Today’s post is a follow up to my May 10th post “Dear Sirs: Why I Didn’t Buy A Car From You” which described the negative experience that I had at my local Honda dealership when trying to purchase a Honda CRV in 2018. Due to my experience at that dealership, I walked out of the sale transaction, never to return to that dealership. I did, however, still wish to purchase a Honda CRV at the time. And did so the following week. Here is the story of how I changed my strategy the second time around to get what I wanted (for the most part). Throughout the article, I will include with some tips on how to negotiate on a new car purchase.
As mentioned in my earlier post, I asked my dad to come car shopping with me, as I value his opinion, and appreciate his vast car-buying experience. And I also didn’t want to go alone. As we all know, there is strength in numbers.
After the disastrous experience we had at my local Honda dealership, my dad decided to check out his local Honda dealership. He told me that he visited the dealership early in the morning, and there were no visible sales staff on the floor. As he was walking across the sales floor, a female salesperson saw him and offered to help him. He told her that he was interested in a 2018 CRV, and she advised that there really weren’t any available at that dealership, as it was the end of the model year and the 2019s would soon be coming in (this is a good time to buy, as the dealership is motivated to clear out the old stock to make room for the new models). However, she advised that she could likely still order one in.
My dad said that she was personable, and reasonable to talk to. And that she reminded him of my older sister. He set up an appointment with her to return to the dealership with me.
My dad and I returned to the dealership at the agreed upon time. The saleswoman greeted us at the door. We briefly sat in her cubicle and had a chat. I could immediately tell that she had more experience than the salesman that we had encountered at my local dealership. And I also noted that she had some awards on her desk and displayed on the walls of her cubicle, related to past achievements (e.g., salesperson of the month).
I communicated that I was interested in purchasing a 2018 Honda CRV. I was more direct this time, and I explicitly stated that I understood that Doctor’s Manitoba had a negotiated agreement with Honda that allows their members to purchase new vehicles at 3% over cost. I communicated that I was interested in purchasing the vehicle at that price. The saleswoman acknowledged that she was familiar with the agreement. She did not ask if I was a member of Doctor’s Manitoba (nor did I represent that I was). I am a Dr., just not a medical one (I have a PhD in Financial Accounting). And as I noted in my previous post, during the COVID-19 pandemic, many dealerships were offering vehicles at cost + 3% pricing to front-line workers. So, this is not something exclusive to members of Doctor’s Manitoba. In managerial accounting, there is a concept of cost-volume-profit. The dealership doesn’t need to make maximum profit on every vehicle sale. Sometimes they just need to move stock. And guaranteed, they are still making a profit at 3% over cost. Plus, we also all know that a bird in the hand is worth two in the bush!
Once I had set the expectation for my desired pricing on the vehicle, I also indicated that I was interested in trading in my 2006 Honda Accord. The saleswoman arranged for someone to come to evaluate my trade. She then offered to let us test drive a Honda CRV; however, it was not the specific model that I was looking to purchase, as they did not have that model in stock. As I had already test driven my desired model at the previous dealership, this wasn’t a problem. She passed over the keys, and my dad and I happily hopped into the vehicle, unaccompanied.
When we returned to the dealership a short time later, the saleswoman had already prepared a sales worksheet, with a deal number noted at the top. She had inserted my personal information (obtained from my driver’s license which was provided prior to taking the test drive). Details of my trade were also noted (year/make/model/VIN); however, no trade allowance had been inserted in the available space.
And to my delight, there was a selling price noted for the vehicle! If you recall my previous post, after two hours at the dealership, the salesman, despite repeated inquiries, was unwilling to provide me with the selling price of the vehicle! The efficiency of the current transaction was already exceeding my expectations. All of these inputs had been inserted electronically on the document, prior to its printing.
Now that we had a starting point, the negotiation began. Handwritten on the document, the saleswoman had indicated an amount which represented the cost of the vehicle, and then had added the 3% profit. She crossed off the computer-generated selling price and inserted this new amount.
As mentioned in my previous post, I had done extensive research online, and had gone through the “Build Your Honda” car configurator prior to visiting the dealership. I knew what the MSRP was, as per the Honda Canada website. On the sales worksheet provided by the saleswoman, the stated selling price again exceeded the MSRP on the Honda Canada website, this time by $3,109. I asked the saleswoman why the price was different. She indicated that they add on a suite of standard accessories to the vehicle, included as “features” on the left-hand side of the worksheet. These items included block heater, all-weather floor mats, front/rear mudguards, and locking wheel nuts. She then said that the “selling price” was irrelevant, as the sales manager had agreed to sell the vehicle for cost + 3%. My inner accountant was uncomfortable with the discrepancy between the publicly available pricing from the Honda Canada website and the dealership-specific pricing. However, I had also priced out the cost of some additional accessories through the “Build Your Honda” car configurator, and the noted selling price was only about $750 higher than what I had obtained online. As the listed accessories did have value, albeit not broken down and specified on the worksheet, I felt comfortable that the cost + 3% selling price was in the range of what I was expecting to pay. However, once again, the way that the information was presented on the worksheet, in aggregate form, with only totals, was again a sales tactic meant to obfuscate what is the true selling price of the vehicle. The average consumer would not have done the research that I had done, or likely attempted to reconcile the difference in cost. They would simply see a higher number crossed out and replaced with a lower one, and feel that they were getting a good deal.
Thankfully, the saleswoman did not bring up the idea of leasing. She did note on the worksheet what would be the biweekly payment for a purchase financed over 5 years at 2.99%, based on the selling price noted on the worksheet. With this initial draft of the worksheet in front of me, the negotiations began.
As noted in my previous post, there are several independent issues that can be negotiated as part of a new car purchase. The first is the selling price of the vehicle. As this had been addressed, mostly to my satisfaction, we moved on to the issue of the value of my trade. Also handwritten on the worksheet, was a proposed value for my trade, presented in both before and after tax amounts (as the value of the trade is subtracted from the purchase price of the new vehicle prior to calculating retail sales tax, so you effectively save the GST and PST on the trade-in value). The trade-in allowance was, in my opinion, a reasonable opening offer. I was trading in a 2006 Honda Accord. However, it was in excellent condition, with low kilometers, and lady-driven! I didn’t attempt to negotiate on the trade at that time, because I wanted to have all of the information in front of me before deciding how to proceed.
We moved on to the third independent issue, optional accessories that I wanted to be included as part of the deal. Some of the accessories that I had priced out in the “Build Your Honda” car configurator online were already included in the selling price as “features” as noted by the saleswoman. I was interested in two additional accessories, illuminated door sill trim (MSRP $375) and a touch-up paint pen (MSRP $13). I asked for these items to be included in the selling price at no additional charge.
Ultimately, the salesperson is just a middle-man, and the ultimate decision making authority rests with the sales manager. But in an attempt to build rapport with the customer, there is often some good cop-bad cop role-playing that is part of the experience. The saleswoman couldn’t say whether her sales manager would agree to adding the items at no additional cost, but it couldn’t hurt to try, right? Message to me: I’m on your side. And if the sales manager says no, it’s not my fault, because I tried.
Before presenting the worksheet to the sales manager, I advised that I needed to call Mr. Schultz, to update him on the situation and to get his opinion on whether what was being proposed was an acceptable deal. The phone call was a pretense. Mr. Schultz and I manage our finances separately, and I had no need to check in with him prior to making a deal. I just wanted some time to think, and also to give the impression that this was maybe not a sure thing, and that there was perhaps another decision maker, still to be satisfied. I excused myself and made the phone call, but it was primarily to provide him with an update and have a casual chat about how the negotiations were going. He was very pleased with the proposed discount and thought that the trade-in value for the 2006 Accord was generous. If it had been him making the purchase, he would have been ready to sign.
Wendy Schultz does not accept the opening offer. In my experience, you can almost always do better. I returned to the saleswoman’s cubicle and said that Mr. Schultz had expressed concern about the offered amount for the trade. This was really the only avenue still open to negotiation at this point. I indicated that the vehicle had both summer and winter tires, both sets on rims, and I was willing to include the additional set of tires as part of the trade. And that Mr. Schultz and I thought that the trade-in allowance should be $500 higher. The saleswoman thought that this seemed very reasonable, and again, while she couldn’t make any promises about what her sales manager would do, it couldn’t hurt to ask. She noted this change on the worksheet.
It was now time for her to go present my offer to her sales manager. She left the cubicle to speak with him and we waited. I wasn’t expecting to get everything that I had asked for. In any negotiation, there are “throw-away” issues. These are items that I include on my wish list, but am prepared for them to be rejected. A negotiation is a give-and-take process, and each party wants to feel like they’ve come out ahead. If the sales manager says yes to one thing I’ve asked for, but then says no to another, he feels like he hasn’t given the car away. And if I get at least one (or more) of the items that I have asked for (but not all), I still feel like I’ve come out ahead.
The saleswoman returned to the cubicle with good and bad news, as expected. To my delight, the sales manager had agreed to the additional $500 on the trade. For a 12 year old car, I was very pleased with the trade-in allowance that was agreed to. Win for Wendy! The sales manager agreed to provide the touch-up paint pen at no charge (MSRP $13), but was not willing to include the illuminated door sill trim at no additional cost (MSRP $375). Instead, he offered a $50 discount off of the MSPR. Again, as I was not expecting to get everything that I asked for, I was ok with his offer.
And with that, I was ready to sign on the dotted line, and the CRV was mine! It’s amazing how different the negotiation process was compared to the first dealership. I will never know if I was treated poorly at the first dealership because I was a female and was dealing with a male salesperson and sales manager. Or if it was because I was dealing with an inexperienced salesperson who was out of his element and a terribly rude sales manager.
I do know that my experience the second time around was efficient, and resulted in a satisfactory outcome for me. And most importantly, didn’t waste my valuable time.
I received a comment on my first post, where the author wondered how many individuals tolerate and reward a (bad) sales process because they want the product and perhaps don’t have an alternate dealership to go to. I hope that no one does! Studies have shown that acquiring new clients is five times more expensive than keeping an existing customer. And word of mouth matters. If anyone asks me, I will tell them to avoid my local Honda dealership, due to my bad experience there.
I realize that my 1990s movie references date me, but sometimes it is the perfect way to sum up an experience in a way that others will completely understand. When I was in high school, I had chicken pox, and spent several days on the couch recuperating. I watched my VHS(!) copy of Pretty Woman over and over (which required a complete rewind to the beginning before restarting). At one point, I had memorized almost all of the dialogue in the movie. One of the best scenes, in my opinion, is when Vivian returns to the Beverly Hills boutique where the snotty saleswomen refused to serve her the previous day:
Shop assistant: Hello, can I help you?
Vivian: I was in here yesterday, you wouldn’t wait on me.
Shop assistant: Oh.
Vivian: You people work on commission, right?
Shop assistant: Yeah.
Vivan: Big mistake. Big. Huge. I have to go shopping now.
I did not go back to my local Honda dealership to relay this message, but you bet it was going through my head as I drove off in my new CRV. Big mistake. Big. Huge.
Life Lessons 
Still the tenacious Wendy.
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