After months of research and a lot of time spent online, I traded in my 2004 Toyota Prius for a 2008 Toyota Highlander Hybrid yesterday. Well, I bought the Highlander, knocking a bit off the price with the Prius, realistically.
First off, I bought the car because I found myself at a point in my life where I owning two cars: the Prius and a 2004 Volvo XC90. I really didn’t want to have two cars, so when I envisioned a vehicle that had the best of the space and bad-weather capabilities of the Volvo and the energy efficiency and general design panache of the Prius, I identified two possibilities, the Highlander Hybrid and the Lexus 400h hybrid SUV.
Problem with the Lexus, though, is that it’s darn expensive, more expensive than I was prepared to pay. The Highlander priced out, even with every option, at least $10k cheaper.
2008 Toyota Highlander Hybrid
So I spent time online, went to the Toyota site and requested bids from dealers throughout Colorado, and tried to work directly with Boulder Toyota, the local dealership.
Now I’d had a bad experience with Boulder Toyota when I bought the Prius back in 2004 (they refused to omit a $900 “high altitude prep package” which was them etching my VIN on the windows and doing an undercoat, which would have cost them about $80, if that) and ended up canceling my Prius purchase and buying it from a Denver dealer instead, so I was unsure how the down economy would affect their interaction.
In fact, they were still unpleasant and untrustworthy salespeople. This time the salesman didn’t say a thing about prep packages, but when we’d emailed back and forth I said that I was expecting $13-$14k for my Prius trade-in. I drove the Prius in and while he offered me a good price on a dealer demo Highlander Hybrid (approx $40k) he also offered me $10k as a tradein on the Prius. Not acceptable.
I called up the used car manager at Boulder Toyota and asked him about how much it’d cost if I wanted to buy a used Prius from the dealership and he told me that an ’04 would cost me about $17k. That’s quite a profit on my little used vehicle!
I wrote an email to the Boulder Toyota car salesman:
The Highlander Hybrid VIN JTEEW44A182019389 is an acceptable deal at $40k, but $10k for my 2004 Prius when your dealership is going to sell it for $17-$18k (according to your used car manager, who I talked with this afternoon) is unacceptable.
I expect a minimum of $14k for my car as a trade-in and know it has strong market value: you only have one used Prius on your lot and it just showed up a few days ago, which tells me that they’re moving well for you.
Please advise how we can proceed.
A week later, I still haven’t received an answer. Apparently they aren’t as hungry to make a sale as I had expected.
Fortunately, I’d also been communicating with the online sales guy at Stevinson Toyota West down in Golden (about 45 minutes drive from my house). We talked on the phone and I shared the $40k for an ’08 Highlander Hybrid deal, to which he said “that’s just dealer cost minus the current rebate, we could do that.” Sweet!
Stevinson Toyota West, Colorado
Yesterday I dropped off my son at a pal’s house and drove down. We met and the Internet sales guy at Stevinson Toyota was pleasant and friendly, but when the time came for him to show me numbers, he presents me with $45k for the Highlander Hybrid and $10k for the trade-in value of the Prius.
What the hell?
I said that was not acceptable and that we’d already discussed the price and he was way off what I was expecting to pay, and way off on what I believed was the trade-in value of the Prius. I offered him $40k for the Highlander against a $13k value for the Prius.
He came back with an offer that was about $800 less than the previous.
I said “Apparently I wasted my time coming down here today. We’re done. Please go grab my Prius keys and I’m outta here.”
He leaves and comes back with The Manager.
Ho hum, I thought, more games, but let’s see how this plays out.
The floor manager (according to his nametag) offers me the car for $42.8k and a trade-in of $10,500 for the Prius. I say “this is pretty ridiculous: your salesman and I talked about this and he told me he could sell the Hybrid for $40k. That’s the number I need to see. And the Prius trade-in is unacceptably low too. You’re wasting my time and your man isn’t telling you what’s going on.”
He says “let me see what I can do” and, surprise, wanders off, salesman in tow, to talk to The Big Manager.
They come back and offer me $12k for the Prius and the Highlander Hybrid for $41850. I stand up to leave and he changes the ‘1’ to a zero. I figure “good enough” and we have a deal.
So the 2008 Highlander Hybrid, fully loaded with all the option packages and with 33 miles on the odometer, I bought for $40850, against a $12,000 trade-in value of my Prius. Not bad.
But we weren’t done yet. Of course not, because then it was the finance guy’s job to try and upsell me an extended service warranty, clearbra, “Karr Alarm” (whatever that is), etc. He presents me with this hand written sheet of different warranty options and how much my monthly payments would be with each one.
I look at the way he’s presenting it and ask “what’s the base monthly payment again?”. Turns out (thanks to my iPhone calculator) that they were asking $5,460 for an extended warranty, clear bra and karr alarm package by making it seem like “only $91/month more * 60 monthly payments”. Insanely overpriced!
I laughed and said “you’re really asking $5460 for this package? I’d think about it for $1000, maybe, but not this price.”
He looked at it, looked at me, pulled out his pricing book, and said “I could sell you just the warranty for a thousand, but not the clearbra and karr alarm.”
me: “If it’s just the warranty, I’ll offer you $900.”
He looks it up again and says “that’s lower than employee cost on it. I’m not authorized to go that low, I need to get approval” (pauses for a few seconds, to “think” about it) “Oh, what the heck, better to just do it. Okay.”
So I figure that the extended warranty was probably still padded, but not by much.
And that was my car buying experience yesterday. Approximately elapsed time, three hours. Had you have been following my Twitter stream that day, you would have seen the blow by blow along with a ton of hilarious and supportive comments from everyone else in the Twitterverse. It made the experience far more amusing, which helped me stay calm and focused on what I wanted to attain. Thanks, gang! (You can find me on Twitter as DaveTaylor and my film alter-ego at @FilmBuzz).
I will say that it’s disappointing to have dealers use the Internet as a honey pot to lure buyers in and then game ’em anyway, rather than honor what they communicate with potential buyers and simplify the process.
It really is surprising that they feel they can still play thier games in the present economy. Salesmen rate their completed sales like fish. They will say a customer was “a 3 pounder” to indicate they made $3K on a deal.
Dave,
Painful man. I’ve foregone any direct connection with any car salespeople.
Like you, I do all the research before hand (that part is fun), get an idea of the costs I want for the trade in, the new car, etc.
BUT then I call my man at AAA Autosource and tell him – “If you can bring it to me at this price, we’ve got a deal.”
Each time (twice now in 10 years) he’s done exactly that. He comes picks my car up, and delivers my new car. I never see the dealership.
Don’t ask me how it works – it just works.
James
Private parties are playing games as well. In my case we have been shopping denver.craigslist for a used vehicle for my son. This is an incredibly time-consuming, process. Of the cars we’ve filtered through that are within striking distance of the budget, we’ve taken three to our mechanic in Longmont, http://www.steves-alignment.com, to check out, and all displayed significant ‘problems’ that the owners can’t believe exist or hide their eyes to or dismiss as minor.
The telltale sign of a bad deal is one in which the vehicle price after repairs (even if you squeeze and do some yourself) is higher than the regional sales price for the vehicle pending condition. As bank uses nadaguides.com for evaluate loans, that’s why I use as well. Good enough for them…
Minor body damage – oh please! Don’t take the seller’s word on the repair price. Take it to a middle-of-the-road shop and get an estimate.
My example:
1999 car – NADA value if tip top – $5000
$2500 – seller’s bottom line (from $3300 orig)
$1100 – warranted mechanical repairs
$2300 – “minor” body damage
$220 – broken windshield
————————
$6120 – does this still look like a good deal?
Sure it takes some footwork, really a lot, but do your research, take the car to a good mechanic, go in prepared and avoid inheriting someone else’s mistake. Laissez-faire!
Dealers make the entire car buying experience torturous. I break out in a cold sweat anytime I have to deal with dealers. They always try to throw various loops at you, hoping the consumer will slip up. It’s good to take a friend with you to monitor the negotiation. Also, gives you an excuse to ‘take a break to discuss with my friend’.
I recommend subscribing to the NADA offical used car guide, NOT the consumer guide. This is the one the dealers use. The guides are published by REGION. Colorado is the Rocky Mtn Edition. Not knowing the mileage/price/condition on your Prius prices it at 13450 trade-in and dealer retail at 16650.
For new cars, use the on-line Consumer Reports price quote. They make a good effort to find out what kick backs and rebates the dealer is getting for specific models, in addition to actual invoice.
FINALLY, watch out for the nonsense “Dealer-prep” fee. Essentially, you are paying the dealer to clean your used car. For new cars, I still can’t understand why the sock this to the consumer.
I still think you were being played and paid too much. The other guys are right. As a private individual at a dealership you get ripped off. Even if it is a real smart guy like you.
You just have to be prepared for that. Car dealers are rated at the bottom of the pond together with some groups of lawyers for a reason.
I can believe they haven’t been replaced by a better system yet.
I went through an agent the last time I bought a car. I paid pretty much what I would have gotten at the dealership in a best possible scenario.
But I didn’t have to set a foot in there. Who do they think they are?
We had an awful experience at Gebhart BMW in Boulder. We were trying to buy a used X3 and found one we liked. We made a deal and took it home. The car wasn’t officially BMW pre-owned certified, but that was “just a technicality because the car was recently traded in and he will get it certified with the warranty for us.” The dealer calls back the next day and informs us that salesman was unaware the car was recently in accident with $10k in damage and that is why it was traded in being just a few months old. As apposed to the previous owner being “very wealthy” who bought cars from them frequently and his wife didn’t like it and traded it in for something more expensive. He offered something ridiculous like another grand off for the trouble. Saying it was a steal and he had “three” other people interested in paying full price.
We took it back and gave them an earful. They claimed to be doing us a favor because they weren’t required to tell us about the accident.
Long story short we went later to Schomp BMW in Littleton and got a slightly upgraded X3 for a lower price. Schomp is a no negotiate “one-price” dealer supposedly. Anyway there initial price was a good one and we took it.
Dealers suck.
Dave,
Great read, masterfully recounted as usual.
I am shocked to see that in this day of internet research, Twittered blow-by-blow, and blogged retelling of the details that the game playing BS is still remotely viable. Surely there are lists of dealer costs and standard margins published someplace in cyberspace to point these wayward sales people to.
I despise the self check-out counters at the grocery store because when I look at them I see the skeletons of downsized workers but “negotiating” the price for a commodity item like a vehicle is unnecessary and absurd. Car sales people need to be retrained to be product evangelists and customer service representatives and let this outmoded dance of 1000 veils (managers) die away.
The vehicle sounds great, and a great choice for you. Drive it in good health. Enjoy.
My friend, L. James Johnson, is the Internet Sales Manager for a Ford dealership (a new position and a new dealership for him). I’ve known him for over 15 years. He has a lot of integrity.
It’s interesting to watch what he is trying to do with Internet marketing. http://www.bayareacarguy.com
He’d be very interested in advice from you and any of your readers.
Hey Dave, as you know, I was hunting for a car during the same weekend and had similar experiences. However, I chose to work with brokers as I usually find the experience to be more “service-oriented.” That belief is now gone. I drove down to Parker on three occasions to see Acura MDX’s. What I found each time was three cheesy men sitting there telling me that they had a record day for selling MDX’s. This after I had an appointment. Then I decided to call them out on Cars.com for promoting cars that were not on the lot and their response, don’t worry, we got several new MDXs in just today, come down. I actually took their word for it and drove down a third time to find nothing but an old MDX with exterior damage. This was also a car that was sold days prior (while I was there) but the loan didn’t go through for the woman purchasing it. When I asked how much it was, they quoted several thousand dollars over the price that I had seen listed online in numerous locations. When I asked why their price went up, one salesmen replied, oops I forgot that we just took money off of that and posted it online at this other price. At that point I was disgusted and felt like I had been gamed. I left and ended up buying a car down the street from a really nice broker. When they called me the next day, it felt good to tell them that I was done buying a car and wouldn’t recommend them to anyone.
Dave, Sorry to hear about your ordeal. I took a ‘tour of duty’ in the industry as a single mom to get the scoop so as not to be ripped off myself. What an eye opening experience that was. Now, I love to make deals for friends and family and take the dealers to town. My last deal for myself was done in a showroom late on a Saturday evening while pitting a sales manager and his general manager against a GM from a different dealership whom I was negotiating with via cell phone (all at the same time). I started a bid war between them and bought the car for a very ‘friendly’ price. It also came with all the bells and whistles and I didn’t finance it through their organization. Just like the concession stand that supports the theatre, the finance department supports the dealership. That is a whole other topic! Find your car online, get your finance package from your Credit Union, and give them a ‘take it or leave it’ offer. Never indicate that you have a trade-in and never tell them what range is for your payments. Make your deal first on the ‘drive out’ price for the auto. After that is established in writing, talk to them about a trade-in vehicle. Save the best for last and tell them about your finance package through your credit union. Make sure you have a box of tissues to give THEM, they will need it! No matter what you get as a deal they will survive since they get rebate and inventory money etc. from the car manufacturer. We could do a whole other post on ‘warranties’, ‘dealer prep’ and ‘used car inventory’. Maybe it is a subject for an e-book? Let me know what you think.
Dave, when I bought my last Toyota 2 years ago, I went through Costco’s auto buying program. I submitted what I wanted, I got a call from the fleet dealer the next day, he gave me the price over the phone, it was within $100 of my target price for the vehicle. This was for a FJ Cruiser, back when they were very hard to come by, much less get a discount! I paid $30K on a $34K sticker price. I went in, no games with price, I had separate financing so no hassles there, I drove away within an hour.
This is the second time I’ve gone through the fleet dealer, and in both cases the transaction was smooth sailing.
Thank you for sharing this.
As someone who is about to go through this in a few months and looking at the exact car you are talking about I found this read VERY informative!
Seems like some of you were lieing and playing games with the dealer . For one why would you waste your time going to a dealer that already took advantage of you once. And how is a reputable salesman able to take care of you properly if your dealing from lies . I suggest do your research and find a place that they are helping you buy a car not sell you one!
Thank you for your detailed and honest description of your car buying experience! I have heard that buying a car is the second most stressful experience in a person’s life – second to buying a home – and I agree with this. Similar to you, I am unsure why people need to play games, I guess the dealers just assume that people will give in and not bother keeping them to their word. Good for you!
That’s why you never should deal with “Retail” sales…always ask for the “Fleet” manager.
I think that you hit all of the key points and great information for the consumer. I will sign up for your blog and please let me know if I can assist in any way.
Nino Parco, C.E.O. Dealership Internet
You would have thought that it would be easy to find a bargain in this climate, but I suppose the dealers are scrimping for every penny too!
I’ve said it once and I will say it again. The best way to gain new business as a car salesman is to be honest.
There is no point in being sleazy. Even if you have to take a cut in commission. You will gain a customer for life.
Well after reading everyone’s response to your article I can only assume that every one feels the same way about car dealerships and the sales people that work for them (they are scum). I can understand why after a couple of bad experiences why people would start to feel that way, unfortunate but understandable. The problem is that their seems to be a couple bad apples that spoil it for the rest of us. I am currently employed through King Buick/GMC where we have been in business for over 90 years and pride ourselves in customer satisfaction. No games, no surprise punches, just a bottom line price. Of course the dealership is going to try and make a profit, just like any other business, they have overhead/expenses. Would you try and negotiate the price of groceries at the register, or how about the price of gas at the pump. So why walk into a car dealership with the expectation of getting 5,000 of the price of a new car and full allowance on your trade? It’s not a game we are trying to find a middle ground where everyone is happy and it’s unfortunate because most people see this as a tactic of ripping of the customer!
I have to say your argument is a bit weak, John. Cars are priced such that there is negotiating room for the dealer, so to say we shouldn’t try to get a better deal is questionable. I mean, if you’re so straight and it’s so frustrating for you to negotiate the price, why negotiate at all? Do the old Saturn trick of “we sell at sticker price, no hassles, no negotiation”…
Just want to point out that KARR alarm is a big scheme to gouge your money from another angle. They’ll give you a lower than MSRP price tag on the car up front, then tempt you with the “pre-installed”-alarm that cost you $800, and it can come down all the way to $400 (if you bargain), and give you the incentives of the “insurance” if your car get stolen, it pays the difference from your auto insurance and the current market price. Well, you ARE buying the insurance so-to-speak, but not directly. You signed to give them them the money, and they apply for the insurance for you, but I guess that’s under their name, so they rake the % of a insurance transaction. Well if you look at the realy company of KARR alarm, it also does re-insurance on the other end under Southwest(Or Southeast?) Dealer services. The “problem” is that the quality of the alarm is “5h17!” It also disable some factory door locking features in some cars. The thing probably cost $50 bucks to make. And who is to say the alarm won’t short circuit factory wiring? Did Toyota give them a stamp of approval? Did Honda certify KARR alarm? There’s a law now stating that OEM component can be installed without voiding factory waranty, until proven otherwise. Are we all electricians, electrical engineers who know that in all conditions, the alarm is safe? Why would you want to buy a car if you knew someone took out the bottom of the dashboard and play with all the wirings one by one and tap it here and there? It is not a single multi plug and play cable that just there. No. So folks, google KARR alarm and South… Dealer Service. You can say it’s conspiracy theory.
Forgot to say, if you see KARR alarm pre-installed, just run! If you say you don’t want it, well, they just won’t activate it, but… the car’s been tingled with! It’s kind of like buying a PS3 with a mod chip included, and they will “fix” your moded version under their-“warranty”. That is, also why they want you to buy extended warranty. So anything goes haywired, they can keep a lid on it/patch it before you call a lawyer.
http://www.swds.net/dealer.html
check out the first paragraph:
“our exclusively developed porducts and programs set us above the competition.”
lol. Sure it does, above on top of the poor product list.
“Since 1987, Southwest Dealer Services has been committed to helping dealers maximize profits by providing value added…”
There you have it.
Very interesting story, thanks for sharing it. I’m about to buy a car too, so I’ll keep your experiences in mind and hopefully not get ripped off!