Personal Business: CAR BUYING
GIRDING FOR THE SHOWROOM SHOWDOWN
Your old clunker of an automobile has finally succumbed, so you're about to take
the plunge and buy a new set of wheels. But it's been five years since you've entered the new-car market, and the idea of dueling against some master salesman--yes, still typically a male--is rather intimidating.
Rest easy. Nowadays, you can march into a showroom armed with gobs of information, much of which wasn't readily available the last time you plunked down money on a car. Before talking turkey, though, Jack Gilles, author of The Car Book (HarperCollins, $12), advises that customers consider at least three different cars in the same price range and vehicle class. "The biggest mistake we make is falling in love with a particular car and therefore losing the psychological ability to walk away from a bad deal," he says.
NO HURRY. Next, Gilles believes prospective buyers should take each car for a long test drive. Go on the highway, park it in your garage, put things in the trunk, and get an overall feel. By taking a longer trip, you also reduce the chances that a salesman will come along for the ride and pressure you.
Once you're happy with the car, you can get down to haggling. Your chief objective is to find out what the dealer paid, and then use that as a reference point to make an offer. Dealer cost is usually expressed as the invoice price--a figure widely available in books, at credit unions, and in pricing summary reports. These include reports from AAA (800 597-5050, $12 plus handling for the first vehicle, $6 for each additional), Consumer Reports (800 594-9245, $12 for the first, then $10), AutoIntelligence (800 445-6111, $14, then $10), and Car/Puter (800 221-4001, $23 for the first, then $16, and $9).
But the invoice price rarely reflects a dealer's actual cost, because of incentives such as factory-to-dealer cash payments that are made from time to time on certain models. There is also usually a holdback, a concealed profit--often 3% on domestic cars--that is kept by the manufacturer until the car is sold.
The biweekly CarDeals newsletter published by the Center for the Study of Services in Washington, D.C. (202 347-7283, $4.50 per issue) gives information on current rebates and incentives offered on new models. You can also order CarDeals or separate price reports from the Car Price Network fax-back service at 800 227-3295.
SLUMPS HELP. Whenever possible, buyers should research the business and automotive press to help determine how well a car is selling. Knowing the market can help you bargain from a position of strength. "If you want to buy a Caravan, walking in there knowing sales are down 22% [through March] this year is really big information," says W. James Bragg, author of In the Driver's Seat ($12, Random House). "They need me a lot more than I need them." Bragg's Fighting Chance car reports (800 288-1134, $22.95 for the first vehicle, $7 for each additional) include buying tips, CarDeals, and the latest inventory data and holdbacks.
The ArmChair Compare Report from IntelliChoice (800 227-2665, $19.95), lets you scrutinize two cars at once and includes customized five-year ownership cost projections that factor in depreciation, insurance, repairs, and other variables. Those checking out several models can consult IntelliChoice's The Complete Car Cost Guide ($45), a comprehensive reference work that can be found in many libraries.
New-car summaries are free for members of AutoVantage (800 999-4CAR, $49 a year or $1 for a three-month trial through major online services). Members are also put in touch with dealers who have agreed to sell the car at a prenegotiated markup. Even if you don't want to buy through that dealer, you can use the price as a bargaining chip in another showroom.
Indeed, Robert Krughoff, who heads CarBargains, a buying service run by the same outfit that publishes CarDeals, advises consumers to pit one dealer against another by giving each a single shot at producing the best offer above or below the invoice price. He advises that you make them show you the invoice. Customers who don't want to dicker on their own can hire CarBargains (800 475-7283) to fetch the best prices. For $135, the service solicits five or more competitive blind bids from dealerships in your area. The downside: The dealer with the lowest bid may not have the precise car you are looking for on his lot. So you may end up sparring with a dealer after all.
Six Steps Toward Sales Floor Savvy
1 Don't fall in love with a single model. Consider at least three cars in the same vehicle class so you can walk away from a bad deal.
2 Take a lengthy test drive with each car.
3 Find out the dealer cost or invoice price from information sources such as Consumer Reports New Car Price Service.
4 Consult the CarDeals newsletter to find out factory-to-dealer or other incentives.
5 Look up articles in the trade and business press to determine how well a model is selling and whether there have been quality problems.
6 Tell dealers you are pitting one against another. Give each one chance to offer the best bid.
DATA: BUSINESS WEEKEdward Baig