Here is today's lesson boys and girls and the story kind of goes like this:
You have one dealer who gives you an incredibly bigger discount than the next dealer or who gives you a lot more for your trade in than the next guy. WHAT can he be doing?
1) Adding on an additional window sticker that includes things like a rustproofing package, window etching and fabric protectant ?
2) Using the list price of the car BEFORE the package discount already on the window sticker, thus making it look like a better deal?
3) Giving you a better deal?
It could be ANY of the above but you need to know the strategy behind #1 and #2.
SOME dealers put "addended" window stickers on their cars that look identical to the sticker from the factory and are placed right next to the factory sticker. On these "addended" labels they list options reportedly already installed on the vehicle. These items all always "high markup" items. The sticker looks identical to the factory sticker and is meant to add useless markup to the price.
Lets say a dealer has car with an MSRP sticker of $20,000. The dealer will now make up another sticker listing things like "Paint Sealant" (YOU DO NOT NEED THIS) for $600 and glue it next to the original sticker. The "bottom line" will now read $20,600. That dealer can now give you $500 more discount than the next dealer or give you $500 more for your trade. Why? I am gald you asked. Because this alleged "paint sealant" only cost the dealer $45 ........... if he applied it at all! You can go crazy with all the high markup and low value things that can be added to a sticker. There is electronic rustproofing, fabric protectant and window etching. There are also overpriced hardware items like moldings, mud flaps and door guards. These things can add thousands in mark-up. He can start discounting the car knowing that he has more profit for himself with his own sticker. If he has $1,000 worth of useless stuff on his car, he can show you a $1,000 discount when he gives it to you to make a deal. He is actually giving you nothing of any substantial value yet you feel you are getting a discount.
Most factory window labels these days include a "discount package" for packages of options. For example a 29K package may include a bigger engine, heated seats, rear air conditioning, an entertaimmsnt center and a better radio. Lets say it costs $3,500 and has a $1,000 discount so it nets out to $2,500 for the package.
The math would look like this:
Vehicle Price: $25,000
29K Package: $ 3,500
Price before discount: $28,500
Package Discount: $ 1,000
The TRUE list price of the car is $27,500. SOME DEALERS will tell you that $28,500 is the list price. This means that they can give you $1,000 more for your trade or tell you (its a lie) that they are discounting the vehicle by $1,000 more than the dealer down the street. The $1,000 discount came fromt he factory, not he dealer. You need to compare apples and apples. Don't let them start negotiating from $28,500!
Here is what you need to do. First, I would not shop anywhere that a dealer has "loaded up" additional window sticker with what I call "fluffety-stuff". All that high markup garbage is just that and you don't need to be paying for it. It is worth little and its meant to make you feel like you are getting a big discount when they give it to you for nothing, which is what it is worth. Second, always ask for an "out the door" price including all fees, taxes and with your trade-in deducted and paid off. Ask "If I needed to write you a check today for this car how much would I have to write the check for?"
I feel sad when a customer tells me that he bought his Chrysler Dodge Jeep Ram or Ford at another dealership for what he thought was a few dollars less than my price only to find out that he actually paid more for the car because he bought into the worthless electronic rustproofing package and actuality got "snookered".
After all, if someone said they would give you two five dollar bills for your twenty you would not take it. Two fives is not worth one twenty. Don't be fooled into accepting worthless things as if they are worth real value.