I get a lot of very polarized reactions on these things. If it’s not your cup of tea: shop however you want; there’s a seller out there for everyone.
That being said, I’m also seeing some interest in these posts so I’ll keep it up.
There’s a lot of active change occuring in the car sales industry. There are a lot of “legacy” players out there. Many dealerships across the USA still operate in ways that defy the laws of economics. As a result, these dealerships are slowly but surely being replaced by corporate groups and new owners that have a better grasp of what’s going on. There will always be anecdotal advice on this forum that has historically, and will continue to work, against bad dealerships, to score anomalous deals.
I joined this forum because I followed the prevailing advice on this forum to a T, and I drove away with a crazy deal! But I also invested multiple days, several trips to the dealer, a ton of discomfort, and ultimately had to make it through a ‘final boss’ negotiation. The whole thing just made no economic sense. I was just so baffled by where the dealer was expending its resources, all the while they weren’t moving very many cars. I kept racking my brain trying to understand how this place could be making any money, and then they went bankrupt and disappeared off the face of the earth.
If you’re going up against this kind of place, yeah, I wouldn’t blame anyone that tries to scrape anything they can together to prepare for a “fight” against “the boss”. But also, I’d offer up the advice that: the best way to win this fight is not to reward bad dealerships with your business. If you’re going to a place where you feel like you need to cross-check every number in the heat-of-the-moment, maybe just shop instead at a place that’s more straight-up from the get-go. You’re really better off going with whoever has the most transparent pricing, versus whoever is trying to lure you in with “lowest pricing”.
I’m in this for the future, and I believe that, one day, good players at dealerships will outpopulate the bad, and economics, reason, and technology will prevail in this industry.
The OTD prices are what drive supply and demand.
(or, total cost of leasing, in the leasing world)
If cars aren’t selling, dealers start putting big Dealer Discounts on them to move them.
Simultaneously, manufacturers notice cars aren’t selling and put big incentives on them. There’s just more of a lag time to respond, because this is only roughly monthly, versus the dealership discount that is assessed (often by different people) on each individual deal.
When manufacturer incentives pick up, dealers feel that they can relieve their dealer discount. The dealer see that manufacturer discount as essentially “picking up that gap” and adjusting the market for slow-sellers. This is what dealership managers that are really on their game do. They find out what is the “sweet spot” price that sells the most cars in their area, offering a dealer discount if necessary to get there, hoping that manufacturer incentives improve, which improves their margin while keeping the price of the cars at market value.
Not every car can be sold at a loss forever, and you want to get away from whacking a few unlucky people over the head to make up the difference. In an ideal world, you want to plan for cars to bring in a modest profit at a consistent pace. It’d be a more consistent, predictable business model - compare to a model where some people make out like bandits and some people pay $15k in dealer markup.
What bad dealership managers do is, instead of knowing the market for the cars like they should, they price each car using the “Profit” field of their DMS. They arbitrarily decide that they’ll make $2000 on each car, or lose $1200 on each car, or anywhere in between or in excess of those numbers. A lot of these guys will make blanket rules, too, and apply those adjustments unilaterally against every car in their inventory, regardless of the supply/demand curve for that particular car.
The “trick of the trade” here, so to speak, essentially tries to capitalize on hitting a scenario where a “bad dealership manager” is marking down cars, and pricing their inventory in a fixed “X amount off, or X percent off” style. Informed members of this community then essentially try to find out about new manufacturer incentives ASAP, such that they can try to “stack” the manufacturer and dealer discounts. Bad dealers succumb quickly to this strategy, because the total “dealer loss” is relatively inconsequential, compared to what they’ve had to let these cars go for before. This is the “OG Leasehackr” strategy (one that is ultimately good for bad dealers, and not so good for large crowds of deal-hunters). It’s capitalizing on a scenario where you can convince the dealership to increase their Dealer Discount, in the immediate wake of the Manufacturer’s Discount being increased on the same car.
It’s not really a strategy that’s informed by market-based average pricing, but a sniper tactic to try and get “The Lowest Price” as a one-off. Regardless, if you look hard enough, and time it just right, there’s no doubt this strategy will work. My overall prediction is, if sales managers get better at their job, pricing will eventually smooth out. You’ll see less extreme “double-stacking” of dealer/manufacturer or “triple-stacking” of dealer/manufacturer/state incentives, and eventually more smooth curves. Dealer discount slides up gradually as manufacturer or state incentives go away, and dealer discount slides down gradually as manufacturer or state incentives increase. The triple-stack gets increasingly relevant as EV adoption grows, as well. The smartest dealerships will react to these changing conditions more quickly than this forum, and the net positive for everyone is that lease prices themselves will become more consistent and normalized across the industry (i.e. less extreme month-to-month jumps).