, power comes from alternatives. Without an alternative we can become desperate to make the deal and a well-trained sales person could easily spot that desperation.

If we go into a negotiation armed with an alternative we will be braver and our entire demeanor will naturally be more confident and determined. Maybe you’ve experienced this if you’ve ever been fortunate enough to have two job offers at the same time and pushed for a better package before making a decision.

There is always an alternative, we just need to use a bit of brainpower to think of it—a different car from a different outlet, a different specification, holding off until another day, walking away and so on. Crucially, you must totally believe in your alternative if it is to impact how you negotiate.

5. Build rapport

We’re all human, and if we feel the other person likes us we will feel more inclined to make a deal. Most good sales people make themselves super-likeable, either naturally or through training and if we do the same back to them it can help our position.

Buyers frequently make the mistake of trying to remain aloof and cold, which achieves little. Instead smile, be warm and friendly, taking time to be interested in them. You might be surprised how well this works.

6. Hide telltale emotion

Build rapport, but hide any emotion that reveals just how much you might want the car. When we like something our body language can give it away; our expressions might become more interested, we might seem more animated or excited and may not be able to stop turning ourselves towards the car or overly touching it.

Most cars aren’t sold at the dealer’s desk when you sign, they are sold earlier on the test drive when, without realizing it, you will inadvertently reveal to a good salesperson just how much you want the car. It is then all down to the price. If you want to see this in action, the next time you are in a department store observe fellow shoppers and spot those who give off clear ‘buying signals’.

7. Beware sneaky dealer tactics!

“What budget are you working to?” It seems a reasonable question from the sales person and one that would help them focus in on helping you, but this question is designed to get you to reveal your position early on. Swerve the question without giving away your budget and instead talk about the sort of car and spec you have determined.

Let the salesperson start discussions around price and what might be possible. “For a deal today we can do x” sounds like an imperative to close, but don’t be hasty unless you are entirely happy with the deal. Chances are good that the same deal will be there tomorrow.

Finally, “I will need to ask my boss” is a very common tactic, sometimes used just to make you feel like you have won the deal of the century. If in your favour this is okay, but watch out for this tactic being used to make you believe the salesperson has no power to act. If you don’t get a favorable deal from ‘the boss’ then ask if you can speak to them directly. Don’t be fooled.

8. Do the dance

Negotiation is a dance, involving the different negotiables with each party dancing around their positions to eventually reach an outcome. Somewhere amongst all of this is a great result; we just need to find it.

It is like we are dividing up a pie between us, and with each benefit we secure, the seller gets less. So the seller will be focusing on maximizing their position but whilst making us feel that we have won a stunningly good deal from them—even when we have not.

Hold the negotiables firmly in mind, maintain a position close to the MDOs as long as possible and if you concede in one area, always ask for something in return elsewhere. You will soon get a feel for what is possible.

9. Nearly there

The sales person will usually want to close the deal as early on as possible, but it is you who should decide when you are ready to close and then only when you believe you have secured the best result possible.

Use hypothetical questions such as “If I agree to this then could you agree to that?” and so on. Such questions test the ground without actually making an agreement, so are easier to answer.

Finally, know when to stop. A common mistake is to negotiate beyond the point when the best deal is there. This is counterproductive. When it feels like you’ve secured everything you can, close.

10. Oh, and one last thing: don’t forget Columbo

It might seem that the scruffy, bumbling American cop from the ‘70s TV series has no place in negotiation, but in fact he gives us a very powerful final tactic. At the end of each episode, just as the bad guys thought they had gotten away with it, he would say “Oh, there’s just one more thing…” and then would ask the vital question that would incriminate them.

We can use ‘one more thing’ in a negotiation—right at the end, at the point when we are about to sign. The seller doesn’t want to risk losing the deal and so we ask for one final, small concession from the seller that they can easily provide.

With pen in hand pause before signing the paperwork in front of you and say something like “There is just one more thing… you will throw in a full tank of fuel, won’t you?” Chances are the seller won’t risk your putting down the pen over a tank of fuel.

Jonathan O’Brien
Jonathan O’Brien is a leading expert on negotiation and the architect of the acclaimed Red Sheet Negotiation methodology.

To find out more, or for negotiation training, visit www.redsheetnegotiation.com