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(I think) I got a great deal on a brand new 2007 Subaru “Brilliant Silver Metallic” Outback Wagon:

The (*) invoice prices were taken from Edmunds.com; everything else is what is on the sales contract. According to Edmunds, the invoice price on this car is $23,100, which means our price was $755.40 below invoice. For reference, the (meaningless) total MSRP for the first five items (through destination charge) is $25,526.

I don’t feel too badly for the dealer:

• He would not have sold us a car he couldn’t afford to sell (he said he was losing money, but would make it up on volume).
• The Subaru dealer holdback (3% total MSRP) is about $750.00 or so, so he probably basically broke even on the car.
• After this experience, I’m pretty sure I’m still behind in the car game: I paid sticker price for my first car 10 years ago.

Homes and used cars have to be haggled over: pretty much every one is different, so every one will have its own price. A new car, however, is a commodity that can be described unambiguously, sight-unseen. As such, once you’ve seen and test-driven a new car, buying that new car should become a simple matter of getting new car dealers to bid against each other.

Knowledge is Power (Not Really, But It’s Still Interesting)

The following references all promise the same way to get a market-efficient price on a new car. A friend of mine told me about Fighting Chance after buying their kit to buy her car, and I found the other two links after doing some more research:

• The Motley Fool
• The absurdly-named Rizzo Method (wasn’t that the name of some character on Crank Yankers?)
• Fighting Chance

I would have bought the Fighting Chance kit ($34.95), but they didn’t have a kit available for the 2007 Subaru yet. It’s supposed to have information about sales trends for your specific vehicle to help you in your negotiations. They also sell a book that I borrowed from the public library. The book was fun to read, but I don’t think it would have been worth the $22.10 purchase price.

Edmunds.com and AutoSite.com both have information about invoice prices of new vehicles and their accessories. It is interesting to read and know, but ultimately probably isn’t required. If the dealers already know they’re bidding against each other, you should theoretically be able to get a fair market-value price without having to know anything. But it is still interesting information, and you will feel better about your purchase.

Note: this technique only helps you get a market-efficient price; it doesn’t guarantee a “low” price. If you are trying to buy a popular in-demand low-stock new-model-year BMW or something, then you will still end up paying over sticker. This technique will only help you avoid getting unnecessarily over-charged relative to what other people are willing to pay (or at least what the dealer thinks he can sell).

Getting All the Fax

We already suspected we wanted a Subaru, and the Subaru.com website actually has links to their dealers’ websites, most of which have forms for submitting quote requests. However, in my online reading, I had consistently read an undertone implying that faxed offers would be taken more seriously than e-mailed offers. Also, all of the above articles advocate using a fax machine for the “fax attack” (although I think they may have been written before the hugeness of the internet).

Saturday

We test-drove a wagon to make sure we liked it. The dealer gave us a pimped-out model (6-cylinder engine, moonroof, leather seats). We didn’t realize this until we got into the next town (the important thing being the beefier engine); we had to turn around and ask for a more basic trim level (4 cylinders, no moonroof, cloth seats). The dealer apologized and got us a suitable vehicle to test-drive.

Monday

I gamely spent an hour or so calling a bunch of dealers (21 dealers in a 180-mile radius), collecting “fleet manager” names and fax numbers. I was dreading doing these cold calls, but it wasn’t as bad as I expected. Most phones were answered by a bubbly-sounding receptionist who has very happy to provide me with a name and fax number, or by a receptionist who tersely gave me the information and hung up immediately. A few were answered by more intimidating-sounding salesmen, but I survived.

I started with the farthest one first, to give myself practice doing these cold calls on dealers I wouldn’t care about as much (I wasn’t relishing the idea of driving three hours to pick up a car). Unfortunately, this backfired a little bit. One of the last dealers told me it would be simpler if I just went to the Subaru.com website and submitted my request there. I didn’t call the dealer where we test-drove the car (it wouldn’t be fair to go behind the guy’s back; more on this later).

Being asked to use the website was great news, in that I could now do this all electronically instead of by fax, but slightly bad news in that I had just wasted an hour on the phone. Darn. I rationalized that as long as each dealer was aware that they were competing, it shouldn’t matter whether the initial request came in by fax or by e-mail or by web. Also, I was already becoming a little bit lazy. So I nixed the fax idea and decided to hit the web.

I submitted a few online quote requests to the farthest-away dealers to see what would happen. Already I ran into a problem because the “thank you for your submission” page was messed up (a bunch of error messages). Well, maybe my request got through, and just the response got screwed up. I decided to wait and see.

Within a few hours, I had a few responses. Good; the website is only slightly busted. A few were bona-fide bids, a few were bids for the wrong car (extra unwanted options, or for the wrong trim level), and a few were shady (”come on down for a test drive and we’ll see what we can do”).

I then realized that the Subaru submission form was ambiguous; their online form doesn’t allow the user to distinguish between a “2.5i Basic Wagon” and a “2.5i Wagon” (includes power driver’s seat, heated seats, and heated side mirrors). Giving the dealers the benefit of the doubt, that probably explained why I got a few bids for “basic” wagons, which I didn’t want.

I discovered through online inventory searches that I wanted “model code 7DD” (my desired option package) and not “model code 7DB” (the “Basic” trim level). That night, I sent back e-mail clarifying exactly what I wanted, and included “model code 7DD” as an “option” in the rest of my online submissions to all the other dealers.

Tuesday

The next morning, I had responses from everyone. Most were good bids. A few were for the wrong trim level or included extra options. And a few were shady invitations to “come on down”. The Motley Fool website says to ignore anything that doesn’t match exactly, but I had until the end of the month before the Subaru $750 rebate ended, so I sent back e-mail demanding (politely but firmly) the specific 7DD car with no extra accessories and no extra options.

I also sent e-mail replies asking for “out-the-door” prices, including taxes and any fees.

Wednesday

Today, I got on the phone with the dealer where we test-drove the car, asked for the salesman who helped us with the test drive, and asked him if he could beat our best online offer. He asked what it was, told us he couldn’t beat it, and wished us the best of luck.

The best online offer was $24,341, but located about 2½ hours away. I really didn’t want to drive that far, so I called the two next-best dealers (both of whom were within 30 miles) and asked if they could beat that offer. The first guy stuck to his guns ($25,036) and said: “That’s impossible. When you drive out there and find out it’s for the wrong car, call me back.” (Coincidentally, this was the guy who told me to just submit my quote requests through the web site.) The second guy lowered his bid from $24,988 to $24,700.

We decided it was worth $359 to save driving time and buy locally (in case we had to go back for some reason). Also, the sales guy had been very responsive over the course of a few e-mails. So we went and picked up the car :). Over e-mail I had asked for the car and its quote without any accessories, but when we picked up the car we discovered that the all-weather floor mats and cargo net were still in the car. I thought I already had a pretty good deal, so I didn’t press the issue of getting them removed and the price adjusted. Besides, the dealer’s “out-the-door” quote had been for a car he said would be without accessories, and the sales contract said “as is” (e.g., no accessories). So I think I came out ahead.

Later, during dinner, the first guy called us to ask how it went. I told him we didn’t go to the 2½-hr-away best offer, but to a different place. He complained that we didn’t call him back to give him a chance to beat the offer of the car we were going to purchase. At first I felt a little bad, and almost remorseful (he probably really could have given us a better deal), then decided that I had already given him a fair chance. I had no reason to sound so apologetic on the phone.

Next Time

• Avoid ambiguities by doing more online inventory research to learn the “model codes” of the various trim levels and accesories.
• Do not reveal to any dealers any information about other dealers, except for the offer they have to beat. It just makes them want to keep you on the phone.
• Initially submit only one “test” quote request, and insist on an “out-the-door” price quote (including all taxes and fees, etc.). This will probably require a little more information (name of your county, for tax calculations). When this completes, request “out-the-door” quotes from everyone else up front, firmly-but-politely insisting that only the options and accessories you request be included. You can remind them that any unwanted accessories are likely to increase their quotes, making them less competitive. There will be a desire to request line-itemized quotes, but it won’t be necessary; the “out-the-door” price is the only price that matters. It will only waste time, and you will get a line-item receipt with the car you buy, anyway.
• (Optional.) Follow the Motley Fool recommendation and insist in the initial quote request that any quotes not exactly meeting the specified car will be ignored. I was getting tired of back-and-forth e-mails. This might save time, but it also might cost you a better deal: the place where we ended up buying our car had initially quoted us for a “basic” wagon. So I guess at least for now, buying a car and getting the best price is still not yet haggle-free.
• When going to pick up the car, bring a checkbook. Silly me, I had assumed I could just lay it all on my credit card and pick up mucho bonus points, but the car dealership said they would only accept only up to $2,500 of payment on a credit card (to avoid merchant fees).

Pictures

No “I just bought a new car” blog entry would be complete without pictures. Here is your reward for reading this far: