As most of my friends know, I’m a bit of a car nut. It always gives me pleasure to buy a new car, which is why I keep them about three years on average. However, this time it was less than pleasurable on two fronts: I had a terrible cold and Tanya had a broken nose (more on that in another post), and the strange way pricing and haggling works in the USA.
Dealers have so long dealt with consumers who are terrified of not getting a unbelievable deal that they create fake “invoice” prices, along with the MSRP (RRP to Australians). Generally, you can find out what the invoice price is from web sites. The invoice price is hidden in Australia, but typically, it’s 15-20% less than tax ex RRP. In Australia, you try to get options and the dealer prep charge thrown in for free, and generally I think a good deal is done when this occurs. The dealer makes a reasonable profit, you get a good price, and relations with the dealer remain cordial.
However, here in the USA folks will start a few hundred or more under “invoice”. However, dealers have holdbacks and volume bonuses beyond the invoice price, which mean that the invoice price is no longer the invoice price, plus they are sticklers on keeping the destination charge, despite freight being part of the invoice price.
So if you get a car for invoice, the dealer makes about a $500 – $1k profit or so, and you think you’ve done a good deal. However, on some popular cars, dealers will hold out for MSRP and they make a few thousand per car. This is what happened to us. We originally started out looking at the Honda Fit (Jazz in Australia), Toyota Prius, and VW Rabbit (Golf everywhere else in the world). I wanted a Prius, Tanya wanted the Jazz.
The Jazz is backordered to March. No good for us – the USA is not a place to be without a car. But we found ourselves looking at the new CR-V. Again, as most of friends know, I hate SUVs. But for some reason this one is different. It drove really well, it’s not that huge, and it’s car like (it’s monocoque construction and modern suspension and Honda’s version of all wheel drive (it favors the front wheels unless they slip, in which case drive heads to any remaining wheels with grip)) made it a nice ride. But the dealers knew they had limited stock and lots of waiting buyers, and even though they wanted to shift units (they have to pay tax on any units left on their lot on January 1st), they universally stuck to MSRP. So we walked away, which is a shame as it’s a very nice car.
Strangely enough I now have a bunch of Honda dealers giving me very close to invoice pricing on the CR-V. So I will remember this in the future – go a week beforehand and walk away when they give you crappy pricing.
After Honda, we test drove the Prius. I loved it. I wish we could have bought it. But Tanya HATED it with a passion. Oh well. Maybe I can buy one as a second car in a couple of year’s time.
Some folks on newbeetle.org recommended a nearby VW dealer and the sales dude there. We went to Antwerpen VW, and test drove the VW. I was worried about the test drive as Tanya seems to be very picky with her cars, which is strange as she’s very much a car appliance (A to B) buyer. VW has a reputation (which I can back up personally) for making unreliable shit heaps, so that was weighing on my mind as we test drove a Rabbit. Luckily, Tanya liked it, I liked it, and they had a few on hand so I knew I’d be getting a good deal.
The haggling was straightforward – he offered us invoice straight up. So the haggling being over, we started on finance. That was awful. After three visits and nearly a week later, we finally can announce our new car: a black VW Rabbit 2.5 auto, with ESP, extra airbags, upgraded stereo and sunroof.
It drives lovely, is nice and quiet, has a delicious throbby 5 cylinder note, and has all the mod cons you’d expect. The only downside is that our car payments are horrendous, but after 12 months, the car is ours to own. Luckily, my new job has a salary to match, so although we will have to be careful, we’ll be okay. This means when we likely to have a new kid (assuming we succeed!) we will not have any car payments, which will be lovely.