Fighting Chance New Car Buying Guide - Our car buying service includes invaluable new car buying tips.

Why Choose

Fighting Chance

In These Tough

Economic Times?

The Other Information Sources

Aren't Telling You The Dramatically

Different Way Automakers Structure

Dealer Cash Incentives Today.

As A Result, The Negotiating Advice

They Give You Isn't Just Years

Out-Of-Date, It's Bone-Stupid.

(And Dangerous To Your Bank

Balance.)

First, A Personal Note: I started this business 16 years ago. It has always required a consuming, non-stop effort — at least 60 hours a week, 50 weeks a year. My wife calls me "a grinder." I study Automotive News, the industry’s weekly trade paper. I’ve received over 100,000 orders, and I have talked with tens of thousands of those customers. Much of what I’ve learned — and continue to learn — comes from their reports of their experiences, including "inside information" they've picked up from loose-lipped dealership sales people. I don't know if 48,000 highly-focused working hours logged on one subject qualifies one as an expert, but if anyone else has devoted more time to this one, I tip my hat to him or her. I'll just say that those 48,000 hours of study probably makes me one of the most qualified consumer advocates on this subject.

I chose to focus on new-car buying because no other information source was doing a credible job of helping you win in this purchase process, which so many of you hate so much. Creating a better product was easy. The competition was, and still is, inept. Most of the logical suspects are singing essentially the same song they were singing years ago. But the retail automotive marketplace has changed dramatically in recent years, and you need more relevant, up-to-date information and advice on how to deal with it effectively today.

Fighting Chance will always be a small "information boutique." On average, even in this down year for car sales, over 25,000 Americans buy or lease a new vehicle each day, 365 days a year. On average, I want 25 of them. (I couldn’t handle 30.) My competitors may have the other 24,975.

Here are some key examples that illustrate how we’re providing the information and advice you need in these tough economic times — information and advice that no one else seems to be providing.

In the past, most of the money spent on "dealer cash incentives" was tied directly to each sale of a specific vehicle. (e.g., "Sell one of those, and you’ll get an extra $500.") That’s not true anymore. Only a tiny handful of auto nameplates still uses that type of incentive on a regular basis.

Today every automaker allocates the vast bulk of its dealer cash incentive budget to "below-the-radar" programs in which dealers can earn substantial cash bonuses for reaching or exceeding sales targets over specific time periods — from one month to several months.These cash payments are typically not tied to individual sales of a specific vehicle. Instead, they are based on overall dealership sales objectives set on a dealer-by-dealer basis, where small dealers get smaller targets and big dealers get bigger targets. In addition, most of these programs require dealers to achieve specific customer satisfaction ratings to qualify for a bonus. (Customer satisfaction scores are based on both purchase and service satisfaction scores from responses to questionnaires asking customers to rate their dealership experience.)

Occasionally one of these programs may be focused on the specific vehicle you want, but not tied directly to your purchase. Instead, the incentive typically comes in the form of a bonus for selling a total number of units, not a cash payment for each individual sale. If dealers reach their overall sales targets for your vehicle, they get a nice bonus check. If they fall short of the target, they get nothing.

There are over 40,000 new car dealerships, and no one can tell you what any given dealer’s target is, or how close a dealership is to achieving its objectives. You can’t even learn exactly when these programs start and end.

So how do you negotiate price successfully in the current dealer incentive environment? You don't walk into a car store to negotiate the price, and you don't make an offer. Instead, you take control of the process, making dealers bid competitively for your business. Our information package teaches you exactly how to do that, step-by-step, working from your home or office and using the "fax/email attack." Just as automakers get competitive bids from parts suppliers, smart consumers understand that they are shopping for a commodity and get competitive price proposals on the vehicles they want to buy or lease. (Not-so-smart consumers walk into a car store and spend countless hours negotiatng a price with some car salesman and his boss — the endless "good cop/bad cop" routine.)

The dealership that will give you the lowest price proposal this month may give you the highest proposal next month because it's in a different place vs. its target objectives. Dealers who are close to earning a substantial bonus will often sell for a lot less than other dealers at the same point in time. They might even be willing to lose money on your deal. So you need to cast a relatively wide net, getting bids from several dealers — one or more of whom might be much more flexible on pricing than others.

Clicking through to get "Internet price quotes" from dealers' or others' web sites isn't always a great idea. Frequently the" Internet Sales Manager" will contact you and try to get you to visit the store to get a price quote. And sometimes those salespeople are relatively junior employees, with the authority to quote the same "Internet price" to everyone, but no knowledge of the "below-the-radar" sales targets and little authority to offer the rock-bottom prices the dealership might often accept to reach those targets.

Because these bonus programs tend to end at the end of months, you should aim to do your negotiating then. In addition to below-the-radar bonus incentives that might be in effect, all dealerships have monthly targets, as does every sales business. (They're trying to beat last month, or the same year-ago month.) The best deals customers report always seem to come at month-end.

Given the core facts outlined above, only a fool — a solid, gold-plated fool — would walk into one or two or three car stores to negotiate the price of a new car. And only a fool would make an offer. Yet that's exactly what more than a million Americans do every month, because "That's what the experts advise, so that's what we've always done." If that's what you've always done, it’s time to wise up and ignore those apparently clueless so-called "experts."

WHY HAVEN'T YOU LEARNED THIS FROM OTHER INFORMATION SOURCES?

Specifically, why aren’t Kelley Blue Book and Edmunds and other high-traffic automotive web sites telling you this? My guess: They won’t do anything to jeopardize the automotive advertising dollars they need to pay the high costs of maintaining and updating those sites. Visit their sites. Look at all the car-company ads. In addition, they want you to "click through" to dealers to get price proposals. Surely you’re not naive enough to think they don’t get revenue from dealers for those leads. But if they provided the facts and the advice that we do, they’d alienate their advertisers. (Note: There is no advertising on the Fighting Chance web site.)

Edmunds' web site lists a True Market Value (TMV) for each vehicle, implying that this is the price you should expect to pay. They tell us that this "TMV " is "based on what others are paying for the car you want." But how many of those "others" are savvy shoppers? Since most people are clueless about how to negotiate successfully, would you be happy to pay the average "TMV" price that they've paid? I hope not.

Alternatively, why aren’t you getting this advice from consumer affairs reporters at TV and radio stations, in your daily newspapers, and in personal finance magazines? Same reason: Advertising dollars. A writer from one of those personal finance magazines called me in mid-2006, leaving this message: "We’re doing an article on negotiating the price of a new car, and we’d like your input." In a reply to the writer’s voice mail, I gave them the short form of my input: " Only a fool would walk into a car store to negotiate the price. And only a fool would make an offer." I never heard from them again. That magazine can’t print those truths without risking the loss of automotive advertising dollars. There is no "free press" when it comes to providing helpful consumer information that would scare major advertisers away. The score in that game is advertisers: one, consumers: zero.

Even Consumer Reports, a trusted automobile information source providing a lot of helpful information, doesn't seem to be on top of the new reality in dealer incentive programs. In their April 2008 Annual Auto Issue, under a headline that reads, "The New Rules of Car Buying," here’s the advice they give to encourage you to purchase their New Car Price Service: "This service gives you everything you need to walk into a showroom with confidence — and walk out with a great deal." "You should bargain up from the real price the dealer paid for the car," which they define as the dealer invoice price minus "unadvertised dealer incentives and holdbacks." These were "The New Rules of Car Buying" in about 1969. They are ancient history today.

There are some fatal flaws with this approach:

(1) People who "walk into a showroom" to negotiate a price are essentially announcing that they are not soliciting competitive price proposals from other dealers, some of which might sell the vehicle they want for much less. They will never end up with the best price available if they’re dealing with just one or two or three dealers. And they’d have to be certified lunatics to put themselves through the pain of walking into 15 different showrooms and negotiating the price in each one.

(2) With the bulk of dealer incentive dollars now in the form of bonuses based on overall dealership sales and customer satisfaction targets, "negotiating up" from Consumer Reports’ "real price" is bone-stupid advice. Fact is, "negotiating up" from any dollar number eliminates the possibility of getting the vehicle for less than that amount. (Duh!) And dealers who are close to earning a big bonus will often sell for much less than that "real price" and even lose a lot of money on several deals if that will get them to their targets.

(3) In the same sense, making an offer is incredibly dumb. As soon as you make an offer, that's as good as the deal can get. Would you lay your cards down first in a poker game?

(4) Worst of all, if Consumer Reports fans act on this really bad advice, they probably won't even get the best price available at the store they walk into! Those best deals typically go to the smart shoppers (Fighting Chance customers) who make several dealers bid competitively and will never again walk into a car store to negotiate the price.

To illustrate these points, here's a specific example from the experience of a Fighting Chance customer. His wife's car died, and she wanted the all-new, redesigned 2008 Honda Accord shortly after it was introduced. In that situation we advise customers to wait two or three months to negotiate to allow the initial sales excitement to dissipate and supply and demand to come into a more favorable balance. He couldn't wait. Most of the price proposals he received were at the full sticker price, or close to it. But one dealer sold him the car for $568 below the invoice price — more than $2,500 less than any other dealer. The owner told him that his incentive target from Honda was 1,000 sales and that he "was doing anything he had to do to make the goal and get a significant bonus check." You can bet that check was at least $250,000 ($250 per car) and more likely $500,000 ($500 per car) or more. All auto manufacturers have their own "below-the-radar" dealer incentive programs. Why isn't Consumer Reports telling you this? My guess is they aren't close enough to the car business. If this customer had followed their "New Rules Of Car Buying,", he would have aced himself out of a lot of money.

This isn’t rocket science, it's common sense. It’s also the way most of the business world has worked forever. Companies making expensive purchases routinely make suppliers bid on price to win their business. And most sales operations don’t reward salespeople on a sale-by-sale basis. Instead, bonuses are tied to meeting overall sales objectives (e.g., "Beat last year’s result by X%.).

Worth noting: The Fighting Chance information package costs almost three times the $14 Consumer Reports charges for its New Car Price Service. Why? My answer is that I know what our product is worth. I assume they know what theirs is worth.

THE BOTTOM LINE

New cars are just expensive commodities -- the same vehicles with essentially the same pricing structure at every dealership selling that nameplate.

You'll always get the best price on any commodity — including new cars — if you make several suppliers bid competitively for your business.

There is no "dealer who always gives the best deals" in any market. This month's low bidder may be next month's high bidder, depending on where the dealership stands vs. its bonus targets.

In today’s retail auto marketplace, walking into a showroom and making an offer by "bargaining up" from a "real price" is a terrible idea if your objective is to get the best deal available.

Any automotive information source that isn’t telling you this either doesn’t know it, or doesn’t want you to know it.

Any questions?

James Bragg