Sunday, November 7

Car Shopping by Phone and Email

I recently read a post at Get Rich Slowly. It was a readers submission describing how they shopped for a new car through email. As I was reading, I found myself thinking about how vulnerable the telephone and email car shopper is to abuse.

The writers strategy was simple; send out a bunch of emails to dealers within a 100 mile radius of where he\she lived, asking for their best drive away price on a specific vehicle (I've linked to the post in the first paragraph if you'd like to read it..) The dealer who replies with the lowest quote wins. Simple enough, seems like a great strategy, but there are a number of big risks doing business this way.

First off, let me get this off my chest and out of the way...

Let's say that tomorrow you show up for work, and the boss calls a meeting first thing. The boss says "In this economy, we have to be very frugal, very aware of our budget, and on the lookout for ways to reduce expenses." "So, today, before we get to work, we have decided to reduce our payroll expenses." "Good news is that those of you who are willing to work for the least amount of money today will have a job; bad news is those that don't give us the best price will not earn our business today." "So, here is what we will do today." "John, how little are you willing to take for your work today?" "Sue, will you do it for less than John?" "And how little are you willing to work for today Bob?".... Ridiculous? What kind of work will the boss get from the lowest bidder? Will they happily do the job for the boss? Will it be done right? Maybe John, Sue, and Bob won't work for a boss like that.

Okay, now back to Car Shopping by Phone and Email...

Asking dealers to 'bid' for your business surely will cut to the chase when it comes to getting the lowest price quote. The only shortcoming; you're doing business based solely on price- not always a good idea, especially when shopping for an automobile,and particularly a new automobile. Dealer reputation is very important when it comes time for when you need them "down the road". How can you be assured that this low quote isn't just bait on a hook?

Shopping with email and over phone gives you the feeling of being in the "drivers seat", eliminating negotiations. However, from the dealers perspective, they want to get you into the dealership. A salesperson uses the phone for two things; setting appointments and ordering lunch! Some will tell you whatever you want to hear to get you to come in, others will be honest. The honest dealers will be those with the marginally higher prices, or those unwilling to discuss price details over the phone.

There is a difference between Price and Cost. Price is something that you pay once, cost is something that you pay for as long as you own the product. Now, you may get a great price quote using the telephone and email strategy, but the cost of doing business with someone who will tell you anything they think it will take to get the sale may be more than the few hundred dollars you might save doing business with someone you can build a long-term relationship with. Sometimes it's better to pay a little more so that you can expect (and get!) a lot more.

If you opt to shop for a car this way, keep in mind that what you hear or read is not always true. Things to consider;

Do I know anyone who has done business with these folks before? Would they recommend them?
Word of mouth advertising is a dealers dream come true or worst nightmare. Ask around for recommendations before agreeing to anything. Reputation rules!

Is this dealership out of state? If so, how can I be assured that they know what they're doing when it comes to registering and titling my vehicle?
If you travel across state lines, beware! Chances are that a same state dealership will be required by the state to register and title your car. If purchased out of state, you are on your own. You will become responsible to visit your states motor vehicle office and take care of all of the paper work.

What are their administrative or documentation fees? Are they disclosed in the pricing that I've received?
These fees can vary between markets and have very wide ranges. You'll want to know if the price quoted includes the doc fee which can be as high as the dealer wants to charge. Note that in most states, this fee has to be the same for all customers and is not negotiable.

Do they have the car in stock?
Are they quoting you a low ball price on a car that they don't have? Dealers do this to get you out of the market, telling you that they will locate one or that they have one on order. Chances are, they don't have one on order and can't get one from another dealer (especially if its a high demand automobile). After making you wait, you'll get a call telling you that they can't get the one you want, but that they have this other model available, and the price for THIS one is a lot more than what you agreed to for the original one! By now, all of the other dealers who did have the car that you wanted in stock have sold out of their inventory. Now you're back to square one, and you can't find the car that you wanted anywhere because they've all been sold! And, because of scarcity in the market, the demand has driven up all of the prices! Make sure that they have one ready for immediate delivery!

What if I need service? Will my local dealer give me the same VIP Priority treatment as they give their customers if I purchased the car someplace else?
Loyalty goes both ways; you're loyal to your local dealer, they're loyal to you. Let's say that the service department is completely booked for the day, and you have a problem that needs immediate attention. You purchased your car from the competition 50 miles away because their price was $300 lower (maybe they even sold you the car at a loss!). Do you think that the service department will bump one of their loyal customers to help you out of your bind? How inclined do you think the dealership that you purchased it from will be to take care of a customer that cost them money on the sale? As I mentioned before, sometimes its better to pay a little more so that you can expect (and get!) a lot more!

How to get the best deal and price on a car

If you want the best deal and price, do your research and show up at the dealership! The best deals are made in person, not over the phone or email. Show them that you're a serious buyer and ready to make a deal by being prepared and ready to buy if the deal is right! An informed automobile shopper is far more likely to get a better deal than someone shopping for the lowest price!