You just said your target was no more than 2.5k mark up from the dealer cost.
How do you determine the dealers costs? Do they show you their retail and receipt sheets? Do you get to see their invoices and operations costs?
What’s the methodology? Do you just walk into the dealer, slap 2.5k on the table and say “here’s your profit, give me that car at your cost.”
I think a lot of people on this thread have been buying used and new cars for a long time. I’ve personally owned 8. My experience has been different with many different dealers as I’ve shopped across 4 different states.
The only thing that remained true? If I go online to find the cheapest car and then go to that dealer to negotiate, I usually don’t get more than 500/1k off the listing price of the online ad. Hell, if it’s a Chevy ad for a used car, then their online price includes a 2.5k down payment!
Tom mcPharland from jalopnik also has posted many articles about used car shopping and he does hundreds a week.
I’m sincerely curious as to what your methodology is.
Saying “I target $2500 over auction value” is information. You want to call it a data point? A fact? I really don’t care. Minutae and hair splitting are not even on my list of things I care to spend my life doing. But Calling it opinion is most certainly incorrect.
So, I never made any claims to dealer cost. Dealer cost means nothing to me. As @max_g indicated, if they got a deal and can maximize profit, more power to them. If they made a bad deal and are breaking even or losing money, better luck next time.
How do I do it? I look at dealer auction data from Manheim and cross-reference that to cars for sale. Sometimes, I get lucky and an asking price is actually a good price. Sometimes I get really lucky and find exactly how much the dealer paid at auction. More often, it is marked up more than I am willing to pay. I pretty much ignore cars with $5k or greater markup from AUCTION VALUE.
Example: my target vehicle with average miles and good condition report has an average auction value of $12k. Find one at local dealer priced at $15,995. I go and check it over. As long as it has a clean history and has no immediate apparent needs, I offer $14.5k. Pretty simple, really.
Yes, I have been shown the door on occassion. I have also been told “that is very fair.” More than once, during discussions, I have confessed that I know its auction value and I’m offering $2500 above, and have been met with approval. Even more often, they act offended. But the market is what the market is. I have never NOT been able to find the right car and paid the right price. Occassionally, I do even better.
But, fair enough on the sentiment. $2500 on a $100k car is not likely. And $2500 on a $1500 car is silly. Then again, why would you bargain hunt a $100k car and why would you buy a $1500 car from a dealer?
I like to grind em’ down. Back and forth with the salesman. Back and forth with the lead salesguy. Back and forth with the man behind the window… Hours and hours…
Then its on to how much a month, and if I… then would you ? Can they do a nothing down deal with my 500 credit score. back and forth ! back and forth !
Then when it’s all over I just tell em’ - Hey thanks - That was fun, but I gotta go now !
While this is true of the aggregate, you will absolutely encounter individual cars which are just priced too high. For example, it’s impossible to account for all variables in a pricing model so a dealer may think that in spite of the predicted price based on a given MSRP & year & mileage, they’re sitting on a unicorn because it has multi-contour seats or rear seat entertainment etc. I see it all the time when I set notifications in my cars.com app… “1k price drop” … “2k price drop”. Think of it like a confidence interval, and the upper/lower may very well be more than 2k on a given car.
