OT: Buying a new car--How much discount?

[jckid]

So we're thinking of buying a new Mercedes C280.

It's been five years since our last new car puchase. On our last car, we got a good deal--20% off MSRP. We kind of lucked out, because the exact car we wanted was one of their "advertised specials". It was an easy purchase.

Well, with the Mercedes C280, they never advertise any specials in our area, other than leases (and we're not interested in leasing). We happen to know one of the salemen at our local dealership, but we didn't discover that he worked there until after we'd already been dealing with another salesman. Anyway, the one we know told us that their profit margin is only 5%-7%, depending on the model. He said that should give us a good idea of what discount to ask for. Well that kind of surprised us. We weren't expecting to save 20% like our last car, but we were thinking of at least 10% off MSRP.

So I guess I'm just looking for feedback on what kind of discount is realistic in today's market. The MSRP of this particular car is $35,500.00. We were hoping to pay no more than $31,950.00 (10% discount). Is that realistic? We have submitted some requests for Internet quotes, but I'm wondering if Internet quotes are really worthwhile.

[bigdeal]

MSRPs are, in general, a joke. Find out what the invoice price (what the dealer pays for the car) is and that will give you much more leverage when buying from the stealer....I mean dealer. There are LOTS of site out there that will give you this info, including edmonds and Costco. Coincidentally, if you're a Costco member you can go through their car buying program and avoid having to deal with ANY sales people.

[1happygirl]

Hey, great ? I was wondering the same thing as I am in the market (albeit for a boring van).


PS This forum rocks with very knowledgeable people about everything worth knowing everything about.

[jckid]

Find out what the invoice price (what the dealer pays for the car) is and that will give you much more leverage

I know that invoice is $33,084.00 (according to kbb.com), but I'm not sure how important invoice is, since I've bought more than one new car below invoice.

[Bruce K]

Invoice isn't always dealer cost as invoices usually include dealer association advertising fees and other items.

It IS a great place to start.

The other part is knowing the value of your trade-in and sticking to your guns to get it.

BK

[digger]

I know that invoice is $33,084.00 (according to kbb.com), but I'm not sure how important invoice is, since I've bought more than one new car below invoice.

The invoice is a great place to start, but other factors such as supply and demand, dealer incentives, financing also play a role in the final negotiated price.

CarsDirect has a pretty good tool that take all these factors and spits out a fair price. As much as you want a good deal, the dealer also has to make money (they rarely 'lose' money in a deal).

My first suggestion is to have your financing done off-site. Your negotiating power is much stronger when you have a check in your hand....and they can't confuse you with "your monthly payment will only be $233" (yeah, over 30 years!). Secondly, work from the invoice price (with all options you want) UP...not from MSRP down. Lastly, when you finally buy the car...ENJOY IT! :) Life's too short to have remorse.

Cheers! :beer:

[davids]

It absolutely depends on the car. I got a tremendous discount on my '95 Ford Contour SE. I got thrown a (very small) bone when I bought my '00 Acura TL. In the long term - as far as the Contour, I was ripped off. It was a POS at half the price I paid. As far as the TL, I got a deal. It was an amazing value at nearly full sticker. atmo.

Supply and demand plays a major role. I think it's edwards.com that has a "TMV" number for 'true market value' - what you should expect to pay based on market conditions. I don't know how accurate their numbers are, but the concept makes a lot of sense to me.

Good luck!

[davep]

I just bought a new car a month ago and had a great experience, as well as a great learning experience. I found out the invoice price, with all options I wanted. I went through Consumer Reports, but there are other services. I then sent emails to 3 or 4 dealers in my area. Within 30 minutes I had spoken with 2 of those dealers and had a price. They both gave me a price within $50 of the invoice price as their first price. The dealer I finally went with then gave me a price for my trade in about $500 more than it was worth, without even seeing the car. And it was beater, probably worth about $300, so I was happy with the $800 I got. They then added about $300 in accessories I didn't even ask for. This was on a Saturday morning, Monday morning they faxed the paperwork to my office, I faxed it back and the salesman brought me the car and took my trade away. I never went into the dealer. In all, I feel like I got a fair price and was treated very well. They made a bit of money, which they have to to stay in business.

Your car may be different. Whether they will sell it at invoice would depend on supply and demand. But unless you are looking for a very hot, high demand car (Prius) or a brand new model, I don't think that many cars are that high in demand. Good luck.

[dgauthier]

So we're thinking of buying a new Mercedes C280.


We bought our '98 C280 for $500 over invoice, if I remember correctly. We did our shopping between Christmas and New Year's. When our car was delivered in February (we wanted a relatively rare color combination), the dealer told us if we were shopping now (ie: February) we'd be paying $3000 more. So we got a good deal because we shopped at a time when almost no one is buying an automobile.

That said, I have to warn you about buying a Mercedes. Reliability was never great with Mercedes, and the new models are especially troublesome.

[slowgoing]

Go to Edmunds.com, type in the model, then hit incentives and rebates. That will give you a good idea of what special discounts are available in your area at the time you buy.

Also, when I go to carsdirect.com and ask for the 4 wheel driver version of the C280, it says MSRP is $35,525 and they will sell it to you through a dealer for $31,718. So sounds like you are on the right track.

[bcm119]

It all depends on the car make and model. Some of the high demand Japanese cars are going for close to msrp, and a few models are going for over msrp. I just bought a car a few months ago for the first time and found it to be a pretty awful experience. It took hours to get down to a reasonable price. I finally ended up paying almost msrp, but that was only 1k over invoice- the margins are way smaller on cheaper cars (mazda 3). The key things are to finance elsewhere first, know the invoice and Edmunds tmv price, and tell them up front that you don't care what the monthly payment is- you care how much the car costs.

[67-59]

davids and davep are right -- the biggest factors are supply and demand. Depending on how that works for the car you're considering, that 10% off MSRP might be really good, or really bad....

One way to get those factors playing in your favor might be to wait until the end of the model year, and buy one of the remaining '06 models as the '07s are hitting the showrooms. I did this years ago when buying a Honda Accord, and got a great deal -- at a time when that was unheard of for Accords. (And yes, I know Accords are boring, generic, whatever, but its low cost and reliability have allowed me to make many other discretionary purchases over the years -- including my beautiful, Campy Record-equipped Kirk Terraplane! In fact, I drove my wife to the hospital to have our first daughter in my new 1992 Accord, and suspect I'll be teaching that same daughter how to drive in the car. Not bad for about $14,000, eh?)

[MadRocketSci]

a lot of good info here:

http://www.fool.com/car/car.htm

They advocate dealing with fleet managers via fax, but I found the information still very useful in buying from a dealer. Worth the (long) read.

Watch out for the "advertising" fee. I was a little p*ssed when the Saab dealer tacked on that fee along with the dealer prep fee. Unfortunately I was desperate to unload my trade-in, which I wasn't sure would make it off the parking lot back home, so I sucked it up. They'll tell you "everyone pays it," but it, along with everything else, is negotiable.

edmunds.com will give you invoice prices along with all listed incentives which you need to know about. for $14 bucks I got a consumer reports guide that told me the dealer holdback for my car was $514. This allows the dealer to sell the car below invoice and make a decent profit. As always, start from the actual dealer cost (invoice - holdback - incentives) and work your way up from there. if the dealer seems happy then you didn't get the best deal possible imho, but sometimes it's not worth the hassle!

if you're looking for a more widely available car, dealing with fleet managers may be the way to go...

[Ken Robb]

years ago MB had a 25% margin in their list prices. They found that the most common actual sale prices were with margins of less than 10%. A few years ago they reduced their margins to 7% on most models. Their reasoning is that the dealers will all have to sell at close to MSRP and dealers will have to compete on the basis of good service and customers will have no incentive to buy from out-of-area dealers because of big discounts.

Bmw followed suit a couple of years ago and they now have about 8% margin. The big discounts below invoice are usually American car models that aren't moving.

The Germans are reluctant to do anything that blatant as they don't want to hurt resale values. High resale has always been a selling point for the German cars. They will, as you note, have some below market lease deals to help move certain cars without discounting the sale price. Also, rarely, BMW (and maybe others) will have unannounced dealer incentives to move certain models. A couple of years ago you could buy an X3 automatic for the same or even lower price than a manual X3 even though it was listed as a $1200 option because they had an oversupply of automatics. It wasn't advertised. I've helped many friends buy cars over the years and I used to think that I could almost always get them a 10% on BMWs where I have most of my contacts. That was when there was still 15% or so markup on the cars.
Now I think $1,000 over invoice on a model with no incentives is a pretty fair deal.

[Serotta PETE]

I agree with KEN. I have had many BMWs and a few Mercedes. In Raleigh the C is selling well and there are not many on the lot - so they are less willing to deal.

While there are "hold backs" Customer Service score incentives, etc...the figure of about 5% off is what I have come to expect in our area for models that are selling well.

One of the best times to deal (if they have the car on the lot) is the last day of the month, as long as you buy that day.

WHen you are buying look at all the cost. Example is that if you were going to pay cash, but they are offering 2.9% FINANCE for three years - take the loan and invest your money.

You can have automatic withdrawals monthly to MERCEDES finance. Many of the MFT specials are "regional" though,

Good luck........in shopping - I had a 280 loaner and really liked it.

PETE

[Ken Robb]

oops, another thought: the finance and insurance department is a BIG profit center for a dealership. The idea of telling them you're a cash buyer may not get you the best price. I think it's a great idea to have a loan lined up but don't tell them until you get the best price on the car. Then you can listen to their financing proposals and negotiate them too. Money is just a commodity and the only difference is in its cost so listen to everyone. It may be your lucky day and they have unadvertised cheap financing or lease deals. Over the past 30 years I have always listened to lease proposals and accepted them twice when the lease money factor was so cheap it was almost the same end price as paying cash. Other times the lease department was just another profit center trying to make money off me.

[djg]

The invoice is a great place to start, but other factors such as supply and demand, dealer incentives, financing also play a role in the final negotiated price.

CarsDirect has a pretty good tool that take all these factors and spits out a fair price. As much as you want a good deal, the dealer also has to make money (they rarely 'lose' money in a deal).

My first suggestion is to have your financing done off-site. Your negotiating power is much stronger when you have a check in your hand....and they can't confuse you with "your monthly payment will only be $233" (yeah, over 30 years!). Secondly, work from the invoice price (with all options you want) UP...not from MSRP down. Lastly, when you finally buy the car...ENJOY IT! :) Life's too short to have remorse.

Cheers! :beer:

Absolutely. Check the internet before shopping or even starting to talk price with a dealer. Depending on the manufacturer, the model, and the time of year, there may be some very generous publicly known dealer incentives bearing on the bottom line and, hence, on how low the dealer is willing to go. I paid 5,500 below invoice for my volvo in no small part because volvo was offering dealers 3k to begin with. Edmunds is a good site, and by no means the only one you should consider. Keep in mind too, that many dealers will do competitive bidding on the internet once you decide on a model, features, and so forth. And check the paper too.

If you are going to finance the car, I agree that one should shop for financing independent of shopping for a car.

[whippettanker]

So we're thinking of buying a new Mercedes C280.

It's been five years since our last new car puchase. On our last car, we got a good deal--20% off MSRP. We kind of lucked out, because the exact car we wanted was one of their "advertised specials". It was an easy purchase.

Well, with the Mercedes C280, they never advertise any specials in our area, other than leases (and we're not interested in leasing). We happen to know one of the salemen at our local dealership, but we didn't discover that he worked there until after we'd already been dealing with another salesman. Anyway, the one we know told us that their profit margin is only 5%-7%, depending on the model. He said that should give us a good idea of what discount to ask for. Well that kind of surprised us. We weren't expecting to save 20% like our last car, but we were thinking of at least 10% off MSRP.

So I guess I'm just looking for feedback on what kind of discount is realistic in today's market. The MSRP of this particular car is $35,500.00. We were hoping to pay no more than $31,950.00 (10% discount). Is that realistic? We have submitted some requests for Internet quotes, but I'm wondering if Internet quotes are really worthwhile.

My next door neighbor is an auto dealer. She buys used autos at the regional auto auction and resells them. She has a long client list and a longer car list. She waits until she finds a car that's on the list and then phones the client. They meet at the auction and take a test drive.

These days it's mostly TDI Volkwagens, Mini Coopers, E85s and hybrids. But if you know what you want, she'll find it.

A low-milage C280 is going to cost about $25000 at auction. Dealers like my neighbor need to make about $2000 on a car like that. But if you don't waste her time, she may drop the fee to $1500.

I found out about this market from my insurance agent, himself a dealer.

Find a dealer in your neighborhood. In Minnesota they have special dealer plates on their cars. Ask your neighbors and mechanics.

Avoid dealerships.

[zip]

I bought my MB C230 from a MB dealer, and would go back there again if I needed to buy another.

I really like the loaner when my car goes in for regular service, which is not that often.

When I bought I found that making your purchase on the last day the dealership is open during the month will help with the price of the car. At that point they want to push units out the door and are a little more open to negotiation.

I also financed through my credit union. I got a rate that was better than any other around. :beer:

[brianmcg321]

I bought my MB C230 from a MB dealer, and would go back there again if I needed to buy another.

I really like the loaner when my car goes in for regular service, which is not that often.

When I bought I found that making your purchase on the last day the dealership is open during the month will help with the price of the car. At that point they want to push units out the door and are a little more open to negotiation.

I also financed through my credit union. I got a rate that was better than any other around. :beer:

The only problem with this is that not all dealerships 'month end' is on the last day of the month. Some may have it on the last day while some have gone to the 20th, or 15th. Some people may go into a dealer thinking they are going to get a good deal because it's the end of the month, when in fact it is the very beginning.

[ClutchCargo]

Lots of good suggestions here from Ken, davids and others. I would just add that unless you're wedded to getting a new car, these days buying a certified used car can result in some decent savings while giving you an almost new vehicle. I think the warranties on these cars are usually close to or the same coverage you would get when new, and a quality car like MB will run a long time if serviced and cared for well.


good luck!

[Ken Robb]

re: buying used CPO cars. Until BMW and other German makers began including "free" (pre-paid actually) normal service in the price of their new cars BMWs and M-Bs did last a loooong time with oil/filter changes at about 5,000 mile intervals. When the service became free the intervals magically expanded to 15,000 miles +/-. Transmission and differential now have "lifetime fills". I don't think these new "lifetimes" are going to be as long as we used to expect. My friends who service BMWs that have been "maintained by the new book" say they have seen some mighty sludged up engines at 40,000 miles and tranny failures around 100,000 are common.
All of my BMWs since 1985 have had oil/filter changes at no more than 5,000 miles, tranny and dif fluids at 25,000 miles, brake fluid flush before every track event (several per year) and every one of them has been going strong at 125,000-200,000 miles when I lost track of the 1985 535i.
I would look for used ones with no more than 25,000 mi so it hasn't been too screwed up to be saved or one owned by an enthusiast/knowledgable owner who didn't fall for these ridiculous recommendations from BMW, M-B, and others and had the services performed by the old book and common sense.

The first owners/lessees of these under-serviced cars won't have any problems if they unload them by 50,000 miles but the second 50,000 miles won't be the sweet ride of the old days.

[Frog Hair]

New Serotta custom bicycles, new BMW's, new Mercede's...this is expensive company to be hanging with.
Given that we all dirve our cars on the same roads and burn the same $4 a gallon gas, why not drop $15K on a (very nice) used car and use the other $20K you were going to spend on something more memorable? Like a vacation, or to help someone, or just save it.
$35K on something that depreciates instantly, has high insurance costs, drinks a lot of petrol and will serve the same exact job as the same tool for less than half its costs...
We all drive the same clogged freeways and share the same streets - personally, I find more interesting places to spend money. Its good to exercise the limits of your discount buying power, but IMHO, you are wasting your money.
Nothing personal.

[zap]

*

[davep]

Frog Hair,

If no one ever "wasted" their money on new cars there wouldn't be any used cars for you to buy. Cheers :beer:

[39cross]

Frog Hair,

If no one ever "wasted" their money on new cars there wouldn't be any used cars for you to buy. Cheers :beer:

How true. Cheapskates and spendthrifts go together like chocolate and peanut butter. A beautiful symbiotic relationship. One group to buy used stuff, the other to sell it.