I have over 20 years experience at a new car dealership. I have sold cars, been in fleet sales, a fleet manager, leasing manager, finance manager, inventory manager, and produced vehicle advertising. In general I would say that a new car dealer is very motivated to get the maximum possible revenue from each customer. (This is also true for most businesses) Dealership management typically adheres to all rules and regulations and will not allow deceptive selling practices. The general problem for the consumer is that they are usually less skilled at the buy/sell process than the dealership staff. The staff does this all day, every day; the customer may buy once every few years. I can’t tell you all that I know on one page. I will try to give you a few tips to help level the playing field.
The first tip is to go slow in the shopping process. The dealer will usually press for a commitment to buy TODAY! Don’t be rushed to buy. There is almost never a great deal today that will be gone tomorrow. First choose the type of vehicle you want, and decide which options you need. Then you can contact multiple dealers for a price quote. It may be better to do this online or by phone. At this time you should find out what factory specials are available. Consider the advantages of a low rate vs. a larger rebate if that is the case. Are you eligible for any special pricing plans such as X or Z plan because of being a close relative of a factory employee or because of the company you work for? After you narrow your choice of dealers, don’t be afraid to play them against each other. Dealers HATE to lose a deal to a competitor and will likely go lower to get the deal.
The second tip is to only buy the car and nothing else from the dealer! Make it very clear that you don’t want, and won’t pay for, paint sealer, fabric protector, service coupon books, paint stripes, alarm system, window tint, life insurance, tire warranty, etc., etc., etc. Any of these things can be gotten later, if you have to have them, at a lower price. If you want an extended warranty, call a few dealers after the purchase and get it at a discounted price. It is common for the finance department to “load the boat” with extras. READ the paper work they present, especially anything with price figures. Tell them to take off any extras and walk if they won’t. (They won’t let you walk too far!)
If you have a trade in, negotiate that separately from the cost of the vehicle. If possible get a bid from a place like CarMax for an indication of your trade-in wholesale value.
Shop for your own financing and only use the dealer arranged financing if they meet or beat what you can get elsewhere.
A typical profit for the dealer can be about $3,000 including the vehicle and financing. On some customers the dealer might make $10,000 or more in profit. If you use these tips you may be able to reduce the dealers profit to a small amount.