When repair costs threatened to outstrip the value of my Volkswagen Fox Wagon last summer, I finally admitted it was time for a new car. It had been 11 years since I'd bought one, and I knew I would have to educate myself on the vast changes in technology. Not car technology, but car-shopping technology.
Some 60% of car shoppers now do research or make purchases on the Internet, says market researcher J.D. Power & Associates. The Net barely existed when my two-door wagon was shiny-new. I soon discovered that while the Net put a virtual showroom on my desktop, it put all of the typical car salesman tricks there, too: the bait-and-switch, the special markup, and the ever popular "I'll have to check with my manager." But I still found the Net to be a powerful consumer tool. Although it didn't deliver a sweet deal on a car, it sure helped me sidestep bad ones. I ended up using a clicks-and-bricks shopping strategy--and that served me pretty well.
SQUEEZE. First, I had to find the right car. I needed one that could haul bikes and friends to cycling events. Checking car company Web sites along with a host of independent auto sites, I looked at wagons (too domestic), sport-utility vehicles (too huge), and eventually came to the Honda CR-V and the Subaru Forester, small, four-wheel-drive vehicles. Either could handle back roads to the mountain-bike trails and squeeze in four adults and their gear.
After perusing Yahoo!'s (YHOO) car guide (table), which was especially easy to navigate, I settled on the Subaru. Like some of the other sites, Yahoo's let me make a side-by-side comparison of the cars and read consumer comments. It also allowed me to make a list--and printout--of options that included the invoice, or wholesale, price and manufacturer's suggested retail price (MSRP) for each.
I had to leave my desk for the next step. I visited a Subaru dealership in Annapolis, Md., for a test drive, and even tried to make a deal right then and there. The saleswoman offered to sell me any option at invoice if I would take the car that day. But the prices she claimed as invoice were, according to my Yahoo information, actually above retail. She insisted my info was wrong, but I doubted her. While a February report by Brandon (Ore.)-based CNW Marketing Research showed that pricing information on independent car sites is wrong about 70% of the time, it cited Yahoo as among the 30% with reliable data.
Having done the test drive, I weighed the idea of buying my car online. It's uncertain whether you save money going this route. A January CNW report found that purchases online cost an average of 4% more than the best dealer price. But J.D. Power says online buyers save some $490 more than showroom shoppers.
I took heart from a friend's experience. He closed an excellent lease deal on a Jeep at priceline.com (PCLN) with just an e-mail and a phone call. The car was delivered to his home, and he says it took five minutes to sign the papers. He paid priceline's fee by credit card. Unfortunately, priceline didn't then operate in my state (it's in all 50 states now). After eliminating sites that wanted money up front (one charged $300, with no low-price guarantee), I checked out Autobytel.com (ABTL), Carclub.com, Autoweb.com (AWEB), and the now defunct CarOrder.com. They let me configure the model as I wanted while tallying both invoice and retail prices. By then, I had gleaned a rule of thumb in the industry: Dealers are happy to make $300 to $400 over invoice for a $20,000 vehicle. That became my benchmark.
RIGHT AWAY. Some sites, such as CarsDirect.com and formerly CarOrder.com, let you order directly. In such cases, the site purchases the car from a dealer in your area where you go to take delivery. CarOrder's price on the Subaru before tax was $1,435 above invoice last summer. So I abandoned that approach.
At the other sites, I put down my contact information so an area dealership could call me. From my posting on Autoweb.com, a Subaru dealer in Springfield, Va.--more than an hour away--called to say that it had the exact car I wanted on the lot. The salesman offered to sell it at below invoice cost if I would take delivery right away. But I was fairly certain that the dealership didn't have a car with all the options I wanted. The Annapolis dealer I visited had scoured the region to find one and failed. More important, because I had checked the cost on the Web, I knew the price offered exceeded invoice by about $2,000. Heck, it was actually a little higher than MSRP. When I told the salesman this, he said he'd have to check with his manager. That was the last I heard from him.
Autobytel, meanwhile, put me in touch with a dealer 40 minutes away. While the dealership didn't have the car, the salesman said he could get it--but there would be an "AMV," or "adjusted market value," charge of $1,500 because of high demand for the model. Perhaps, my friend the salesman suggested, his manager might let him knock the fee down to $1,000. "No thanks," I said, using words more polite than the two I was thinking.
I don't think the dealer from Carclub ever called, but no matter. By this time I was frustrated. I took my itemized worksheet with the base price and extras calculated to an invoice price and drove to Valley Motors in Timonium, Md., about 20 minutes away. There, I asked the salesman closest to the door: "Would you be happy making $400 over invoice on a Forester?" Matter-of-factly he responded: "I could work with that." I handed him my worksheet, and in five minutes began the paperwork on a car at my price.
I know you sometimes can get the dealer to go under invoice. Edmunds.com has a "true market value" calculator--a sort of an anti-AMV device. It factors in such things as regional supply and demand and dealer rebates that might affect a car's value (for example, Subarus are cheaper in Florida, where demand is low for four-wheel-drive cars with side-mirror defrosters).
So maybe I didn't pay absolute rock bottom, but I got something for my money. The salesman, Bill Kasper, kept me up to date on my car's progress on its way to the dealership. He even agreed to trade the stock gold-and-silver wheels for the more subtle silver five-spoke wheels that I found more appealing. When the Subaru arrived, he showed me how to use all the features, including the many ways to arm the alarm. And he has graciously taken the time to repeat the information on follow-up phone calls. Try getting that on the Net. By Roy Furchgott