By the time you get down to price, the salesperson can easily manipulate the negotiation because he knows exactly how much the car is worth – it’s his job – and has a fair idea how much you’re prepared to pay.
An interesting Irish Times article:
So, what should you be doing? Well, he recommends the following. To begin with, do the traditional homework and decide exactly what car you want to buy, the price you want to pay, the safety considerations, its performance, judging, for instance, style over comfort or whether you really want to pay a premium for a particular colour.
Once you’ve made your choices, go online and find every single dealer or showroom that has what you want for the price you want to pay. Then ring each one and tell them the following: “At 5pm today, I want to buy a car (Mazda, Ford, Fiat, or whatever). I am calling every dealership within a 50-mile radius of my home and I am telling each of them what I am telling you. That is, I will come in at 5pm today with a cheque to buy a car from the dealer who offers me the best price.”
Finishing the call, you also tell the salesperson that you will be telling the next dealer the price you’ve been quoted from them.
This, of course, gives the salesperson one shot as selling you the car at their best price. Every time you ring a subsequent dealer you quote them the best price you’ve gotten so far.
He acknowledges that dealers don’t like getting these calls, and will probably try to fob you off with a response like “you can’t buy a car like this over the phone” to which your response should be, “well, I’ve done this before. So, maybe I can’t buy a car over the phone from you, but I know I can from others”. Bueno de Mesquita adds that you might get a negative response from the odd dealer keen to get you to their forecourt, but in the main most will be grateful for any opportunity to sell.
Still seems too easy to be true? Well, bear this in mind. Away from the triviality of driving the car sales fraternity nuts, the professor’s day job as a game theorist, when he’s not teaching, is working as a consultant in procedural forecasting, political economy and international security policy.