How Much Lower Are Car Salesmen Willing to Go Under the Asking Price?

Understanding the Car Sales Process

Car salesmen, or salespeople, are often willing to negotiate below the asking price, a practical and commonplace practice in the auto industry. The extent to which they are willing to go lower can vary based on several key factors. These factors include the dealership's pricing strategy, the demand for the car, the time of year, and the condition of the vehicle. On average, you might find that new car salesmen are willing to negotiate anywhere from 5 to 15% below the asking price. For used cars, the discount can be even more significant, often ranging from 10 to 20% or more.

Strategies to Get the Best Deal

To maximize your chances of getting a better deal, consider the following tips:

Research Market Prices

Utilize resources like Kelley Blue Book or Edmunds to understand the fair market value of the car. These resources provide valuable insights into typical selling prices, helping you negotiate more effectively.

Timing Is Everything

Timing can play a crucial role in securing a better deal. Salespeople often aim to meet their quotas, so end-of-month or end-of-year sales can present potential opportunities. These periods are when dealerships are more likely to offer discounts to meet their targets.

Be Prepared to Walk Away

Show your willingness to leave the dealership if no satisfactory offer is made. This can significantly motivate the salesperson to offer a better price.

Negotiate Trade-Ins Separately

If you have a trade-in, it's often advisable to negotiate its value separately from the new car's price. This prevents any potential misunderstandings and ensures you get the best possible deal on both fronts.

Understanding Dealer Invoices and Profit Margins

The willingness of car dealers to negotiate is often tied to the dealership's profit margin. In general, most manufacturers have a profit margin of around 9 to 14% from the list price of the vehicle to what the dealer pays for it. However, specific deals can vary based on the current market conditions and available rebates.

Key Factors Influencing Car Prices

Regardless of what dealers might be asking, the true value of a car should be determined by its fair market value. To find the true market value (TMV), refer to resources like Edmunds, which provides detailed information on dealer invoices, freight charges, prep charges, and any manufacturer incentives.

For a new vehicle, the dealer typically wants to sell it at a profit, which means they might set the sale price above the invoice number. Other factors such as manufacturer incentives, a vehicle's popularity, and supply and demand can also influence the final price. By researching these details, you can avoid wasting your time and the dealer's time in the negotiation process.

Buying a new vehicle can be a relatively quick and enjoyable process if you approach it with a solid understanding of these basic techniques. Understanding dealer invoices, knowing the true market value, and being prepared to walk away can significantly improve your chances of landing a fair deal.