No matter where you’re at in the entrepreneur journey, undoubtedly you need to have a reliable car. And whether that’s a new car, a late model used example, or if you’ve reached that point, a supercar like this Ferrari F430, there’s a few tricks and traps to purchase.
Here’s an indisputable fact
Motor Dealers want to make as much money from you as they possibly can.
If you don’t think that’s a fact, then stop reading this article. I can’t help you at all. If however, you think that you can learn from someone who’s been in the car business since February 1978, then read on.
I’ve been a motor dealer for over 39 years. The first 37 as a franchise dealer selling Ford, Toyota, Mitsubishi, Suzuki, Chrysler, Jeep, Renault, Dodge, Citroen, Isuzu Ute, Volkswagen and finally Mahindra.
In all my businesses, the goal has been to make money and look after the customer. But which comes first, the chicken or the egg? I’ve always preached the customer-first mantra – because if you look after your customer well, you’re sure to make more profit. On average car dealers make around $2600 for every new and used car they sell. On top of that, if you take a dealers finance, you’re contributing another $2800 to their bottom line. But that changes with customers who buy a second or subsequent car. Don’t be surprised that dealers make more profit on the second purchase. If the dealer has been looking after a customer really well, the trust between the dealer and customer rises. My experience says that repeat customers contribute another $500-$1000 to the dealer’s bottom line.
Over the last 25 years or so, car brokers have come into vogue. Car Brokers generally establish a relationship with a dealer for each brand they’re trying to sell and push the customer to avoid the stress of dealing directly with a dealer and only deal with them. Customers think that they’ll get a better deal through a broker. I’ve had personal experience with brokers as a franchisee and I’m telling you that on more occasions than not, they make more profit on a particular sale than the dealer. It’s wasn’t unusual for me to write cheques to brokers for $1000 or more. One particular transaction that is clear in my memory was a broker making $2900 on a deal with a retail customer.
So here are a few tips to get the budding or experienced entrepreneur buying their next car at the right price.
- Do your homework – do you need that particular car or is there something else that will do the same job as the larger or more expensive one.
- Pre-arrange your finance BEFORE you visit the dealer. Make sure that the repayments are affordable in your budget. Dealers will work hard to upsell you on models and extras. You’ll find yourself paying more than you budgeted for if you’re not careful.
- Don’t buy their aftermarket accessories. The only one that I buy is window tinting and then never from the dealer. Salespeople will try to charge you up to $800 for tint whilst I get my customers the same product for under $400. You don’t need paint protection, interior protection, tyre and rim insurance or anything else. If you’re purchasing a 4WD and you’re planning to take it on the beach, you might buy electronic rust protection, but if you’re paying $900 or $1000 you’re crazy. The best product on the market can be had with 4 attachment points (not 2) for around $500
- New cars generally have capped price service plans included for the first 3 or 4 years. Don’t bother with the independents who are arguably charging the same price. Having a dealer stamp in your log book will make the vehicle you’re buying worth more at trade in time.
- If you’re trading in your old car, the best idea is to have it prepared for sale before you take it in for evaluation. What do you need to do? Detail, replace un-roadworthy tyres, fix the chips in the windscreen, make sure that your books are up to date and lastly get a safety certificate completed. Dealer valuers allow anywhere between $500 and $1000 for mechanical repairs that MAY be needed. If they see the safety certificate, there’s a chance that they won’t allow this amount. Have a read of my 11 tips to prepare your car for sale or trade-in.
- The whole of life cost – what will a particular vehicle that you’re interested in cost you over the time you’re planning to keep it. There’s thousands of dollars involved when you take into account, initial purchase price, fuel and service expenses, insurance costs, and trade-in values. If you’re not sure how to do the math, then have a read of my “Whole of Life Cost”
In closing, remember that car dealers are focussed on making as much profit from you as they possibly can. If you want some assistance to reduce their profit, then reach out to me at firstname.lastname@example.org or phone me on 0418 748 498