"Oh what fun it is to ride" intones the mellifluous voice in the holiday commercial for Mercedes-Benz. We've all seen the "December to Remember" TV commercials that make us simple folks wonder, "Why didn't I think of giving my spouse five years of car payments for the holidays?"
The holiday auto buying promotions do work, said Scott Lambert, executive vice president of the Minnesota Auto Dealers Association. "Years ago, the holiday time was slow, but I give Lexus a lot of credit for changing that," he said. "It must work because all the manufacturers have holiday promotions now. It's generally a good time of year, and with gas prices down, that's helping too."
I've never thought of giving anyone a new vehicle for Christmas. I don't travel in the circle of people who can. I don't even travel in circles of people who buy new cars. Most of them buy used.
But that doesn't mean that I don't enjoy the process of negotiating for a new vehicle. I bought my first new car a decade ago and plan to buy another new one in the next decade.
Lucky for me, one of my friends recently joined the throngs of people eager to buy new cars. I jumped at the chance to help him get a good deal on a 2015 Subaru. He was in good company — the rate of people buying new cars last month was the highest in a decade, translating to 17.2 million on a full-year basis, according to Autodata.
My friend used more than half a dozen online resources to evaluate vehicles and get prices from CarsDirect.com to Edmunds.com. His vehicle with all the options had a manufacturer's suggested retail price (MSRP) of $31,948 and a dealer invoice price of $29,305.
I used two main sources to try to get him a good deal. A free article called "Buying a New Car" by Consumers' Checkbook (http://tinyurl.com/n8km8f6) and a price report.
Checkbook is an invaluable nonprofit consumer organization in Washington, D.C., that teaches people how to get a good deal buying a new vehicle. Consumers who would rather not go through the hassle can pay them $200 to do the negotiating, but the nonprofit deserves credit for showing people how to do it on their own if they want.
I took Checkbook's advice and called six different dealers (five in the Twin Cities and one in St. Cloud). I asked for the name and e-mail address of the sales manager. Then I sent e-mails to each of them saying that my friend was a serious buyer looking for a new 2015 Subaru. I said that we were contacting multiple dealers to get bids. "The dealer with the lowest price, including all required fees, will get the business. Bid below, at, or above the invoice price, but make your first offer the best offer," I wrote in the e-mail.
I then followed it up with voice mails to all six sales managers (not one was available when I called).
While I waited for their responses, I got the Consumer Reports' New Car Price Report for $14, my second invaluable resource. Within minutes after ordering it online, I not only had the dealer invoice price ($29,305), but also Consumer Reports' bottom line price ($28,370). That was valuable information to use as my target price.
After some back and forth phone calls to four dealerships, I was able to get the car for $250 under the invoice price. Other dealers in the Twin Cities came in at $300 to $1,000 more. Even Costco's car buying service, whose representative called me to ask why I hadn't taken their offer, was $300 higher than I did on my own.
Did I get my friend a good deal? He paid less than invoice, but it's hard to know for sure. Still, shopping for a new car is much more of an informed process than it used to be, thanks to the Internet and invoice pricing, said Robert Ellis, director of operations and online resources at Checkbook. "People now have a reference point thanks to invoice pricing," he said.
Ellis recommends that buyers do their negotiating by phone or e-mail rather than in person at the dealership. "At the dealership you're on their turf playing by their rules," he said. "Unless you have an unusual amount of fortitude, you'll either be charmed or intimidated."
In addition to his new car, I also saved my friend money on an extended warranty for his vehicle. Prices on a 7-year/70,000-mile Subaru Gold Plus service agreement with $0 deductible ranged from $1,335 to $2,200 at Minnesota Subaru dealers, but with Checkbook's help, I was able to find a dealer in Maryland to sell it for $876. Most consumer experts don't recommend extended warranties, but I didn't discourage my friend my buying one since his vehicle has all-wheel drive, EyeSight navigation and every electronic bell and whistle Subaru offers.
I purchased one myself for $850 when I purchased my '04 Malibu new. It's been a decent car, but its squeaky suspension has been problematic. Thanks to the warranty, I received a new $1,200 new suspension at no cost. Would I buy a warranty on vehicles with a stellar reliability record from Consumer Reports? No, but a good warranty can be peace of mind, especially for those on tight budgets.
If you want to consider buying a new car extended warranty, you don't have to buy it at the time you purchase a new vehicle. It can be purchased after the fact from any dealer in any state, with covered repairs done by the local authorized dealer you want. For a list of dealers by manufacturer that sell extended service contracts for as little as $1 over cost, go to www.carbargains.org and click on "low cost service contracts."
My friend is enjoying the holiday season driving around in his new car, but all that negotiating doesn't make me wish for a new car with a big red bow on it. Another year without a car payment is a wonderful gift in itself.