How to save $12,000 on a car in 37 minutes

Buying a new car is an unnecessarily harrowing experience for most people. And even with as much practice as I get helping friends negotiate a deal, it can still be enormously frustrating.  Showroom staff are so well trained at trying to “close” a deal and not let customers walk out the door that it can be hard to simply get any price, let alone a good one.

Ring any Toyota dealer, as I did recently, and you’ll be lucky to get a recommended retail price over the phone. I can understand not wanting to offer a discounted price without meeting someone face-to-face, or finding out about how serious they are, but surely it should be against some kind of consumer law to not supply a price on goods that are for sale?

Helping a friend buy a BMW last week I found out just how hard it was to get a price even after walking into a dealership. For starters, the salesman wouldn’t print the quote from his computer screen, even with the full recommended retail prices (so I at least knew what the starting point was). I had to borrow a pen and a scrap of paper from his desk and write each price down, one by one.

When I asked what his best price was, he said it wasn’t possible to tell me. I would have to come back when I was ready to buy. I told him I was ready to buy today, but I need to know his best price, not the full tilt RRP with the dealer delivery charge and the whole nine yards and every other piece of profit that saw the price of a basic $50,000 BMW X1 end up at a ridiculous $62,000 drive-away once a few options were added.

He said he wasn’t allowed to give me the price because someone else might beat it. Ten points for honesty. I said I would shop him against one dealer, but wouldn’t reveal the price he gives me. If the other dealer is cheaper, then he would lose the deal. But if the other dealer is dearer, I’ll drive back, even if the other showroom tries to match the price.

I figure this is only fair because anyone can match a price, it takes guts to show how far you’re prepared to discount in the first place, without a target. In the end he went and got the manager, who tried the same tactic. I was about to walk out the door, politely, when he said: “How would you feel if I could do it for $50,000 drive-away?” My friend signed straight away.

Just in case you’re wondering, I didn’t use my surname or declare I was a journalist. That is not allowed. I went in as a punter, just like the hundreds of others across Australia who make the same attempt to price a car each weekend. In the end, the dealer ripped up the $3000 dealer delivery charge (contrary to popular belief, it does not pay for transporting the car, it’s to have someone give the car a squirt with a hose and affix the number plates, although sometimes you even get a full tank of fuel), $5000 of dealer margin and a $4000 factory bonus from BMW. And this price was for a factory order, by the way, not old showroom stock.

It should be pointed out that this type of discount is highly unusual. On some models the dealer can’t even afford to throw in a set of floormats. The current Volkswagen Golf special is one example: it’s $22,990 drive-away including metallic paint. A seven-speed DSG auto adds just $1500 (not the typical $2000-plus of other autos). You won’t get a cent off that car.

As for my BMW X1, though, which is clearly not exactly bolting out the door, the dealer still had at least $2000 in profit left in the deal, especially after “hold-back” is taken into account (the bonus a dealer gets if they hit their monthly sales targets). I don’t begrudge any dealer from making a profit. They have massive overheads to cover even before they’ve turned the lights on. And sales staff work long hours, much of it on weekends and public holidays. But the new-car buying experience doesn’t need to be this hard.

This latest exercise got me thinking: how many more cars would BMW (and others) sell if they didn’t try to jab people in the first place, and started at a much more reasonable price? No-one is paying full freight for cars these days, so why risk losing a customer in the highly unlikely chance they might be the one person this year who pays full price for a car? Nevertheless, it was one of my luckier days as a price negotiator: a $12,000 discount in 37 minutes. It would have taken 27 minutes had anyone served me when I walked in the door.

This reporter is on Twitter: @JoshuaDowling