Last week, I saw a clip on YouTube where Russell Peters, a man who makes good money playing up every cultural stereotype ever, performed a routine about how cheap Indians can get. Things like ripping a perfectly good shirt at a store so they can ask for a discount. Things like trying to get $10 off a $35 bag. And things like being proud of themselves for not spending any money on a Louis Vuitton bag.
As the thirty readers of Clunkerture know, I’m of Indian descent (I mean seriously, do you think anyone in his right mind would stick with such an unpronounceable name like Satish Kondapavulur!?), so I took that comedy routine to heart, especially the bit about negotiating for the best price.
You see, desi people are indeed that cheap. That include me. Yes, I always try to never pay list price for something. Yes, I actually don’t turn on air conditioning while driving to save gasoline. And no, I don’t watch Extreme Couponing because I will immediately become depressed about how non-desi people can save that much more money than me, someone who still uses his student ID to get discounts at the movie theater.
Throughout my search for the perfect P38 Range Rover/E46 M3/Porsche 997, I’ve seen plenty of showroom floors, home to car salesmen, posters of cars you wish were still sold brand-new, and anywhere from two to twenty cars. Usually, the cars on the floor are a) the most expensive vehicles on the lot, and b) “special” editions of cars they think can be sold for MSRP.
In the window of the cars is the Monroney sticker, known as that paper which lists the numerous features, most of which are never utilized, safety scores, most of which are now promptly ignored because we think the NHTSA is looking out for us, EPA fuel economy ratings, which are perused and discussed for 20 minutes only to seriously consider a hybrid, and, most importantly, the MSRP, which is the price the automaker “suggests” for the car, but in no way, shape, or form indicates what you'll really pay for the car.
But on occasion, I’ve seen an extra piece of paper stuck to the side. On that paper is generally one of two things. It could be labeled “Market Value Adjustment” or “Dealer Mark Up.” Both of these things won’t be good.
Usually that extra piece of paper is on newly-launched and/or limited-production performance cars. Cars like a 1-Series M or Mustang Boss 302, which to no end have had those extra stickers perpetually attached to them. In those scenarios, dealers charging extra does make sense because they’re very much a trophy for car enthusiasts, and even more so if they have the first one in their area. Eventually, after they’ve been on the market for a while, you can visit the model-specific forums or contact Internet managers of dealerships to see if you can buy the car for MSRP or lower.
However, in more than one instance, I’ve seen those “Market Value Adjustment” stickers on some very normal cars. For example, when I went with a friend to test drive a Dodge Dart, there was an MVA adjustment of almost $1,000 in the window. While at a Cadillac dealer, there was a “Dealer Mark Up” of $2,000 on an ELR. At a Subaru dealer, a Tribeca had a $4,000 MVA. A TRIBECA! None of these cars were exactly flying off the lots, yet dealers were compelled to charge over sticker for them, making an argument that the market justified the higher published prices.
Despite everything I’ve written so far, I do understand why dealers attempt to sell cars above MSRP. It’s because the profit margin on selling brand-new cars is fairly small. Since the dealer has to give the both the salesperson and finance manager a commission as well as turn a profit on the sale, marking up the price beyond MSRP is one way to do that. By budging on the mark-up if the buyer asks for a lower price, it’s still better than selling the car for below MSRP. The results mean greater commissions for the people involved and a higher profit for the dealership.
But, for customers, who are buying new cars to impress their dates, it makes the car-buying experience a lot more painful (after sitting at the salesperson's desk for a few hours, they won't feel like sitting at a restaurant for another couple hours), wastes a lot more time during price negotiations (they’ll probably miss the blind date they’ve scheduled), and customers might pay more than they have to (they’ll have to ask your dates to pick up the tab due to the new car payments).
With the advent of TrueCar, Edmunds (which has been around for over ten years), Autotrader, and numerous other car-buying services and online consultants, I’m surprised that dealers still have the MVA stickers in the window. And if those MVA stickers work (and I’m not sure they do), I am amazed at the number of consumers who don't research such an important and expensive purchase.
The circumstances aren’t like they were ten years ago, when one walked into the local new car showroom, found a car they liked, pretended they didn’t actually like it but were willing to live with it, and then walked towards the door about four or five times before they got their preferred selling price for the car. Then, the “market value adjustment” worked due to lack of readily available information on cars, and the salesman had a lot more play in justifying the price (This is a Mercury Villager Nautica…This is a designer minivan!...It’s like buying a Hermès bag!).
When my dad and I bought the Jetta, it was a question of e-mailing 10 different dealers before we found the best deal on it. And this was on December 31st, mind you, at the end of the year, when salespeople are doing whatever they possibly can to increase the size of their bonus. So with that, we managed to get the Jetta out the door with an extended warranty for slightly over MSRP. And yes, for the next two weeks, I was gloating over that deal because Indians are compelled to brag about how cheap they are. (At least until I saw the J.D. Power ratings of the Jetta, at which point I was put on edge of having gotten such a good deal.)
And that’s what you should do as well. There are numerous other ways to know the price other than e-mailing various dealers. You can configure a vehicle on the automaker’s website and then submit a request to nearby dealers. You can go to a dealer’s website and scroll through the cars that are in stock and request more information. You can visit websites such as Autotrader and TrueCar which will have the selling prices published, where you can send messages to the seller. All of these options mean you waste less time on the showroom floor and possibly keep more money in your pocket for that date.
Or you can get an Indian friend to do the car search and negotiating for you. Though you might have to ride in a car mid-summer without the air-conditioning on and endure some gloating for the next six months.