Used Car "Sale" - Disappointing as Usual

Every now and then you come across what seems like a good car sales event.... usually they turn out to be disappointments.  Actually I have found they always turn out to be disappointments.  One of the larger, if not the largest used car dealership here in St. John's had advertised a "Drive Home Happy" sales event with at least $1,500 off every used car on the lot, which currently consists of about 150 vehicles.  They have a lot of used Hyundai Elantras, Santa Fes, Accents, Mitsubsihis, a bunch of Civics and a smattering of other vehicles.  As with most other used car dealerships they are priced anywhere from $1000 to $3000 over what you could get a similar car for privately.

 I emailed the dealership on Saturday asking them what exactly they would be offering at their 3 day sale.  As a backgrounder, most of the vehicles (those with under 100,000 km) come "certified".  Certified boils down to a one year bumper to bumper warranty, which gives you some piece of mind when buying used.  You know they are fairly certain nothing major will break within the next year.

I asked if the $1,500 was actually off every car and they responded that yes every car was $1,500 off if I didn't want it certified, if I did want it certified it was $500 off.  Of course the advertised price on the cars was certified so the Drive Home Happy was actually only $500 off the current sticker price.  You can get $1,500 off but they won't give you the extra year warranty.

So once again what started out looking like a very good deal turned out to be an ok deal but I would suspect you could probably get $500 off any car on the lot if you haggled a bit anyways.  As usual with car sales.... all sizzle no steak!

Ford Employee Pricing

For the month of August Ford has their employee pricing event on which is supposed to be the best deals of the year. I decided to do some research to see how good the savings are right now with my test vehicle being the Ford F-150 because it looked like this is where the big savings were to be found.  If you are not familiar with ford, their pricing schemes are easily the most complex in existence.  They often switch between low rates with low discounts and high rates with big discounts, even from month to month you can see dramatic changes in their discounting methods.  I am guessing they are trying to hit a larger audience, since older buyers probably like the discounts but younger buyers like the low rates, so they try and hit both markets by switching back and forth.

That's just the start of it, lets say for instance you like the F-150 XLT.  You get 4 engine choices, 4 box length choices and 11 axel ratios..... all those are not exclusive since one type often goes with another but it is a LOT of options.  Each configuration has a different discount applied so considering they have 9 different models to apply a multitude of configurations it's safe to say there are probably over 100 different pricing models for the F-150.

I didn't have a week to put this together so I figured I would stick to base configurations of each model to look at the discounting.  The details on savings are below but suffice to say there are some really good deals on the F-150 right now.  The XLT and FX2 seem like really good deals and the rates are not bad now either with 3.49% for five years and 4.49% for seven years.  The other striking thing from looking at the F-150 is the wide margin of prices!  You can go from under $20 k to just over $50 k.

I'd say if you are in the market for a new pick-up the F-150 is a great deal!



Here is a summary:

MODEL	PRICE	DISCOUNT	NET	% OFF
XL	19,999	1,985	18,014	10%
STX	27,299	7,688	19,611	28%
XLT	30,199	8,913	21,286	30%
FX2	39,899	11,771	28,128	30%
FX4	45,799	12,597	33,202	28%
Lariat	45,299	12,527	32,772	28%
King Ranch	60,499	14,655	45,844	24%
Platinum	61,099	14,739	46,360	24%
Limited	64,799	14,757	50,042	23%

Beware the Finance Manager!

Excellent article on the Globe and Mail today in relation to dealing with the finance manager at the end of the car buying process, it can be found here: http://www.theglobeandmail.com/globe-drive/car-life/how-a-fast-talking-finance-manager-almost-bamboozled-me-into-spending-way-more-on-my-new-car/article12633603/

Everyone that has ever bought a car has been there, you are all excited about your new purchase and in many cases have already agreed to a bunch of add ons whether you realize it or not.  BUT just in case you haven't they bring you too the normally above averagely attractive female or slick buttoned down fast talking finance guy to wring every last cent out of you.  My experience the past couple of times has been the former, which makes saying "no" even more difficult!

I probably mentioned it in a previous post but the finance lady at Kia told me 99% of customers buy the rim warranty because the rims are so expensive to replace.  I just told her I have not damaged a rim beyond repair in 20+ years of driving so I'd take my chances, not only that I don't know a single person that has, just think about it.

You have to be prepared to politely say no to everything they offer.  Some people like to go for the extended warranty up front but you have lots of time to buy that up until your regular warranty expires, there is a 50% chance you will get rid of your car before it even kicks in so it's just as well to at least wait before buying it.

Rustproofing..... theft deterrent..... scotch guarding..... yadda yadda.... all money makers for the dealership.  With lower car margins due to the high volume of information available to buyers the up-sell items get pushed harder than ever these days... want bacon and cheese on that $2 burger, your total is $4.50 thank you!

Reality Check - Compact Luxury Sedans

http://www.autos.ca/car-comparisons/comparison-test-german-compact-luxury-sedans

Just read this great review article on compact luxury sedans on Autos.ca you should check it out.  It is surprising on a couple of fronts, firstly the BMW offering came in third behind the Merc and Audi and secondly, the new Cadillac would have placed second if it was included in the comparison.  Yes, Cadillac has a compact sports sedan that professional  auto reviewers rate higher than both the BMW and Mercedes.  It seems like the BMW is changing into the soft older person luxury sedan, a position firmly held by Mercedes in the past.  Cadillac wasn't even in the compact luxury segment last year but is now kicking some BMW butt...... go figure.  I might go test drive one just for the heck of it.

Another not insignificant point is the price of these vehicles.  The Mercedes came in "cheapest" at about $55,000 after tax, this for a vehicle with no HID headlights, satellite radio, heated rear seats or back up camera.  I know a certain beautiful Kia Optima that is $20,000 less expensive with all those options and then some.  Just think about it... $20,000 less with more stuff and a larger interior and in my opinion looks every bit as nice or nicer.  The only thing missing on the Optima of course is all wheel or rear wheel drive.  I'm not sure that's worth $20,000.

Car Deal Comparison - January to September 2012

I thought it would be good to revisit some of my car pricing data back in January to see how things have changed.  A lot of the 2012's are now coming to the end of their product cycle so there should be some good deals out there, it should be interesting to see how much the same car costs now as compared to 8 months ago.  The cars should cost less because they are almost a year old now.  If you buy a 2012 now, keep it for 5 years and then sell it it will be worth less than if you bought it 8 months ago, kept it for five years and then sold it.  So why the 2012 deals seem better now, you will probably lose the savings on the other end if you go to sell the car.  If you plan on keeping it until it dies then you actually have got yourself a good deal.

I'll show the payment on a 5 year purchase then vs now.

Hyundai Sonata GLS - Then ($530) Now ($484) due to $3,250 discount

Volkswagen Passat Comfort-line - Then ($624) Now ($581) due to interest rate drop to 0% from 3.9%

Ford Fusion SEL  - Then ($528) Now ($496) due to employee pricing discounts

Subaru Legacy Convenience package - Then ($597) Now ($555) due to rate drop

Honda Accord EX - Then ($607) Now ($567) due to rate drop


So, this kind of speaks volumes, obviously cars are cheaper in total cost at the end of their model years, by about $2,500 in total by saving about $40 per month over 60 months.  The trend is very consistent across all makes and models.  The downside is you are basically buying a year old car so you will lose this savings when you go to trade or sell the vehicle.  But if you plan to keep the vehicle for the long haul, this is definitely the way to go.

2007 Infiniti M35 X

I was browsing Kijiji when I saw a beautiful 2007 Infiniti M35 X for sale at what seemed like a bargain price of $17,500 with 75,000 km, just do a search it is probably still up.  If you go to the Infiniti site you will see these are about $60,000 vehicles new.  I did some checking around the autos.ca site and everyone had a lot of praise for the vehicle but they were wary due to the price being so low.  I contacted the seller and arranged to go see the vehicle.  It looked nice and they took me for a quick spin, everything seemed to work fine, I told them I would come back on the weekend to take it for a test drive and they were fine with it.

They said they bought it 9 months ago from Hickman's used but now needed an SUV because they just had a baby.  They said it had no accidents and they had clear title to the car.  In any event this seemed like a SUPER deal, full leather, sunroof, 280 hp V6, beautiful sound system, navigation, keyless push button start and very roomy.  I did notice that the speedometer was in miles and not km's so it was a US car.  That is not uncommon with some luxury cars since they are not sold here in Newfoundland but it did catch my attention.

As I did some more research this seemed like an unbelievable deal and I had arranged to have another look.  Over the weekend I decided to buy a car proof report off the internet because I was convinced that if it came back clean I would probably buy the car.  Well here is a copy of the report:

http://reports.carproof.com/main?id=T0%2bp1XW%2b8q2B41SIm/zErw%3d%3d

The vehicle was destroyed in New York, dragged across the border as a piece of junk, patched back together in Quebec and shipped to NL to be sold to a sucker at Hickmans.  I feel for the couple selling the vehicle I really think they didn't know what they had bought.  I shared a copy of the report with them and they were not happy.  If I was them I would pay a visit to Hickmans and if no satisfaction then a letter to the evening telegram would be in order.  I wonder how much of this goes on????

So I am out $50, but not $17,500 and once again am reassured that.... if something seems to good to be true it probably is!  I think I will just stick to something new after all.

Top 10 Car Buying Tips

Car Buying Tips-

I have made some general observations about car buying from my experience over the past while.  These are my top 10 advice tidbits.

1. There is basically no negotiating on car price any more for a new car.  You will be paying msrp or very close to it (less any available cash discounts) like it or not.  What you need to focus on is the extras they may try to charge you for.
2. Often times there are cash incentives / discounts available, make sure you check vehicle websites for available incentives on the car you are interested in.  The salesperson may or may not mention the cash incentive up front.  I will be further detailing cash incentives in a later post.  You can be sure if there is a cash purchase incentive available there are also low interest rates being offered if you use the dealer financing, the dealer financing with no discount almost always works out better than the cash incentive unless you happen to have extra cash laying about.
3. Make sure you know exactly what is included in the price of the vehicle you are interested in.  Some dealers include expensive undercoating, admin fees, extended warranty, unwanted options and anything else they can think of to charge you more.  It might be only "$10 extra a month" but that adds up to $600 over a five year purchase.
4. Never start negotiation with the monthly payment, or now the popular bi-weekly payment.  The dealer wants to give you the lowest number possible to consider, so instead of the $30,000 purchase price they focus on the $250 bi-weekly payment.  First thing you need to nail down is the purchase price and every penny included therein.  Once you know what they are including you will know what you can back out of it.
5. Try to  make sure you know exactly what options you are prepared to pay for before you go to the dealer and stick to your guns.  If you are considering a certain model make sure you test drive that model.  If you test drive the fancy model with sunroof, bigger engine and navigation it will be difficult to go back to the base model.... take my word for it.
6. Don't be pressured to commit to a purchase.  The dealer will not run out of cars (well unless they need parts from Japan to make them) and you might end up buying something that is not exactly what you want.  This is a long term commitment of some serious funds so make sure you get what you want.
7. Don't fall for the old line that they don't know how long the deal will be on for blah blah blah.  They may not know but I have been tracking car prices for the better part of a year now..... they don't change much.  New programs normally start on the first of the month, many go on for months and months.  I will be detailing this in a later post.
8. New models cost more than old models.... If the 2012 is a vast improvement over the 2011 then it may be worth paying extra but if not then don't.  Dealers want to move the old model to get ready to sell the new model and normally you will see interest rates drop as the model year ages.  Quick example, one week ago 2011 Honda Accord 0.9% financing, now 2012 Honda Accord 4.99% financing.  The vehicles have very similar (maybe same) MSRP but the 2011 costs $60 less a month or $3,600 over 5 years due to lower interest rates.  Look at them.... they are the same car.  Do online research to see when new models are due out, its a good time to buy the old model if it is what you want.
9. Find a salesperson you feel comfortable with.  If you don't like the one they send to you then tell them to send you another.  Remember this person will be making hundreds if not thousands of dollars from you, make sure you like them.  My partner bought a Mazda 3 last year, I couldn't handle the sales guy, he was just so fake, always smiling like a Cheshire cat.  I told them to give us the nice lady salesperson and they did no problem and we bought a car from them.  (I wonder if she got all the commission???)
10. Make sure you shop around.  In St. John's there is basically one dealer for one type of car (with a few exceptions like 2 Ford dealerships next door to each other.... go figure).  But Clarenville, Gander, and Grand Falls all have major car dealerships.  They may offer better deals and have a different selection.

I have others to share but these are the first 10 that come to the top of my head, hope they help!