Is it Still Possible to Negotiate with a Car Dealership

Yes. You’re welcome - blog post over.

All joking aside, this is a question we have been receiving with increased frequency (and notice it popping up on the Reddits and Quoras of the world). In today’s market, it is especially valid. Consumer preferences have shifted, car dealership margins have compressed, aided by the ubiquity of the internet, and “no haggle” dealerships have begun taking over the car world. We’ll dig into these changes and discuss the impact this has had on the car buying process. The upshot is that, yes, it is still possible to haggle and negotiate with a car dealership; however, negotiating has become more difficult in the last several years. Luckily, we have put together a comprehensive guide to negotiating a great deal that you should definitely check out for some useful tips and tricks. And if the whole process sounds a bit too time-consuming for your busy schedule, you can work with Automagic to let us search for and negotiate the best deal for you!

How Things Have Changed

Back in the day, buying a car was a relatively simple process. You would typically go down to your local dealership, find a car on the lot that suited your needs, and then negotiate a price. If you were picky, you might read reviews and comparisons in automotive magazines or stop by a few different dealerships to test drive multiple cars. True bargain hunters might read classified ads in the local newspaper or *gasps in Gen Z* call a few dealerships on the phone to try to compare prices. Dealerships would often gatekeep pricing information until you were physically on the lot, when they knew you had already invested time into the process and were less likely to leave. Pricing, especially for used cars without factory MSRPs or Kelley Blue Book new car invoice data, exemplified the Economics 101 principle that the price of a good or service is simply what people would pay for it. Because the price people would pay for a three-year-old Dodge Neon in Pahrump, Nevada could be much different than the price people would pay for the same car in Los Angeles, pricing varied regionally.

To hark back to Econ 101 once more, there was a high information cost. It required effort to review ads in multiple newspapers or call up several dealerships and try to convince them to disclose the price of a specific car. This lack of transparency allowed dealerships to add a profit margin cushion to many cars and take advantage of some customers or be able to bargain with shrewd negotiators.

Enter the internet. With resources like Kelley Blue Book and Edmunds, car values are much more accessible, Autotrader allows shoppers to compare nearly every vehicle listed for sale in the country, and bargain hunters can even use automotive auction sites like Bringatrailer or eBay Motors to try to get a great deal. Transparency has leveled the playing field. Prices for new and used vehicles have largely standardized nationwide, with some occasional regional differences based on demand in certain areas. For example, why would a customer buy a car from a dealership when a similar car is $1,500 cheaper and only 30 miles away?

With pricing information so easily accessible, dealership margins have compressed. Dealerships are forced to pay attention to prices competing dealerships are charging and adjust accordingly, leading to a (beneficial for the consumer) competition for lower prices.

No Haggle Dealerships

Consumer preferences have also changed over time, as more and more modern car buyers prefer to limit time in the dealership and face-to-face negotiations - sometimes negotiating the entire deal via email before arriving at a dealership. Additionally, many folks simply dislike the negotiation process. It can be time-consuming and many buyers are left wondering if they just got a great deal or were taken advantage of.

These shifting preferences, together with lower margins and widely available price information have helped the rise of “no haggle” dealerships. These dealerships utilize complex algorithms to determine a fair price for cars on their lot and state that these prices are final - not subject to negotiation.

This of course has some clear benefits for both the buyer and seller. Both parties can avoid the time spent negotiating and move more efficiently through financing and other aspects of the deal. This also removes some of the pressure and trepidation that some buyers feel when purchasing a car. The stress of negotiating is removed and the buyer can walk away feeling that they secured a reasonable deal.

While these benefits are largely true, we find there are a few caveats in our experience. First, the price will typically be a decent (but not great) deal. It will be in line with the listed prices of similar vehicles in the area, and the buyer can feel comfortable that they received a fair price; however, if a buyer wants to spend additional time and effort, there are often better deals out there. Next, these prices are based upon easily quantifiable criteria (such as make, model, mileage, color, and options) while ignoring important factors such as mechanical condition and maintenance history, which can be extremely important, especially when buying a used car. For example, a babied, highway mileage car that was washed weekly and always stored in a garage will likely last longer and cost less in maintenance/repairs than a car with similar mileage that was driven hard and never maintained.

So, Can You Still Negotiate?

As mentioned in many fewer words at the beginning of this post, yes. Just don’t expect to negotiate 20% off of the listed price any time soon. Dealers want to sell as many cars as possible but don’t have the same flexibility as they did in prior decades due to price information and margin compression.

We tend to think of this shift as causing a different type of negotiation than many buyers are used to. While savvy negotiation tactics are still helpful, the most effective negotiations these days are based on information (not schmoozing the salesperson or reading Harvard Business School articles on negotiating). Check out our post on negotiating tips for more detailed information, or just read the quick summary below.

The most important factor in a negotiation is utilizing information available online. A buyer can easily find out the going price of a vehicle in similar condition and use this when negotiating a deal. For example, you love the color of a car at dealership A, but dealership B is offering a nearly identical car (just a different color) for less money. You can try to use this information to try to get a better deal for the car at dealership A.

Perhaps an even better way to use information to get a better deal is to determine which cars dealerships want to sell. If you don’t have a specific car in mind but generally want a good deal, you can research which car makes and models are selling the slowest (there are several online resources that show this information). Or, if you love a specific make and model, you can compare several different available cars at different dealerships and see which have been on the dealer lot the longest (Autotrader will occasionally include this information in listings, or you can review Carfax reports to see the date the car was listed for sale). If a car has been sitting on a dealer lot for a few months, the dealership may give you a great deal.

Another great tactic is to try to negotiate with multiple dealerships simultaneously via email or phone. Some dealerships still try to avoid negotiating unless the buyer goes to the showroom but many will at least begin haggling virtually (especially if you explain that you are extremely interested in the car and intend to buy it immediately… for the right price). At worst, you’ll have a sense of which dealerships have some flexibility to negotiate, and, at best, you’ll negotiate a great deal before ever visiting a dealership lot.

Finally, while not necessarily a negotiation tactic, we always recommend car shoppers pay close attention to dealer fees and extra charges. Some dealerships are straightforward on this, charging very low fees for car registration, etc.; however, other dealers try to sneak additional fees into the deal that can quickly turn a good deal bad. Perhaps you negotiated a deal on a car that is $1,000 less than a similar car nearby but when it comes time to sign the paperwork, you notice a $599 dealership fee, a $399 document fee, a $499 inventory fee, etc. Suddenly, the deal doesn’t look so sweet. The dealership may try to convince you these are standard fees that everyone adds… and you’re already at the dealership signing paperwork, so many buyers get stuck in a very uncomfortable situation. Best to confirm what fees the dealership charges earlier, as part of the negotiation process.

Conclusion

So yes, you can still negotiate with a dealership for both new and used cars. However, temper your expectations and do as much research as you can before beginning any negotiation. And, if you’d rather outsource the time and effort of compiling research, finding a car, and negotiating a great deal, you can set up a free consultation with one of the experts at Automagic Consulting!