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Negotiating car price doesn’t have to be the hardest part of your job if you keep these easy rules in mind
Does it sometimes feel like selling a car is like competing on the TV show “American Ninja Warrior?” It can be thrilling and challenging as you conquer each obstacle. And finally, in the end, you have one last major obstacle: to scale the “warped wall,” a steep, curving structure that stands about 15 feet tall. In the case of auto sales, the “warped wall” is negotiating car price with a buyer to the point that you are both happy. It’s a delicate balance, and certainly not for the faint of heart.
Negotiating car price: Why it’s important to consumers
Some dealerships are moving toward fixed pricing and no-haggle promises, but the vast majority are still willing to negotiate. According to Harvard Business Review, only 13% of car shoppers don’t like to negotiate, and would rather buy a market-priced vehicle. On the flip side, 45% of car buyers do like to negotiate to what they feel is a fair price. Another 20% want to negotiate down to the lowest price possible.
Negotiation has been part of the car-buying experience for decades, and while not everyone loves it, they may feel like they need to engage to get a fair price. And, because the auto industry is constantly battling the public perception of the sleazy, dishonest salesperson, many customers will always feel like the wool is being pulled over their eyes—even when a salesperson names an incredibly reasonable price.
Negotiating car price: How to handle the situation like a pro
For some salespeople, negotiating car price is an art form. The back-and-forth, “playing the game”—it just gives them a rush. There are two things to remember as you hone your craft, though:
1. It can take years to master the art of negotiating.
If you jump in with an open mind and a willingness to learn (and fail), you’ll become one of the best.
2. If you’re an old pro and confident in your skills, don’t get comfortable.
Car buyers are doing more research, and they’re coming in armed with numbers and knowledge. The industry itself continues to change. You might as well grow with it.
Here are five situations you may have to deal with in negotiations:
1. The scenario: A husband and wife reach the negotiation stage, and the man seems to be taking the reigns through the entire process. He’s talking the most, the loudest, and with authority. He appears to be the one who is “in charge” of making the deal.
Rule: Don’t assume anything and always engage both buyers equally. Sometimes, salespeople have a tendency to ignore wives during negotiations because they believe they aren’t involved. The truth is that over 80% of car purchases are influenced by women, and the one sitting in front of you may have the final say. Ask both husband and wife thoughtful questions and look them both in the eyes equally.
2. The scenario: You have a customer who is trying to negotiate with you, but they’re getting confused by all of the numbers. They can’t keep everything straight, and they’re getting frustrated with the process. They feel like they’re getting swindled, and they’re considering just walking away.
Rule: Everyone processes information differently, and though you may be the type who needs to talk it out, you may have customers that are more visual. When you say a number, write it down. When you’re doing the math for them to show value, write it down.
3. The scenario: Your customer is dead set on a monthly payment of $300, but the absolute lowest you can go is $315. You’re so close, but the customer isn’t budging.
Rule: Put the extra $15 into perspective for them by breaking it down into smaller amounts. For example, you can explain that $15 more a month is only one dollar every other day. Isn’t the car of their dreams worth an extra dollar every other day? Or not going out to lunch at work one day a month?
4. The scenario: A prospective buyer starts the negotiation with a laughably small amount. You are baffled as to why they would even say a number that low because it’s not realistic at all.
Rule: Don’t insult the customer’s intelligence. Keep a straight face, even when they give you ridiculous numbers. You may want to say something like “Where did you get that number?” in a non-condescending tone. Wait to hear their answer and go from there, but never make them feel stupid.
5. The scenario: You’re ready to start negotiating car price with a customer, but they want you to name the starting price. You don’t want to start too high or too low, but you’re not sure where the sweet spot is.
Rule: You don’t want to start too high, but it’s much worse for you if you start too low. Begin negotiations slightly higher, so you’re able to come down in small increments and end up at a price you’re both happy with.
Negotiating car price: 5 simple rules
With all of those scenarios in mind, here’s the short list of rules you should remember when negotiating with customers:
- Engage both buyers
- Write it down
- Put the numbers into perspective
- Don’t insult the customer
- Watch your starting price
Put yourself in a better position for negotiating car price by constantly doing your homework. Read published tips for consumers about negotiating so you can understand where they’re coming from, and have prepared reactions and answers ready in certain situations.