According to AAA, the Sticker Price (MSRP) is marked up by an average of 13.5% from what the dealer actually paid for the vehicle.
What scares us about car negotiations? Our preconceived notions of “not getting a good deal” or being subjected to “slimy dealer tactics”? Could it be how infrequently we make large purchases and the costs associated with them? With double-digit markups, it seems like new car buyers would be more more diligent in their research and more aggressive with their negotiations.
Mrs. FinEngr and I first started talking about the idea of a new car back in August of 2009. Not really entering the market until early September of 2010, we worked with Geoff, the Car Negotiation Coach, on strategies to secure the best possible price.
New Year’s Eve Day, we purchased a 2011 Hyundai Sonata.
Based on checked and re-checked calculations we negotiated:
- 19% below MSRP, over $3,000
- 14% below Factory Invoice, over $2,000
- 3.5% below Dealer Cost (averaged*)
*It’s hard for me to believe the dealer actually took a loss on our sale. At a minimum I know they got very little to no profit off us. Different sources and price profiles came back with savings from 0.5% to 6.0% under Dealer Cost.
As for the back story, here’s our situation…