I have a general question about negotiating the best price for leasing a new vehicle. I am currently in negotiations for a Volvo XC60 2021 Recharge R-design and am currently being offered 20.4% off of MSRP. My general strategy for negotiating is to start by emailing every dealer in my area (tons of dealerships in my area) and request their best offer off of MSRP while informing them I am emailing all other dealerships. Once I have the offers, confirm it is competitive (using Truecar to see the prices the car has sold for in my area) I add about 3-5% off of MSRP from the best initial offer as a counter offer to all dealerships. At this point I will usually have 1 or 2 dealerships willing to entertain that discount. Once I have the best offer I move onto leasing terms/fees/addons.
I have seen through videos and posts on this forum people advocating for negotiating best discount off of MSRP prior to adding taxed/untaxed incentives while also inquiring about the invoice price.
Is my above strategy flawed or are these two different ways of arriving at the same point?
I wouldn’t recommend trying to negotiate one line item at a time. By focusing on purely discount, you may get one dealer to offer a larger discount, but because of the hidden other line items (marked up mf, dealer add ons, etc) or included incentives that others aren’t including, it actually is a more expensive lease. Some dealers are incentivized to give or take in some areas vs others (such as dealers that offer larger discounts in exchange for a marked up mf). What you care about is total cost, so approach the deal holistically.
I personally wouldn’t recommend using Truecar in that manner nor just blanket adding a discount % on top. Truecar deals tend to be rather mediocre, so why baseline with that?
The purpose of breaking things out to be pre-incentive is so that you’re actually comparing apples to apples across markets/deals. You may look at that 20.4% and think it’s a huge discount compared to to someone else’s 18%, but if the incentives are much higher for you, you’re leaving money on the table.
…which includes $5,919 incentives. Take it out and you are at 11% actual discount (not bad at all) on a $64K sticker. But we don’t know your MSRP nor whether you have any other incentives (loyalty, etc.) included in that discount.
To be clear, prior to agreeing to a lease deal I also confirm that the money factor is not marked up, assess dealer add-ons and fees
I don’t look at the deals offered through TrueCar or the average discount achieved. I use the graph that purportedly shows actual sales in my area and focus on the lowest sale price.
In terms of assessing the value of the deal my end point in discount negotiations is when only one or two dealerships is willing to entertain something close to my counter offer. The question is could I squeeze even more out the remaining contenders.
I am finding out now what incentives are being used in the discounted price. There are two dealerships that are at a similar price point
If you try to first negotiate sales price and THEN try to negotiate/verify MF/dealer fees/etc, what you’ve done is tried to solidify a value while leaving multiple variables in play.
This does a couple things…
it means you have no way to know if you’re actually comparing like terms between deals until you take everything through the next step in the process
going step by step through each value wastes everyone’s time
it makes the process tedious for everyone
it takes away a dealer’s ability to balance the deal holistically into something that makes sense for them
what it doesn’t do is help you in any way… so why do it? If you want to negotiate based on sales price, you need to normalize the variables.
The truecar graphs show reported deals from a self selecting group with limited visibility into the actual data behind the values you’re looking at. There’s no way to know sample size, circumstances, etc. It’s poor data.
^This – After doing all the homework, figure the aggressive deal, reasonable deal, and the most you’re willing to do. Keep everything constant - I give them info they need to run accurate numbers in the first email (e.g., zip code where car will be registered, county, what incentives I qualify for, lease terms, etc). I go for first month DAS only + MSDs, if applicable. That way, every offer you look at will be apples to apples (esp with dealer doc fees, and other fees in general). If you’re close and pushing them for a bit more off, I always make it clear that I’m willing to leave a deposit over the phone if they can agree (and follow through, obviously)
Ended up leasing a 2020 XC60 T8 Inscription, lease terms 36/15. Unclear what incentives other than Costco were used. Personally, I don’t think going step by step wastes time and brings me to the lowest price point possible. Also, I like “beating around the bush” and teasing out the lowest price a dealership is willing to pay by asking them to compete with each other, then using that information to counter offer. But, I suppose there are many ways to achieve the same goal and it would be interesting to see which strategy actually leads to the absolute most money saved.
How are you supposed to know how this deal compared against what is possible without even knowing the incentives that were involved?
How can negotiating one line item at a time, when the others are dependent variables, not waste time? You’re taking what could be a single back and forth and turning it into a back and forth over every item, only to get several items deep and realize that the terms you thought you were offering are different than the terms they think they’re accepting. Back to square one.
Similar to the above, all I’m interested in is the holistic best %off of MSRP. Not concerned with how they balance that with incentives/discounts. Then I choose the best offer and move onto the other variables. As I have progressed in negotiations with the best offer I have yet to run into a step where they weren’t willing to give me the base MF, remove unwanted add-ons, bogus dealer fees. While you have theoretical concerns about this strategy’s impracticality, so far it has been remarkable smooth (doing everything via email is wonderful). I sent emails to all dealerships on Monday and bought the car on Saturday.
So if you’re just worried about the discount % (and that includes trying to get to a specifc payment), why not just send that and therefore removing all other steps? A straight I’m looking to get X% off with base MF and no add-ons.
There are numerous dealers that have incentive structures that give them bonuses for leases with marked up MFs. These can be such that the dealer is able to offer a better deal holistically than they could with buy rate MF. By forcing buy rate, you’re taking possible opportunities for a better deal off the table.
Frankly, taking 6 days from contact to delivery is about 5 days longer than it needs to be.
If your strategy works for you, that’s great. You do you. Just be aware you’re taking arrows out of your quiver and making the process more tedious than it needs to be.
This assumes dealerships are making their initial offers with buy rate MF. I don’t discuss MF until after I’ve locked in the lowest discount.
I don’t think this strategy is tedious and believe this maximizes my chance to squeeze every last cent out of the dealer instead of giving them room to manipulate the deal. But who knows, maybe I’m just spinning my wheels.
I don’t know how to formulate the best %off of MSRP. I’m very interested to hear how you guys come up with that number and would love to add that to my arsenal.
That’s the point. You’re turning this into a multi-step process with a number of phase gates to nickle and dime your way through.
Lets say you’re trying to work numbers from 3 dealers at the same time. You’re negotiating on a $50k Mercedes. One dealer offers you $6k off MSRP. The 2nd offers you $7k off MSRP. The 3rd offers you $8k off MSRP. Which one is the better deal? Which one do you keep working further?
