March 23, 2013 • By Dennis Beaver
Buying a new car is rarely a simple, straightforward procedure unless money is of no concern. Most of us want the best deal possible, yet, customers who understand how an economy functions know that for automobile dealers to remain in business, they need to make a reasonable profit. No profit = no dealership = jobs lost, and that’s not good for any community.
Debbie — a cardiology nurse — understood that economic reality when she went shopping for a new Honda at a dealer whose sales numbers make it one of the most successful on the West Coast. As she tells it, “The last car I bought was a Honda Accord and that was 10 years ago. It is the only make of car that I would ever consider buying again, but when it comes to negotiating price and trade-in value, I knew my limits and needed help.”
And so she brought a close friend, a CPA and her lawyer — who just happens to write this column — to the dealership. Little did we know that buying a new, top-of-the-line Honda Accord would take almost an entire day and leave us wondering if we should have packed a suitcase and arranged for bail.
Bring your support system — assertive friends
“The Internet makes it fairly simple for new car buyers to discover a realistic price, yet there still is a great deal of old-fashioned bargaining possible over price and especially trade-in allowance. Many buyers are often terrified of price haggling, setting themselves up to pay much more than necessary, often sending this message: I just want to sign the contract and get out of here,” the general manager at one Central California Honda dealer told You and the Law.
He was describing nurse Debbie.
“Unless that type of a customer comes in with assertive friends, an almost certain result is overpaying. But there are huge traps even after a price has been worked out, especially if the customer has driven a hard bargain and the dealer is making less on what we call ‘the front end’ of the deal than desired,” he added.
“The focus will then be ‘on the back end’ selling, services or warranties, such as the Platinum Shield — for around $1,000 — where customers get a Scotchguard-like treatment for the seats, a questionable paint coating, VIN etching on windows, lost key insurance, and in my opinion something which has not been needed for years, regardless of where you live, undercoating — all of it pure profit for dealers,” he stressed.
‘Start by raising doubt, worry and the pressure begins’
“There is a well-rehearsed strategy which plays to the natural desire we all have to avoid expensive repairs. You will be told that the car has a basic 36,000-mile warranty and asked, ‘But what happens when it expires? A new transmission or engine costs thousands of dollars! And no one knows how soon after the warranty expires that things can go wrong, but you can protect yourself now by buying extended warranty protection, which only costs …”
“But today it is the rare car indeed that does not go well beyond 100,000 miles before any real problems arise. Few extended warranties are ever actually used, and pay high commissions to dealers. For some people who plan to drive a car until the wheels fall off, they can be a good purchase, but you can always buy these warranties later.”
‘You can’t leave’
There was one more thing the general manager told us:
“There is also a strategy at some dealerships to wear you down by making it difficult to leave — even if you make it clear that all you want to do is to buy the car and do not want anything extra. They will say, ‘For your benefit, before we sign the sales agreement, it’s required that you meet with our finance manager concerning the protection plan and extended warranties.’
“But, the guy is always in a meeting, ‘And we’re sorry, but I can let you go until he talks with you,’ so hours can go by, with one clear objective; that you will just agree to anything to get out of there!”
‘Either she signs now, or we’re going to XYZ Honda’
The greater part of a day had elapsed in helping Debbie buy her car, and after waiting almost an hour for “the finance manager” to see us, it was clear that I had a story to write.
Walking into his office, I met a mid-20s, arrogant jerk. “You have a choice. Either Debbie signs the contract now, or we leave. No more delays. She is not buying anything except a car. Do you get it?”
Today, she is the happy owner of a lovely Honda Accord in white orchid pearl.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.