Sunday, February 26, 2006

Buying a car - the rest of the story

I had an idea of making a series of posts about my car buying experience. However, with the recent arrival of the twins, I don't see myself having a chance to work on it. So let me see if I can summarize the process.

After determining that a minivan was the right configuration for us, we looked at Consumer Reports. They ranked the Honda Oddessey and Toyota Sienna almost identically, and well above all other minivans. So it seemed like the right choice to get one of those.

A big question was how to configure the car. There are some pretty cool options; which to buy? Power sliding doors would be great when hands are full of babies & groceries. DVD player to pacify the kids on trips. Power 3rd-row windows make those windows much more useful.

In a moment of clarity, I realized that the right answer was to buy none of these things. Safety, reliability, comfort, gas milage, and room enough for the family are important. Spending money in the car on anything else is rarely worth it, for us.

The Honda was redesigned last year. In the process, they raised the bar, making a bunch of features standard, which were still optional on the Toyota. Sure, these features would be nice, but I wasn't interested in buying them. This put Honda at a disadvantage, price-wise.

It turns out that the lowest trimline on either model is almost impossible to find on dealer lots. There's much more money to be made on the upscale trimlines (especially this close to Microsoft), so the dealers just don't stock them.

My plan was to make the dealers compete against each other for my business, based on guides from the Motley Fool. However, if there were only 3 of my model in the whole Pacific Northwest, then there wouldn't be a lot of competition. I adjusted the Foolish approach to be a little less specific about exactly what I was buying (since there were no options that I required).

I used Edmunds' and Consumer Reports' pricing services to get an idea about what the price on the van might be. Note that both "MSRP" and "Invoice" are marketing numbers, and have little connection to the cost of the car, or even to what the dealer paid for the car. However, Invoice is a good starting point for figuring out what you might pay.

I then emailed a dozen dealerships. Most were close by, but I picked a few in the next county, and a couple that were 100 miles away. The mails I sent looked something like:
I plan to buy a [Sienna/Odyssey] in the next 2 weeks. I am interested in
the [CE/LX] trimline, with no additional options or accessories. Color is
not important. Over the next 3 days, I am taking bids from various
dealers. Please reply to this mail with your bid.

Some dealers replied with hard prices ("We will sell that to you for $22,734.") but others didn't, including "come on down", "we have a blue one in stock, is that OK?", "please call so we can talk about configuring it to meet your expectations", etc.

I entered a dealership early twice during the process, and regretted it both times. The second time, I made it very clear ahead of time that I was coming to the dealership to get a quote. The salesprick talked me in to a test drive, and then got out the "4 square worksheet" and tried to get me to start negotiating. I got pretty frustrated that he wouldn't just give me a quote. I walked out, annoyed that I had wasted 2 hours on that place.

One Honda dealership give a very good offer, only $800 over the best Toyota offer. I decided that $800 was probably worth the large feature gap between the two cars, and had felt good about my interactions with them so far. I showed up & we started to do paperwork. Half-way though, they discovered a "math error", raising the price by $1000.

I don't know what really happened. Was it a legitimate mistake, which the sales manager caught? Did the sales manager say "no way we can sell for the price you quoted; try claiming you made a math error"? Or was it their plan all along, to try to wrestle more money out of me?

I don't know, and it doesn't matter. At $1800 over the Toyota, I was no longer willing to buy the Honda. I also was unwilling to try to negotiate price in the dealership. So I packed up my stuff, and walked out.

Remember that when you're in the dealership, they have a huge advantage. Put yourself in a position of advantage when you negotiate. For me, that was at my desk, with 15 browser windows with car information.

I emailed the dealership with the best quote on the Toyota, clarifying the price. (I've heard of dealers stuffing in extra fees, so I asked them to disclose all numbers up front). I decided I was OK with the result, and told them they had won my business.

There was an annoying process where it took 4 days for the dealer to get the car from across the state. I kept making plans to take off from work to go get the car, and then had to cancel them.

Once I got to the dealership, it took 3 hours until I could drive away. A big chunk of that was waiting in line for the "finance manager", who took my check in 10 minutes. Luckily, I planned ahead and brought a book. I picked a comfortable looking vehicle in the showroom and sat in the passenger seat to read.

I didn't have a trade-in (keeping the old car for trips without the babies), and didn't finance (I had saved up money, but would have used my bank instead of dealer financing). This made the paperwork simpler, and made it harder for them to hide costs. It also meant that the dealership was making less money, so the quoted price was firmer.

Dealerships, like casinos, don't have clocks around. They don't want you to know how long you're spending there.
  • Negotiate remotely
  • Stay in control
  • Be ready to walk out of a dealership at any time
  • Be clear about your requirements ("I leave a 2pm, with or without a car")
  • Never buy "today"; tomorrow's deal will be fine

The Sienna is damn comfortable. I really enjoy the luxury of riding in the passenger seat. It also handles quite well, especially the very tight turning radius.

One day I want to install a PC in the van, which provides music, movies, and navigation. Synchronize the media with the home archive with wireless networking, etc. Some cool possibilities...

Now that the old car is somewhat redundant, I also intend to party on it a little bit. Not sure what, yet.


James Adams said...

"In a moment of clarity, I realized that the right answer was to buy none of these things. Safety, reliability, comfort, gas milage, and room enough for the family are important."

*clap* *clap* *clap* *clap* *clap*

Bravo for not equipping a car with a DVD player, first and foremost. Those things just do not belong in a car. We grew up just fine without having those things, and your kids will grow up just fine without them as well. Kudos to you for having your priorities in order.

Dealer Invoice said...

Wow... a consumer who actually took the time out to do a little bit of research! Congrats. As a Car Dealer For 12 years (Now Retired with Millions) I could never figure out why consumers would not take a few hours and do exactly what you did - try and save money. They all wait till they are at the dealership to put on their "tough guy" routine and by then they are under the spell paying for my next vacation. Feeling a little guilty (well sort of) I decided to build a site that would help consumers when buying a vehicle. It actually shows you step by step how to eliminate all dealer advantages plus I put a few more extras in there as well. Everything is free and there is nothing to buy. I am sick of selling! Have a look: Best of Luck - You did good!

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