Considering my coast-to-coast radio show, website, Facebook page etc., I may easily talk to more potential auto buyers than anyone in the country.
One of the most asked questions I get is; “so how much did the dealer pay for the car that I want to purchase?” For those who do not know, before the Car Pro Radio Show was created in 2001, I was in the retail automobile business for over 3 decades. I have to admit, when I get this question, it irritates me a little.
I consider myself a consumer advocate in every way. I do my best to help people make good car buying decisions. When it comes to dealer cost on a car, I frankly don’t think that is anybody’s business. Would you ask a clerk at Walmart what they paid for that 60” HD TV you want to purchase? Would you ask a home builder how much it cost to build that dream home you want to buy? I don’t think so.
The bottom line is that as a consumer, you should be more interested in the best price you can get, without regard to what a dealer paid for a car. Profit is not a dirty word and car dealers have a huge investment in their business, and like everyone else, they deserve a return on that investment.
The next problem for “dealer-cost chasers” is getting accurate information. I’ve seen some big name websites with the wrong numbers, wrong cost of transportation, and wrong incentive information. This is frustrating for the consumer and the dealership both. Dealers don’t open every day to NOT sell cars, but when you are armed with bad info, you leave a dealership in the car you drove in there, mad at the dealer, and not understanding why the dealer didn’t accept your offer.
Some people choose to go through “buying services” and brokers in those states where it is legal. TrueCar has done a ton of advertising and tout that they “changed car buying forever” and they’ll give you “upfront pricing estimates.” Not exactly sure how a pricing estimate is going to help you get the best deal, but consider this; according to car dealers I have spoken with, they pay TrueCar on average $300 for every person who buys a car through the TrueCar website. There is nothing illegal or immoral about it, but don’t you think the dealers consider that fee when calculating the lowest price they can sell a car for?
When I am shopping, whether it be a car, an electronic gadget, computer, or lawnmower, I just want to pay a fair price. I consider the value of my time in the calculations too. Can I afford to drive one hour to save $50 on a purchase? I want to be treated well, respected as a consumer, and get a fair deal. I don’t mind paying a profit to any business. I just want a fair deal.
The next problem for people wanting dealer cost is; you aren’t going to figure it out anyway. You can get close to what factory invoice is on a car, but that’s not the same as dealer cost. Even with my experience, I can’t know what incentives are being paid to the dealers direct from the factory. Often times, these are based on a dealers volume and the amounts change the more a dealer sells. Many of the factory-to-dealer bonuses are based on how well people are treated.
I am in favor of researching the car you want to buy and doing your homework, but obsessing over what a dealer paid for a car will make you crazy. Dealerships have tremendous overhead, and trust me, you want them to be there after you purchase a car in case you need them.
Just remember, the lowest price for which a dealer can sell a car, and the actual price for which you can buy it, often have nothing to do with each other.