Author Topic: Should you expect a dealer to negotiate car price?  (Read 12426 times)

r3dt4rget

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Should you expect a dealer to negotiate car price?
« on: March 23, 2015, 05:12:50 PM »
I'm just curious what others have experienced in regards to buying a used vehicle from a major dealership. Do you expect to pay the list price for a used car?

The car in our situation was a 2009 chevy aveo hatchback. 110,000 miles, good overall condition, for $5,999 at a chevy dealership. Upon test driving and inspecting the car I found that the A/C was not blowing cold, and there were a few rock chips that needed to be touched up or rust would start to form and deteriorate the areas. But overall pretty good condition, the A/C was the big issue. I informed the salesman who promptly assured me the car has been rigorously inspected and probably just needs an A/C charge. I countered that "needing a charge" means there is a leak, which is not just a simple fix. I offered $5600 and an agreement in writing that they would cover the A/C repair done at my local chevy dealer (we traveled about 4 hours to see this car).

They came back with an offer of a $699 extended warranty being thrown in for free, which covers the A/C components for 3 months/30,000 miles. But they were firm on the $5999. I assume they wanted to offer a warranty to handle the repairs because it's less risk for them if it's a big repair. Anyway, I insisted upon paying $5600 plus they would throw in the warranty for A/C repair. After declining we were preparing to leave. At that point they said the best they could do was $5800 without the extended warranty. Since the repairs were likely to exceed just a simple fix I decided it wasn't worth the risk and passed, saying my highest price was $5700 plus the warranty or A/C repair in writing. They wouldn't budge and we left.

I find it odd that a dealership wouldn't budge a few hundred dollars off the asking price on a trade-in. They were willing to fix the A/C (via a free extended warranty that would covered those repairs) but would not budge from the asking price. Am I wrong for assuming dealerships will negotiate prices? The car was valued fairly, but in our best interests I wanted to knock a few hundred off the price to take care of the rock chips that were starting to rust.

Sid Hoffman

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Re: Should you expect a dealer to negotiate car price?
« Reply #1 on: March 23, 2015, 05:20:26 PM »
Other than Carmax, basically every dealership is negotiable.  Even a lot of the ones that have no haggle pricing will still play ball on things like trade-in value or value-add stuff like the 3rd party warranty.  Once you get down low enough in price however, they often want to just dig in and get what they can out of it.  Generally the sweet spot for negotiating used cars is 3-5 year old cars that sold for $25k new.  Often those cars get traded in at a fraction of what they're worth by somebody who's getting a new car every 3-5 years and might have gone for $10k wholesale, and is now stickered at $15k on the dealer lot.

By the time you're down to the $5-6k cars, they might have still paid $3k wholesale and after all costs don't even break even until $5k or so.  Cheaper cars also tend to be at smaller lots where they aren't making it up in volume, so to speak.  Again, that puts you in a poor position because they will simply dig in more and hold out for that buyer that is willing to pay closer to sticker price.

On the bright side, reliability ratings for the Aveo are horrible.  That's probably not a car you want anyway.

caliq

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Re: Should you expect a dealer to negotiate car price?
« Reply #2 on: March 23, 2015, 05:29:05 PM »
I recently test drove a 2008 Matrix at a dealership and was prepared to trade in our Fusion to buy it, provided they actually negotiated their list price down to something tolerable (it was >2k above KBB range for dealer-bought cars, and >4k over what this model/mileage sells for private party on craigslist or Ebay).  Well, we got to that stage and I was informed that they didn't negotiate at all on their internet price.  Well, they'd had the car on their lot since early October, and I was there in mid-February.  I mentioned that, and mentioned how highly the car was priced in comparison to my research.  Then I got up and walked out.  I got an email about a week later from the sales rep asking if I'd be interested again if they lowered the price a couple hundred dollars.  I replied and said it'd have to be at least a grand lower, or a bump up in the trade in value of our car, and she never answered.  I just checked their website and it did sell so, someone paid their sucker price. 

Le Poisson

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Re: Should you expect a dealer to negotiate car price?
« Reply #3 on: March 23, 2015, 05:32:17 PM »
Use the power of the internet.

Find 6 or so cars that are all the same (more or less) and email all the dealerships. They will all see the lowest priced car and know what they are dealing with. Tell them you are ready to pull the trigger on the car, but wonder if any of them can compete.

You will get back 3 replies. Either:
  • Sorry but we don't play this game our price is $X,xxx, take it or leave it
  • We can't match that price on this car, but we have this similar one that is coming in soon. Would you consider it? (They are going to the auction, and knowing your price will aim to get the car you asked about)
  • We can come close on that car, why not come in to talk to us! (they want you to come into the shop where they will pressure you into paying more for extras on the car to make up the loss)

Our last 2 cars were bought using this method, and it has been great for us - however we aren't looking for showy or perfect cars.

Car 1 was a Buick Allure. We live in Toronto, and had figured out that the model we wanted was just a base model CX and had a mileage target in mind. We emailed around to 5 different dealers and ended up with a car in Ottawa for less than half the price of the same car locally.

Car 2 was my current kid taxi. It is a 2012 Chev Sonic. I found a car in Cornwall for $8500. After emailing around, a local dealer with a car for $12,000 agreed that he could come down to $9,000. I pointed out that for $500 I could drive to Cornwall and back, and stay a night in a hotel. They agreed to the $8500 price tag. I was surprised to find that the car was a higher option package and had only half the mileage of the other car. It still has a few months of warrantee, and came GM Certified - whatever that's worth.

I don't even bother with driving around to look at cars anymore. You are making your decision based on a 10 minute test drive and 15 minutes of looking over the car. You can do that after the price is set and before you sign the sales slip.


southern granny

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Re: Should you expect a dealer to negotiate car price?
« Reply #4 on: March 23, 2015, 08:15:44 PM »
We use Edmunds.com to decide what we are willing to pay for a used car.  So far we have been able to negotiate them down to the Edmunds price and sometimes even lower.  You have to be willing to walk away if they don't meet your price.  There will be other cars.

Spork

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Re: Should you expect a dealer to negotiate car price?
« Reply #5 on: March 23, 2015, 08:32:01 PM »
This is what I have done and it's worked for me...

* I use Edmunds/Kbb to determine the max price I want to pay.
* I show up on the last day of the month.  (That's important.)

Assuming the car is acceptable, I offer $500 under my max price.  They counter with something ridiculous.  I offer my max price.  They counter.  I say no -- and mean it.  I don't budge.  If you're prepared to walk out and they don't take what you already have determined is the max reasonable price, it's not worth having.

And that last day of the month *is* important.  They are paid in kickbacks from the dealer on how many cars they sell in a month.  The amount the dealer gets can be made or broken by just a couple of cars.  The commission a sales guy makes goes up in steps with each car they sell.   T

This is why you may get a call later.  When month end comes, they want to close every sale they can.  They will often sell under their own cost because the bottom line is: if they make their numbers, they make more in the end.

Exflyboy

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Re: Should you expect a dealer to negotiate car price?
« Reply #6 on: March 23, 2015, 08:48:24 PM »
Hertz ex-car rentals will not negotiate.. But their prices are well below those of normal dealerships.

I much prefer it that way.

The_path_less_taken

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Re: Should you expect a dealer to negotiate car price?
« Reply #7 on: March 23, 2015, 09:37:03 PM »
1. internet research
2. see if their website has a "call for special internet price/promos"
3. figure out EXACTLY how much you are willing to pay before you go in
4. hopefully be MMM enough to have cash: unless you're getting 0% financing we're gonna facepunch you
5. as someone said, go in the day before the end of the month: 30th, 31st
6. be polite, but firm
7. get the GM of the dealership involved, and sell HIM: "Mr. Jones, I'm local, so if I'm happy, all of my local friends are going to hear your name. I have cash and can have my bank wire it to you in seconds. Treat me right and I won't buy just this car, I'll buy ALL of my cars from you." (he has no idea this might very well be your last car if you're mmm)

8. be prepared to walk. Grimace, thank them for their time, say "I guess I should have checked (their biggest local-ish competitor name) before coming here." Walk.

You will get a call/email within a day to see if you did buy at the other dealership. Say you think they are meeting your price of xxx. "Can you beat it, because I'm tired of playing around: I am buying a car today."

Say "oh, that's the other dealer on line 2: can your GM email me your best price, because otherwise I'm just going there now".

Good luck.

Also...it's all an equation. So if you have something popular/pristine to trade that they want (or already have a customer waiting for) they can sometimes make enough on the back end or even trade-in that might bring your numbers down. Although usually you'll get more for your current ride on craigslist.

The opposite is true: if you want a TRD PRO today you will pay MSRP (west coast) because there are so few on the ground and no one has or will give them up to another dealer.

A good negotiator can actually beat the Costco club price.


r3dt4rget

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Re: Should you expect a dealer to negotiate car price?
« Reply #8 on: March 23, 2015, 09:40:33 PM »
That's interesting about shopping on the last day of the month. I figured a few hundred dollars would not stop them from selling a car that had been there for weeks. They used some sneaky tricks as well. The first small talk was about what we did for a living (to judge our income). I didn't realize it until later. But we were honest and he could easily figure out me and SO make over $100k/year. Probably though I was crazy haggling for a $6k car and walking away over $300.

I have to wonder if easy credit is making used car shopping more difficult. In researching cars I found the smaller dealers will price cars 3-4k over value with an attached monthly payment and only $99 down. Why would you take a cash payment when you can gouge a sucker who can get financing?

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anon-e-mouse

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Re: Should you expect a dealer to negotiate car price?
« Reply #10 on: March 23, 2015, 10:22:17 PM »
I used to work for a software company that helped car dealers make a ton of $$$ from fleecing the buyers.
YES... Always always always negotiate.
Unless they throw you out, you haven't negotiated hard enough.
They will play the waiting game, let me get my manager game, the finance rate game, your trade in has no value game, etc etc.
Hit them up at the end of the month, at the end of a quarter (or year), and especially right before they close during a bad weather week.
Don't forget to ask for a full tank of gas, to shove their extended warranty up their @$$, and try to negotiate free oil changes, etc.
(if you really want a warranty, they are usually much cheaper elsewhere)

Carmax is the only place that I know of that has a zero negotiation policy.
My dealings with them have been decent.  At least I know I wasn't entirely fleeced by them.
My best deals came from the "Internet Sales" department AFTER doing my research.

Spork

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Re: Should you expect a dealer to negotiate car price?
« Reply #11 on: March 24, 2015, 06:55:05 AM »
One more thing to add: 
Dealers always want to use the 4 square piece of paper: trade in price, down payment, car price, monthly payment.  DO NOT for any reason play that game.

There is one square: cost of the car.  If for a moment you throw another transaction in there (cost of financing, monthly payment, trade in...) you lose.  They've done this 100 times a day for every day of the week.  They're playing math games and they are faster at it than you are.  Pay for the car only!  Don't trade in.  Don't work out payments.  Sell that trade in on craigslist instead.

They'll often do this with 0% financing.  (Who can say no to 0% financing!) but it becomes a shell game where the price of the car goes up in order to get the awesome financing.   There ARE real deals with very low financing where they get a kickback from a financing company... but if you play that game, you have to really be prepared to keep doing the math.  It is so much easier to pay cash and not worry about that.

I'm a red panda

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Re: Should you expect a dealer to negotiate car price?
« Reply #12 on: March 24, 2015, 07:03:49 AM »
Decide what you want to pay.  If the dealer doesn't want to offer that price, walk away.

The problem exists when you become invested in getting THAT car.

Gone Fishing

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Re: Should you expect a dealer to negotiate car price?
« Reply #13 on: March 24, 2015, 07:22:22 AM »
Length of time on the lot is a big factor.  Most car dealers finance their cars on a line of credit from the bank called a "floorplan" line.  The way the line works is the dealer will be able to advance 80-100% or so of the the (true) wholesale price to purchase the vehicle, if it has not sold in a specified period of time, usually 60-90-120 days depending on the model and creditworthiness of the dealership, the are required to make a curtailment, or pay down the line by some amount, perhaps 20-40% of the purchase price.  Many times a dealer would rather move a car and take a smaller margin or even a small loss, than have to choke up the cash to pay the curtailment. 

cynthia1848

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Re: Should you expect a dealer to negotiate car price?
« Reply #14 on: March 24, 2015, 08:25:42 AM »
Some dealers will not negotiate the internet price.  The best way is how Prospector describes - you need to reach out to a few dealerships all at once so you are comparing apples to apples.

I bought a used car for around 10-12% less than the asking price.  Speed was important to me, I was paying cash, and I had a baby with me.  (If you bring a baby with you, they will want to get you out of there FAST, lol.)  But the dollar amounts were larger, more like 30K than 6.

GreenPen

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Re: Should you expect a dealer to negotiate car price?
« Reply #15 on: March 24, 2015, 09:14:13 AM »
Length of time on the lot is a big factor.  Most car dealers finance their cars on a line of credit from the bank called a "floorplan" line.  The way the line works is the dealer will be able to advance 80-100% or so of the the (true) wholesale price to purchase the vehicle, if it has not sold in a specified period of time, usually 60-90-120 days depending on the model and creditworthiness of the dealership, the are required to make a curtailment, or pay down the line by some amount, perhaps 20-40% of the purchase price.  Many times a dealer would rather move a car and take a smaller margin or even a small loss, than have to choke up the cash to pay the curtailment.

In addition to the reason you mentioned, used cars depreciate every month they are on the lot as they get "older". So dealers are under a lot of pressure to move cars off the lot in 30 days, and really get antsy after 60 days. A close relative of mine will often sell under the Black Book price when it starts getting close to 90 days. And that's always his advice to used car buyers: find that car that's been on the lot for over two months (usually because it's a stick, or a strange color, or something like that).


Le Poisson

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Re: Should you expect a dealer to negotiate car price?
« Reply #16 on: March 24, 2015, 10:28:03 AM »
find that car that's been on the lot for over two months (usually because it's a stick, or a strange color, or something like that).

Hey - are saying my 5-spd "Inferno Orange" Sonic was cheap because its a bright orange 5-spd??? Oh, yeah, that may be part of it.

Gone Fishing

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Re: Should you expect a dealer to negotiate car price?
« Reply #17 on: March 24, 2015, 01:38:39 PM »
find that car that's been on the lot for over two months (usually because it's a stick, or a strange color, or something like that).

Hey - are saying my 5-spd "Inferno Orange" Sonic was cheap because its a bright orange 5-spd??? Oh, yeah, that may be part of it.

They had already dropped the price 3-4 times when I found my 5sp 4door Corolla.  I was just beginning to think I would never find one!

southern granny

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Re: Should you expect a dealer to negotiate car price?
« Reply #18 on: March 24, 2015, 08:26:54 PM »
I have a crazy car buying story.  A friend was very interested in a car on a local lot.  They would not deal on the price so she walked away.  She went to a lot in a neighboring town (20 minutes away) because they had a similar car listed.  For some reason ( I forget) she wasn't interested in that car.  She mentioned to the salesman about the car that she really wanted on the first lot.  That lot ended up getting the car for her from the first lot and selling it to her for the price that she had originally wanted to pay.  So obviously, the first lot sold it to the second car lot for even less.  And no, the two lots are not connected. 

firewalker

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Re: Should you expect a dealer to negotiate car price?
« Reply #19 on: March 24, 2015, 08:45:35 PM »
I went to Carmax specifically because of their no-haggle system. I just don't have the stomach to try to haggle a dealer down. Heck, I sometimes avoid the free samples carts at Sams Club because I'll feel guilty if I don't buy the product afterward. I know, issues, right? However, that '01 Camry bought in '02 has never let me down to this day.

The_path_less_taken

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Re: Should you expect a dealer to negotiate car price?
« Reply #20 on: March 24, 2015, 09:01:08 PM »
I have a crazy car buying story.  A friend was very interested in a car on a local lot.  They would not deal on the price so she walked away.  She went to a lot in a neighboring town (20 minutes away) because they had a similar car listed.  For some reason ( I forget) she wasn't interested in that car.  She mentioned to the salesman about the car that she really wanted on the first lot.  That lot ended up getting the car for her from the first lot and selling it to her for the price that she had originally wanted to pay.  So obviously, the first lot sold it to the second car lot for even less.  And no, the two lots are not connected.




When you go into a dealership wanting a specific new car they don't have (and even sometimes for a high end used one) the dealer will get on the computer/phone and reach out to neighboring towns in an effort to make a good deal. It's fairly common. There's actually a tab on each lead reading "wish list" for each customer.

The holdup is when a dealer thinks his competitor is making more money than he can or getting a sweet deal he's somehow missed: they're totally happy to "dog in the manger" sit on the vehicle so the sale can't happen...

Proving that those kids who swiped your lunch in fifth grade and stole your homework continue to know how to get ahead later in life.  ;-0

For something hot like a Tacoma TRD PRO, one dealer might demand some sort of gimme from the other dealer for letting something rare go...if his toes are held to the fire by a customer and the GM, it'll happen.

Spork

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Re: Should you expect a dealer to negotiate car price?
« Reply #21 on: March 25, 2015, 08:09:39 AM »
I have a crazy car buying story.  A friend was very interested in a car on a local lot.  They would not deal on the price so she walked away.  She went to a lot in a neighboring town (20 minutes away) because they had a similar car listed.  For some reason ( I forget) she wasn't interested in that car.  She mentioned to the salesman about the car that she really wanted on the first lot.  That lot ended up getting the car for her from the first lot and selling it to her for the price that she had originally wanted to pay.  So obviously, the first lot sold it to the second car lot for even less.  And no, the two lots are not connected.

I've done this twice.  Some Toyota dealerships around here are just a bunch of smug asshats.  You can 30-60 miles, find one that isn't such a PITA and have them dealer trade for the car you looked at.

I'm a red panda

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Re: Should you expect a dealer to negotiate car price?
« Reply #22 on: March 25, 2015, 08:28:07 AM »
I don't understand car dealers.

We once walked in to Ford, and told them we wanted the Escape Hybrid. While we were negotiating on final pricing for it, I said that I was also interested in the Focus.

The guy handed me a brochure and walked away.

WTF? I was ready to buy 2 cars that day.

I ended up waiting another 3 years to buy the small car, and did not go with Ford.

jba302

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Re: Should you expect a dealer to negotiate car price?
« Reply #23 on: March 25, 2015, 08:40:22 AM »
We have some dealerships around here that have a no-negotiation type thing going on. When we were looking for a new car nobody would budge on the price, but they would be super willing to be huge assholes on the trade-in. Before I got smart about money, I was interested in trading in my 2dr TJ for a 4 door JK. The sales lady was super easy to deal with, she just pointed out the line and said "here are the choices, here are the options, it's pretty much take your pick and I'm here to help you decide what's best." The old-school sales guy was now the trade-in expert, who spent 20 minutes telling me why my TJ was a piece of shit that I was lucky that they would be even close to willing to consider taking from me (in more polite terms). So we went to the Honda dealership who we've had experience with in the past. Same sale price deal, $4k more on the trade-in.

waffle

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Re: Should you expect a dealer to negotiate car price?
« Reply #24 on: March 25, 2015, 02:55:15 PM »

And that last day of the month *is* important.  They are paid in kickbacks from the dealer on how many cars they sell in a month.  The amount the dealer gets can be made or broken by just a couple of cars.  The commission a sales guy makes goes up in steps with each car they sell.   T

This is why you may get a call later.  When month end comes, they want to close every sale they can.  They will often sell under their own cost because the bottom line is: if they make their numbers, they make more in the end.

Kickbacks only apply to new cars from the manufacturer. They may have other reasons to push for sales at the end of the month on used cars (cashflow), but its not about kickbacks on used cars.

I was recently on the hunt for a pickup. Upon finding MMM I got rid of my 30k+ truck, but still needed a pickup for hauling my frequent home improvement supplies. I did lots of hunting both on craigslist and dealership websites. I wanted a late 90's or early 00's truck with decently low miles and manual transmission in good shape. beyond that I wasn't picky. Private sales mostly lined up with KBB pricing, but dealerships constantly wanted double or more KBB price.

My practice at dealerships would be to first have them show me the carfax. On the carfax there is a section where it says how much below or above book price they estimate the car is worth. I would point this out and ask the salesman if we could lookup the book price and they would always agree to. I would then make an offer based on those two reports. Every time the dealership would reject that offer. Not once did the dealership come even close, so I would walk out. It did provide some good laugh out loud moments when they would try justifying their incredibly outrageous prices.

I ended up finding a 2001 Dodge 1500 with only 39,000 miles for $4500 from a private sale and am very happy with it.

Spork

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Re: Should you expect a dealer to negotiate car price?
« Reply #25 on: March 25, 2015, 03:12:34 PM »

And that last day of the month *is* important.  They are paid in kickbacks from the dealer on how many cars they sell in a month.  The amount the dealer gets can be made or broken by just a couple of cars.  The commission a sales guy makes goes up in steps with each car they sell.   T

This is why you may get a call later.  When month end comes, they want to close every sale they can.  They will often sell under their own cost because the bottom line is: if they make their numbers, they make more in the end.

Kickbacks only apply to new cars from the manufacturer. They may have other reasons to push for sales at the end of the month on used cars (cashflow), but its not about kickbacks on used cars.


Actually, I read a very long and interesting article a while back... says exactly the opposite.  The big name dealers pay their used car people the same way.  The lot gets a bonus if they meet a sales number and each sales guy gets a higher commission-per-sale if they hit a magic number for the month.   I can't for the life of me find it now... but I'll post it if I can find it.

edit:
Found it!  From This American Life... shoulda remembered that.  It's an interesting read/listen to get an idea how the other side of this works.

http://www.thisamericanlife.org/radio-archives/episode/513/transcript
« Last Edit: March 25, 2015, 03:28:43 PM by Spork »

OSUBearCub

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Re: Should you expect a dealer to negotiate car price?
« Reply #26 on: March 25, 2015, 05:51:09 PM »
I'm following this thread very closely.  About to buy a new(to me) car in 3 months.

forummm

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Re: Should you expect a dealer to negotiate car price?
« Reply #27 on: March 26, 2015, 10:12:35 AM »
Yes. They will always negotiate it up--but you might not realize they are doing that. Either by adding in extras or padding the interest rate. The stealerships will always try to take more of your money. Here are some posts that talk about some ways to keep from playing their games. They are for new cars, but the info may still apply:

http://forum.mrmoneymustache.com/share-your-badassity/nissan-leaf-almost-paying-me-to-drive-it/msg368785/#msg368785

http://forum.mrmoneymustache.com/share-your-badassity/nissan-leaf-almost-paying-me-to-drive-it/msg368764/#msg368764

Forcus

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Re: Should you expect a dealer to negotiate car price?
« Reply #28 on: March 26, 2015, 10:24:36 AM »
To the OP, the dealership did you a huge favor. I do not generally pan any newer cars because most of them are quite good (even the s-boxes). But the Aveo is a horrid, terrible little car. It's only marginally better than walking. The only car I find more worthless is a Daewoo (which... the Aveo is just a rebadged version of).

I know at least one or two Aveo fanboys will chime in and that's fine.

Le Poisson

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Re: Should you expect a dealer to negotiate car price?
« Reply #29 on: March 27, 2015, 08:11:32 PM »
Forcus - I agree, but I was trying to be polite and focus on negotiations rather than the model of choice. All my research said to stay away from the Aveo. Its why we paid a little more to get the Sonic ($8,500 CAD vs OP's $6,000 USD)

One thing to beware of in all these 'next generation' hatchback and economy cars is that the evolution of design, chasing better rollover ratings, more airbags, and more electrical in the pillars has lead to far larger blind spots than previously, and in more places. In my work we have seen a number of crashes where drivers simply didn't see the approaching vehicle behind an A-pillar. We first started seeing this with the Ford Focus, but a number of other cars are now on our list to watch for this. If you buy a car with a windshield that slopes forward until it is almost over the front wheels, change your behaviour and do the head-bob check. Move your head up and down, or side to side to see past the A-pillar and beware of oncoming vehicles.

caliq

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Re: Should you expect a dealer to negotiate car price?
« Reply #30 on: March 27, 2015, 08:16:21 PM »
Forcus - I agree, but I was trying to be polite and focus on negotiations rather than the model of choice. All my research said to stay away from the Aveo. Its why we paid a little more to get the Sonic ($8,500 CAD vs OP's $6,000 USD)

One thing to beware of in all these 'next generation' hatchback and economy cars is that the evolution of design, chasing better rollover ratings, more airbags, and more electrical in the pillars has lead to far larger blind spots than previously, and in more places. In my work we have seen a number of crashes where drivers simply didn't see the approaching vehicle behind an A-pillar. We first started seeing this with the Ford Focus, but a number of other cars are now on our list to watch for this. If you buy a car with a windshield that slopes forward until it is almost over the front wheels, change your behaviour and do the head-bob check. Move your head up and down, or side to side to see past the A-pillar and beware of oncoming vehicles.

Would you mind sharing the full list of models with this issue?  I'm in preliminary stages of thinking about downgrading to one of the small hatchbacks.