Battle of Wills
Negotiating the purchase of a new or used car is hard work. Here are some tips to help you master the art and get the best deal possible.
If negotiation is a kind of warfare, then most of us are not the soldiering types. We glide through the supermarket without brandishing a competitor's circular in the manager's face. A speeding ticket might trigger a quick plea for mercy, but not a roll of bills to make the whole thing go away. And a brief encounter with a smarmy waiter in some haute restaurant might cause you to lower the tip to the average 15 percent, but it won't cause you to confront the maitre d' for your pound of flesh.
But every so often — settling a divorce, closing on a new home or maybe the most common of all, buying a new car — we're drafted back into the fight.
Negotiating with a car salesman is an inherently unfair fight for the average person. It's a duel between a relative novice (no offense) and a seasoned, professional mercenary. To gird yourself for battle against the Goliaths prowling your local dealership, here is some advice from professional negotiators — experts who use core principles of economics, psychology, sociology and even body language to bring back the best possible spoils of war. For you, that means the best possible price on the car, truck or SUV of your dreams.
Start With Solid Research
Preparation is the most crucial part in any negotiation, and collecting as much data as possible before sitting at the negotiating table is the best way to even the odds. "A car salesman doesn't have more power, but more expertise," says David Lax, managing principal of the negotiation consulting firm Lax Sebenius and co-author of "3-D Negotiation." "But you can check Consumer Reports, or go online, and find out what dealers pay, what their true costs are." Lax, who taught Harvard Business School's first course on negotiation, points out that expertise is really just another term for extra information. As you collect hard data, your opponent's extra information becomes shared information, and the playing field begins to level out.
Map Your Strategy
This step is a more detailed follow-up to the general market research you've already done. Instead of seeing the dealership as some monolithic opponent, Lax suggests breaking down the entire business into its component parts, from the salesman trying to make his commission to the dealer trying to move inventory, all the way up to the automaker's dilemma of whether to close manufacturing plants in a slowing market or provide incentives to dealerships to sell at a loss. You may be negotiating with the tip of the spear, but knowing the status of the entire army lets you exploit its biggest weakness. That could mean basic maneuvers — making contact at the end of the month, when sales associates are eager to hit their monthly quotas — or more detailed calculations, such as determining which dealerships are in direct competition and might be willing to undercut each other at a loss.
Define Priorities Ahead of Time
Walking into battle without setting the exact conditions of victory — and defeat — is an invitation to chaos. Yet prospective buyers breeze into dealerships every day, asking to be impressed. "People who are reactive, which is most people, don't do as well as people who prepare for the at-the-table tactics," says Lax. "To do that, you have to think about what your interests are, what you really care about." On the most basic level, a set of pre-defined priorities (for example, the features the car you purchase must have) lets you deflect that offer of a free moonroof, while you angle for the amenities, equipment and service requirements that aren't negotiable. The more you consider your priorities, the more useful bargaining chips might appear. For Lax, having a dealership pick up his car for maintenance was more important than whittling down the price. "You're always trying to create value, for both parties," he says. "In this case, my time was more valuable than the time of the sales guy. So he's willing to drive out to my place, and I'm willing to pay more for a car, which gives him a better commission." If price isn't the only issue, and you can determine what's most valuable to you, and to the sales associate, both sides can walk away feeling like the winner.
Rehearse Your Offensive
With your vehicle and dealership properly scouted and your priorities lined up, body-language expert and negotiation coach Patti Wood suggests doing something a little silly: State your terms, out loud, either to yourself or to someone else, while en route to the negotiation. "Do it until you're confident in saying what you want," says Wood. "If you're in the deal and you're not fully confident, your voice is going to betray that." A voice that drops in pitch telegraphs comfort — a price that's a final offer, not an opportunity to bargain. "But if it goes up, then the salesman knows he or she can play with that number. It leaves an invisible question mark in the air," explains Wood.
Shake Hands First
According to Wood, first impressions have nothing to do with being "touchy-feely." Researchers have found, when it comes to establishing rapport, the immediate physical contact of a handshake can have the same effect as three hours of face-to-face interaction. Since any negotiation, friendly or not, is a power struggle, it's important to prove your dominance. "Wait until you're two feet away, strike out your hand a little early and make significant eye contact to say, 'This is my purchase. I'm confident about it,'" says Wood. "You're in charge of making them comfortable, not the other way around."