I am entertaining the idea of buying a Mercedes-Benz C 250 petrol with some options. My question is, if the dealer locates the correct colour car with the right options I’m looking for, but he has to get it in from another dealership, does that compromise my ability to barter the price down? If they had to order it especially from Germany I'd imagine I wouldn't have too much bargaining power?
As with all products, supply and demand determines the price. If supply is relatively free and demand is relatively low, then the price is easily negotiates. If the reverse is true of supply and demand, then it’s hard to negotiate a lower price.
How do you know the car is available only at another dealer? It could be a ploy against you subsequently negotiating a lower price.
If the dealer knows you are highly motivated to purchase a particular car, and supply is low (there’s only one available) then he will certainly use this information to prevent your lobbying for a lower price.
HOW TO BEAT A CAR DEALER
Back in 2014 I updated this video. In the nine months since then it's had 65,000 views on YouTube. It's had nearly half a million minutes of total viewing (331 days in total) - at the time of writing this, there haven't been that many days between its upload and now...
Almost 400 comments have been made. These are interesting: neatly polarised into lovers of the video (potential car buyers) and haters of the video (car dealers). The cause for both the love and the hate is the same thing: the tips work because they empower buyers. The video lifts the lid on how car sales work as a process, and what you can do about it to drive a better dealer as a car buyer.
Make up your own mind on the video. It's 11 minutes and 14 seconds out of your life, which you won't get back. But it could save you thousands.
If you are after a low price on a new car, then there are several factors to consider:
BUYING FLOOR STOCK
Cars that are in stock now at a dealership, which you can effectively see, feel and purchase today, are the easiest ones to get a discount on. When a dealer takes delivery of a new car and puts it on the showroom floor, he has already purchased that car from the parent car company, on credit.
The interest on that credit is a significant operating cost for that dealership. Dealers are thus highly motivated to sell a car in stock now. High motivations means the possibility for a significant discount if you negotiate like you mean it.
There is much less motivation - and thus little to no discounting - of cars ordered in especially to suit your requirements. So, the more flexible you are on the specifics, the more you stand to save.
TIMING & QUOTAS
Car dealers account for their sales at the end of the month. Every dealership is offered significant financial incentives to meet their strict sales quotas. This means, effectively, a big cash backhander from the manufacturer for those dealerships doing a good job shifting the product.
Going in at the end of the month, ready to buy, and negotiating hard is a good strategy. Dealers shy of their quota will be highly motivated to achieve it - and therefore more likely to drop the price.
What really compromises your ability to barter the price down is dealing with a single dealer. It’s a fundamentally flawed way to purchase a car. Effectively it gives whatever dealer a monopoly on your business - they’ll tell you anything, and there’s no way you can verify the truth or otherwise of what is said.
Dealerships are - effectively - positioned to deliver a geographic monopoly over the surrounding territory, with the (pre-internet) thinking being that the dealership will source much of its business from that territory. (It’s why you never see two Mercedes-Benz dealers across the road from each other.)
TENDERING IN A BUYER'S MARKET
I’d rather be a buyer in a room full of sellers than a buyer walking into the only shop in town (the car industry’s preferred option, and geographic business model).
The best way to buy a car is to get a number of dealers competing for your business. As a one-off buyer it’s difficult to do this. Dealers want you in the dealership, face-to-face, to greet you and gut you. (The polite sales term is ‘close you’.)
But if you use an independent broker, they will tender your purchase across a range of dealers, and those dealers will submit an offer for the business. Lowest price offer wins the sale. This is an economically robust way to secure the lowest price, and it insulates you from the more insidious profiteering schemes that await the unwary who might set foot solo in dealerships.
Basically it’s a simple process that gets several dealers competing for the business, which drives the price down. It works successfully for hundreds of visitors to this website every year.
Don’t worry about which dealer wins the sale. You can get the new Mercedes-Benz serviced at whichever dealer you want. Even if the winning dealer is interstate, registration in your state and transport to your location can be routinely arranged.
Earlier on, I said that the more flexible you are, the less you’ll pay. Now I know there was a real hoopla whipped up around the new C-Class after its 2014 launch. But really, it has direct competitors that are just as good. So similar, in fact, that if you landed here from Alpha Centauri tomorrow, you would not be able to tell them apart.
Mercedes-Benz has two sworn enemies - BMW and Audi. And the C-Class it pitched against the BMW 3 Series and the Audi A4. (And let’s not forget that if there were truth in advertising, Mercedes-Benz’s motto would be ‘almost as good to drive as a BMW, and almost as well finished as an Audi’.) If you can’t get any joy on the price of the C 250, buy a comparable Audi A4 or BMW 3 Series. They’re substantively identical, unless you’re a brand snob.
The happy result of the C-Class’s recent debut is that this would have put some pressure on Audi and BMW dealers to maintain sales volumes of the A4 and 3 Series. They’d thus perhaps be more motivated than before to sell you one of their cars - a happy result for you, regarding the price.
And trust me: you can be just as happy in an Audi A4 or BMW 3 Series as you can in a C-Class. After about four weeks, they’re all just your car.