Negotiating a lower than MSRP Price.

Look 'em right in the eye (seriously, no looking at your feet or glancing out the window) and ask, "would you accept an offer of_________?" I'd open with $1,000 less. If it were an '05, $2,000 less.

In the usual scenario, if you're dealing with a "lower case" salescritter (not the Sales Mgr. or Fleet Mgr.), after saying, "I don't think there's any way THEY'll go for that", he/she, to get the ball rolling, will say, "let me take this offer to the manager, but he's (she's) not gonna like it."

He/she will than come back with a "counteroffer", which may be a take-it-or-leave-it spiel, an offer to throw in the mats---or, who knows, a counter of $300 off. Then you counter with $600 off and settle for $500 off.

 

If you could poll Prius buyers on the purchase price relative to MSRP, you will find a particular rock-bottom price for each region. In one region, the lowest price might be MSRP. In another, it might be MSRP + $500. In yet a third, it might be MSRP - $1000. It would be difficult for an individual to determine those prices in the regions closest to her. A buyer has to determine how far is she willing to travel to get the lowest price. A dealer hundreds of miles away might have a lower price than the local dealers, but the buyer may need to factor in the costs of a airline ticket and a shuttle ride to the dealer.

With that preamble, here is a method that works well in most cases. This is not an original idea. It is described in various forms in consumer publications.

1. Take test drive at a local dealer. You will be talking to a sales person whose income is the commission on sales. Within reason, you should purchase the vehicle from this person (if the price is something you can accept) because this person has provided you a service. Seems fair, right? Alternatively, rent a car for a day. Some dealers offer rental for Prius.

2. Go to the manufacturer's web site and find the dealer locator. Request price quotes from all the dealers that you would be willing to purchase from. Include several dealers in your region and a few in other regions. You will be communicating with direct sales managers, who are higher up on the totem pole than sales people. This part can be done from your home computer and takes about half an hour.

3. Look at the quotes. Some dealers are quick to respond, some slow, and some don't respond at all. Pick a few of the lowest and make a lower bid: "I found a dealer who will sell it for MSRP + adjustment. Can you do better?" This can go on for a few rounds, but the improvements get smaller quickly.

4. Contact that sales person in Step 1. Tell him the lowest price (plus your expenses if you need to travel hundreds of miles to get that lowest quote). See how close he can get. He will have to talk to his sales manager to get approval. This is not really a negotiation, as you can walk immediately if the price is not low enough for your comfort level. You have a powerful position, and the local dealer knows it.

5. You're done. Either you buy it from the local dealer or you buy it from lowest bidder for your business.

When businesses compute for your business, you're the winner. You might not get lower than MSRP for Prius, but that's your local market: Price is determined by supply and demand.

 

There's an offer and demand issue at work here. If the dealer has a waiting list for the car, why would he sell for less than msrp? Would you do it if you owned the dealership? Would you sell as high as possible over msrp?

 

Some dealers in certain metropolitan areas are willing to sell for below MSRP if only to increase sales volume, thereby increasing their allotment. It's a cycle that feeds on itself.

I used the method that I described above. Toyota Sunnyvale was fast to respond and very thorough too. The first quote was below MSRP, and I got an even lower price on subsequent rounds. I placed my order in late September for a 2006. I got one in the first shipment in early December (10 weeks). I don't disclose my price, only my method. It's up to others to do some "legwork", and you'll feel good about it afterward because it's the best you can do.

 

While there are normal supply/demand forces going on, I did discover yet another aspect of that force. Before contacting local dealers I did a lot of research. Discovered, for example, that many dealers across the US have Internet Departments. The purpose of these departments is to steal sales from your local area.

For example, I live in Wisconsin. I contacted a dealer in North Carolina who had an Internet department. After discussing the reason for my contacting them, they knew right away they had to provide a reasonable "deal". They offered me a Prius $1000 above invoice, which is about $1500 below MSRP. I did the same thing with other dealers across the US. When you are talking about these kind of numbers the investment of a few phone calls more than makes up for the charges.

After I had a representative list of out of state dealers, I then started to call my local dealers. Most had no clue what I was talking about when I spoke about Internet Departments. They also wouldn't negotiate. However, a few did understand. One in particular understood that if they were to win my business they would need to negotiate a price that is reasonable compared to these Internet Departments. One dealer, after hearing of this research said "We want your business. We are willing to sell you a Prius at $1000 below MSRP". Considering my costs of travel by air and the time and costs to drive back home, I accepted the $1000 below MSRP offer.

So, while the dealer in North Carolina, if I had been local to them would never of offered that deal to me (Invoice+$1000) they were smart to offer that to me because it represented a sale they normally would never of been able to get. Likewise, my local dealer was smart to offer me a competitive offer because he knew all I had to do is fly to North Carolina and drive my Prius back home.

So, in a way, market forces are still in working order. However, this type isn't very well known unless you do your homework.

I hope it helps you understand the dynamics of this. I pick up my Prius the first week of January at the agreed upon discount.....which by the way was locked in as a contract.

Enjoy your Prius. I hope you are able to get one in the price range you find acceptable as well as the time frame. I put my downpayment on Sept 1, 2005 noting I would not take delivery until 2006.

Good luck.

p.s. I am ethically bound not to publicly discuss which dealers I contacted.

 

You could also try the "group buy" method.
I got $500 under MSRP on a January 2006 for myself and 2 friends this way.

You do know a lot of people interested in buying a Prius you know. B)

 

Mind saying why?

 

Only because they asked me to. They don't want to have to explain to prospective clients why one client got a better deal than another one did. I did the homework and got rewarded for it.

Use the info and try to get the same results. But please keep in mind that after Katrina I would not have gotten the same results at my local dealer. But you can fly to a distant dealer and drive back your car.

Hope that helps.

 

My dealer did not make a similar request, but I feel compelled to withhold some information too. I give the dealer name and the buying method, but I don't disclose my price. B)

 

Holy Cow! You can get one BELOW sticker? I've been searching from Northern Florida (where we live) and have been quoted $3K ABOVE sticker and 6 months. Minneapolis was quoting sticker and 12 - 15 months. Tuscon was quoting $1K over sticker and 6 - 8 months. I went to Cincinnati - Sticker and 15 - 18 WEEKS. I jumped on that one.....

 

Three60Guy, congrats on your deal. too many people in line waiting that it dont matter where you are from, you wont get that much off. hard to believe a dealer cant find more than enough in their area to take care of their inventory plus some.

only means the Prius still has a long way to go.

 

If you belong to Costco, go through their auto buying program. Way easier than haggling, and you can look at your shoes the whole time.