Seven steps to scoring a bargain on that new car
WANT to get the best price on a new car? Minimise risk and maximise a discount by doing some research beforehand. Here are seven simple steps to driving a bargain.
1. Get clicking
Know which car you want before you turn up to a showroom.
If you wander into a dealership not knowing what you want, chances are you may end up driving out in a car they have trouble selling.
Fortunately you can do most of your preliminary research on each manufacturer's website.
Once you've clicked on the model you want, look for "specifications" or "download brochure" or similar. That will give you more than just the highlights.
Make sure basics such as six or seven (or more) airbags and a rear view camera are standard.
An increasing number of brands have Apple Car Play and Android Auto built into their audio touchscreens, but oddly big brands such as Toyota and Mazda don't.
Check to see if front and/or rear parking sensors are standard (some still charge extra for these basics), and if there is a full size spare tyre, a skinny space saver or an inflator kit in the boot. If it's not listed online remember to look under the boot floor once in the showroom.
2. don't get stranded
Check the factory warranty coverage. The industry average is three years/100,000km (Toyota, Mazda, Ford, Holden and Nissan) but you can do better.
An increasing number of brands now stretch to five-year coverage (Hyundai, Honda, Mitsubishi). Kia has an industry leading seven-year warranty.
Aftermarket extended warranties signed up at the dealership at an extra cost to you should be avoided; they lock you into expensive service contracts and don't cover big ticket repairs. It's the factory warranty coverage that matters when things go wrong.
3. Go for a test drive
Be sure to take the car you're interested in for a test drive, and not just a lap around the block.
Make sure the car you're testing is indicative of the exact model you're being quoted on. It's not uncommon for dealer "demonstrator" models to be the luxury versions with more powerful engines.
Also check if your golf bags/prams/other stuff fit in the boot.
Have a young family or one on the way? Check if the car has Isofix child seat mounting points. Also check where the top tether straps go. Most are behind the seatback; roof mounted top tether points can obstruct people and cargo.
4. The trade-in
In most cases you'll get more money for your old car if you sell it privately (dealers often make more money on trade-ins than the new car they are selling you).
When you trade-in you're paying for the convenience of leaving behind an old banger - and not having to wait weeks for prospective buyers to turn up for test drives and arrange finance.
When trading-in a used car for a new one the only figure that matters is the "change-over" price - the remaining amount you pay to get into the new car once you hand over your old one.
Some dealers may offer a discounted price on the new car but then low-ball your trade-in. Or they may pay handsomely for the trade-in but charge over the odds for the new car.
The "change-over" price is all that matters and allows you to compare the one price across different dealerships selling the same new car.
Make sure you're comparing like-for-like on the new car. Some dealers like to add extras to make it harder to compare apples with apples. Just negotiate the car in its basic form, worry about accessories later.
It's even worth getting outside quotes for window tinting. Many dealers now do their own tinting on-site and charge anywhere from $600 to $900 for it. Shop around and you'll see window tint specialists charge between $300 and $600 depending on the car.
5. Decision time
Once you know exactly which car you want, negotiate on the drive-away price about 10 days out from the end of the month.
A period of 10 days or so gives the dealer enough time to prepare the car and get you in the traffic. On the downside, if they've already hit their target for the month, they may be less desperate to do a sharp price.
Check the dealer has the car in stock and/or can deliver it in time.
On in-demand models dealers may promise quick delivery to get a deposit - and then leave you hanging for weeks or months if they can't get one.
Get it in writing that the car will be delivered by an agreed date. Get the sales manager or dealer principal - not the sales consultant - to sign the contract with the agreed date.
Agree that your deposit should be refunded in full if the new car is not delivered on time.
This is especially important with trade-ins. One tactic on delayed deliveries is to say your car has devalued since the original "change-over" price was agreed.
6. How low can you go?
Not all cars have thousands of dollars in savings. In the sub-$25,000 drive-away price bracket there's not much wriggle room: between $400 and $1200 profit is left for the dealer on popular mainstream models.
The discounts get bigger as prices rise. On cars sold at their regular RRPs, there can be savings of up to $3000 in the $25,000 to $40,000 bracket - if the dealer wants to limbo that low.
On cars not already subject to a discounted drive-away offer funded by the manufacturer, try the following.
Ask for a price breakdown that lists the RRP, registration, third party insurance, stamp duty and dealer delivery. On a car with a $20,000 RRP those items can calculate out to about $23,500 drive-away.
Our tip: aim for the RRP, but as a drive-away "no more to pay" price. You may not always limbo this low, but it's a good target.
In our example of a $20,000 RRP that calculates out to $23,500 drive-away, if you ended up paying $20,000 to $20,500 drive-away with no more to pay you'd be doing well. On a car with a $30,000 RRP, if you landed somewhere between $30,000 and $31,000 drive-away with no more to pay you're getting a good deal.
7. Not all drive-away prices are equal
Here's where it gets tricky: the Kia Cerato sedan and hatch are available for $19,990 drive-away with automatic transmission. That's already more than $3500 off the full price and, insiders tell us, there's barely $400 profit left for the dealer. So you'll be lucky to get floor mats thrown into that deal.
But a Ford Focus at $27,000 drive-away has at least $2000 of fat to trim - if you ask nicely and find a dealer who wants to move metal.
The more often you search the "special offers" sections of manufacturer websites (they usually change at the beginning of each month unless it's an extended discount offer), the more easily you'll be able to detect if the drive-away price has much room left in it.