When it comes to buying a car these days, you’re in a position of power. The local car market is in trouble and there are literally thousands of dealerships vying for your business. You can walk into a new or used car dealer and buy a car at a price that suits you. But that’s only if you play the game like a pro…
 
What most car owners don’t know about pricing

Like any product, cars have a ‘trade’ and a ‘retail’ price. In the auto world, these are known as ‘book’ values. The difference between the two values constitutes the dealer’s scope for profit margin. For you the buyer, knowing the ‘trade’ value of a new or used car is your secret weapon in coming out tops when buying a car. The car dealer’s ‘bible’ is the Auto Dealers Digest. Ask to see this book when visiting dealerships to check prices.
 
Do this to calculate your negotiating power

Let’s assume you’ve decided what model of vehicle suits your needs and budget:
 
New cars: Check local car magazines for listed retail prices. Generally, the ‘trade’ adds between 9% to 15% onto their ‘wholesale’ price. This means if you’re buying a new car sold at R115,000, you’ve got up to R15,000 worth of bargaining space, to beat the dealer down to R100,000.
 
Used cars: check the classified ads and Junk Mail to get an idea of what is being asked for a certain model with similar kilometre readings. Phone used car dealers and ask them what the trade-in value is for the model you are looking for. This will give you the ‘trade’ value of the car. When you compare this with the asking price, you’ll know how much room you have to negotiate down.
 
3 rules for the “perfect car deal”

Once you’ve identified potential sellers, it’s time to start dealing. If you can access cash to cover more than half the price of the vehicle, you’ll be in a far stronger position to get your price than if you need to finance the vehicle in full. Here are some tips to get you started:

1. Take an expert along: If you know anyone who has car know-how, get them to thoroughly examine the vehicle. Remark loudly about any shortcomings to the dealer and have your expert write them on a list of paper as ‘bargaining ammunition’.

2. Time it right: Car salesmen work on commission and invariably have to meet sales targets. Visiting dealerships at the end of the month (especially weekends) is a good time to catch a bargain because sales staff are desperate to meet target and achieve their bonus incentives. If you want to scoop a bargain on a new car, wait for the latest model to arrive and buy the previous version at a greatly reduced price.

3. Talk and walk: With your knowledge of the car’s ‘price bracket’ and shortcomings (damage etc.), offer a price below ‘trade’ value. The salesman will laugh at you, no doubt. Ask him how much he is prepared to drop his price. Then keep silent. If his price drop is insignificant, say “thanks, but I’ll take my business elsewhere”. With competition so rife in the industry right now, he’ll be begging you to stay and drop his price to a level that pleases you.

Knowing what car you want and what price you are prepared to pay, coupled with a solid knowledge of what the market prices are doing at that point in time will give you the edge at the bargaining ‘table’. Always remember that the car salesman needs your business more than you need his car.