Question on negotiating discounts off MSRP

If there aren’t any incentives/lease cash/rebates etc. provided by the manufacturer or financing company, then how possible is it to get a “good deal”? Based on my experience, all of the discounts are usually provided by the manufacturer and rarely the dealer themselves, unless a particular dealer is desperate to move a specific car. Is that accurate?

If there are no incentives, is it worth the time to keep trying to negotiate over the selling price?

Oh, my sweet summer child.

If you couldn’t negotiate lower than manufacturer incentives, would a resource like leasehackr exist?

Yes, you can negotiate a better deal. You should do some research on here and then follow up with questions after.

No. In fact, we go out of our way to separate incentives and the pre-incentive discount to clearly identify what is coming from the dealer . You’ll see a lot of vehicles have target dealer discounts around 10% of msrp (this varies by brand/model/region).

Right, but then you also hear terms on how some cars/brands “lease badly” and you can’t get the target 10% usually.

Oh, no doubt that not all will be the same, but that’s a far cry from saying no discount is possible.

The cars that “lease badly” are usually bad lease candidates for a variety of factors. Lack of factory incentives is definitely one of those factors. High interest rates and low (or perhaps realistic) residual values would be the other factors. Finding a dealer that’s willing to offer a high discount off of the sticker price is what can allow you to overcome some of those obstacles and at least get the best possible deal for that particular car. You can only put so much lipstick on a pig though.

Motivation to move distressed or aged inventory is certainly one reason a dealer might discount, but competition is another one. If all the manufacturer rebates are the same across the network of dealers, then a dealer needs to give the customer a reason to get it from them versus the next closest dealer. The free coffee in the service department isn’t usually good enough to cut it. So especially in areas where there are multiple dealers to choose from you will tend to see more aggressive discounts. If you’re the only game in town then there’s not a whole lot of motivation to do so. Some dealers might even choose the opposite tactic and just rely on customers who don’t have the time or sense to shop around. Those are the ones that you should probably avoid.

At the end of the day, you need a JUSTIFIED reason to be successful in asking for a discount.
Here are some examples of reasons that have been successful in the past:

  • Another dealer has the exact same car for cheaper, after conditional discounts factored in (This is far and away the BEST reason for asking for a discount; blows all the other justifications of the water)
  • This car has been on the lot 90+ days and is in an unpopular color/feature combo
  • You experienced some delay or inconvenience that the dealer feels responsible for (bumped into your old car in the parking lot and wants to make right on the repair, made you wait 2 hours to test drive because the car you wanted was on a storage lot and the porter got stuck in traffic, etc)
  • You are a member of a special group that offers additional discount, corporate/fleet incentives (work for a specific company with supplier discount), have additional coupon offers like a Private Offer mailer
  • You build a personal relationship or rapport with the sales team: i.e. bring them booze, offer tickets to a unique event that you have access to, or otherwise have something that they might want to sweeten the deal.

If you ask for a discount without a justified reason, the salesperson can and should ask you what makes you feel entitled to additional discount? You don’t know them, and they don’t know you, and it’s literally their job to make as much off of you as possible, so why should they sell you the car for less than what they initially quoted you?

Can you answer that question thoughtfully? That is the game.

I can tell you what answers to that question don’t work:

  • My budget is $X
  • I’m only willing to pay $Y
  • My payoff on my trade is $Z, so…
  • I’m only approved for $X
  • Can you go any lower?
  • Another vehicle, that is not exactly the same, is priced for less

Find an excuse from my first bulleted list and you’ll do just fine. If you can’t think of a good answer to the “why should they give you a discount?” question, or if your excuse is closer to my second bulleted list, you’re bound to have a harder time convincing someone you don’t know to do you a favor.

What makes you, your deal, and your situation, different from the next guy that walks in off the st? Why do you deserve a lower price than that guy? You need confidence, and charisma, and logically sound reasoning when you answer that question. That’s how you win this game.

I don’t buy that for a moment. The only justification I need is that’s the price I’m willing to pay. If the dealer doesn’t want to do the deal, that’s cool, no hard feelings, but to suggest that I need to bribe the sales team as a justification is ludicrous.

It’s not a matter of entitlement or owing anyone anything. It’s a business transaction between two independent parties trying to find a middle ground that works for everyone.

Why should they sell the car for less than their initial quote? Because a sale that meets the business model of the dealership is a lot better than a sale walking out the door because of the salesman feeling entitled.

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My point is just that the number that you’re willing to pay has to be justified in some reality if you want to drive off in the car.

If you come to a salesperson and start the conversation with just a number, the first thing they’re gonna ask you is how you got to that number.

The next sentence that comes out of your mouth will tell them if they have a shot at selling you a car today. If your logic is insane, they’re just gonna say thanks but no thanks and move on.

If your logic and justification of your number is sound, it’s probably going to include some of the reasoning from my list, even if its a lowball. If it sounds like they can reason with you based on how you talk and what you say, they’re gonna be more likely to try and reason with you.

If you can think of a justified reason to ask for a discount that isn’t already on the list, I encourage suggestions.

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And the appropriate response to that question is “It is simply the amount that I am willing to pay”. It may or may not be a ridiculous amount, once I make an offer it’s up to the dealer to say yes, no or make a counter offer.

The dealer’s rebuttal is gonna based on the market conditions of the car.

If they have 170 Elantras on the lot and the model year changeover is happening, that may just work.
If it’s a brand new Mercedes Benz GLS580 and they have 3 on the lot with $10k markups, the dealer doesn’t care what you’re willing to pay.

The supply/demand curve on the particular car you’re looking at has to be in the buyer’s favor for the “what I’m willing to pay” justification to hold any weight.

It doesn’t. It needs to be a number that makes financial sense for the dealer to do, sure, but that doesn’t mean a dealer should let a deal that is beneficial to them walk out the door over ego because someone didn’t say the magic words. That would be poor business sense for the dealer.

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My advice is more around how the buyer should decide for themselves what number to offer. It’s about how you pick your number, more than how you present it.

How do you know what you’re willing to pay, anyway? How do you know that what you’re wiling to pay is in the range of offers that make financial sense for the dealer to do?

I have LeaseHackr members texting me all the time saying, “I will never lease a car that’s not at least 8% off dealer discount”. This logic is absurd, but it is the prevailing message that hundreds of people take from the content on this site. No research has been done on market conditions of the car, people just pick a percentage in their head and decide that’s what they’re willing to pay.

If you do that, you’re setting yourself up for disaster.

Build the justification. Answer my rhetorical question at home before you go to the dealership. “What makes you feel entitled to additional discount?” Answer that question by doing research on the market for the model you’re looking for. And the best way to do that research is to get quotes from multiple dealerships and compare them. And the best way to apply that research and move forward in your comparison shopping is to use the #1 justification on my list, “Another dealer has the exact same car for cheaper, after conditional discounts factored in”

The more aggressive of a number you pick during your research phase, the more you’re setting yourself up for a potentially less smooth experience with the dealer interaction.

That is not accurate at all.

Did you spend any time at all looking thru Shared Deals and Marketplace sections? Did you find any deals in there that didn’t include dealer discounts in addition to OEM incentives?

I’m reminded here of the negotiations that Derek Jeter had with the Yankees when agreeing to what ended up being his final contract. He was very agitated about how things were going and the General Manager told him “You said all along that you wanted this to be fair. What is more fair than the highest offer you have in front of you?”. Leaving some insane lowball offers out of the question, chances are that if someone else had made a better offer than what I was willing to pay, the car would be gone by now, especially when we’re talking about aged inventory.

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100% agreed.

If the price you’re asking for doesn’t make sense based on market conditions, there’s no reason to expect the dealer to move forward just because it’s the price you’re willing to pay.

They’re also not going to move forward if the deal doesn’t make sense if you give the salesman a bottle of 1942, if the dealer down the street has a lower price, the car has been sitting there for 90+ days, etc either.

If your car payment is such a significant percentage of your monthly budget that you have to treat your dealer negotiation like Derek Jeter treated his Yankees contract, you should be looking at a cheaper car.

The vast majority of people are looking for the transaction to be pain-free. Not to spend days in aggregate of their time to save $3000 spread over 3 years.

I understand, @ElectricEliminator that you are an example that devoted “unlimited time” towards getting a free car, and it is possible to do that. I’ve done the same. But most people are not emotionally equipped to do that, and my advice is targeted more at the “average joe” that just needs an affordable car.

If the conversation with the dealer gets to the point of them wanting me to justify the price I’m after, it’s already crossed out of the pain-free zone.

The only rebuttal I’m looking for from a dealer is “yes” or “no”. Going back and forth means everyone’s time is being wasted.

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He is right and again this is a situation where LH is disconnected from the actual dealer experience. Sales people and managers hear from people all day long that X price is what someone wants to pay “just because”. And that amount is usually a ludicrous amount, like 20% off a new BMW or they have to be at $250/mo. It is basically buying an express ticket to be kicked out.

As for gifting them something, wait until after the sale. Gifting a sales person something before closing the deal is an express ticket to the unemployment office. (Champaign is my favorite for anyone reading :wink:).