Does Subaru have big dealer hold backs and incentives?

[mcstuie]

Hi - a friend negotiated $5000 offf the invoice price of a Chevy and I've tried doing the same with Subaru at 2 dealerships. They say I'm insane and no one will do that deal. Are they lying or is it truly not possible to knock more than $500 off invoice with Subaru? And where can I find true invoice price? Thank you!

[Naked Buell]

That is B.S. I haven't checked but one site that used to do that was Edmunds.com. It would tell you what the dealer buys the cars for. One guy, found out what the dealer bought the truck he wanted and then offered $500 more than what the dealer bought it for and it took 5 dealers but the 5th one took the deal. 

 

So it is the time when you buy. Best time is very beginning of the month or right at the end of the month. That is when they are trying to make there commission. In a book a read that was written by a car saleman. You just have to shop around, know what the car is worth and deal. The Dealer who wants to make the deal will deal.

 

There is a place close to me, DaveSmith, sells car and trucks, and he awesome on prices, and I have found Subaru's there, people fly in, he has people pick them up at the airport and bring them to their new vehicle. He has dealerships all over and can get "any" vehicle you may want. I would give them a call or look them up. DaveSmith.com. Plus the money you may save, it can be shipped. 

[Wagon Wagon]

Dealer employee here. I spent 6 years in sales and I've got another 3 1/2 in marketing (not Subaru though). You will not get the kind of discount on a Subaru that you'll get on a Chevrolet. In fact you'll almost never see the kind of discounts on an import car that you'll get on a domestic.

 

• Domestic brands rely very heavily on volume and fleet sales. They also are very closely tied with the UAW at their factories. Between these two factors the supply almost always outstrips the demand. They'll build vehicles like crazy and then throw out huge incentives when the supply of vehicles starts piling up.
• Trucks are given much larger amounts of markup than other vehicles. I'm not exactly sure why, but I can tell you regardless of manufacturer incentives we've got twice as much room to discount a $40,000 Ram compared to a $40,000 Jeep. The fact that domestic brands sell a HUGE amount of trucks compared to other vehicles means their average discount is pushed incredibly higher vs. other brands that aren't so truck heavy.
• There's a difference between dealer discount relative to invoice and manufacturer incentives. That $5000 your friend got off the Chevrolet was mostly incentives, I guarantee it. An example: one of my stores can get you over $6500 off the sticker price of a new Jeep Patriot. $5000 of that is money provided by the manufacturer to incentivize sales of the vehicle. About $900 of that is dealer markup, or the amount of money between sticker and invoice. The other $600 is holdback, which is the amount of profit the dealership has below invoice. If Jeep wasn't essentially giving people money to buy new Patriots we'd be able to go about $600 below invoice before taking a $0 profit deal... and bingo, that's almost exactly what you're finding with Subaru, isn't it?
• Subaru, like most other import brands, has a very healthy demand for their vehicles relative to the supply. They don't put large incentives like this on them because they don't need to. People will buy them anyway, and people will buy them fast enough that the supply of cars doesn't back up. Some domestic vehicles are like this too- you almost never find a large discount on a Jeep Wrangler because the demand is great enough to keep the cars moving off the lot.

 

For the most accurate info visit TrueCar.com. You will not have to give out personal info to get an idea of what fair prices are. Just pick your make and model, put in your ZIP, pick your options, and it'll spit out an average sale price for the car. At around that price you're getting a good deal. Below that price you're getting an awesome deal. I've kept an eye on TrueCar religiously for the past several years and it's almost always accurate to within a couple hundred bucks.

 

Let me know if you need advice for shopping/making an offer. I run the online marketing department for 5 dealerships and can give you advice for getting the best deal with the least headaches, and also the red flags for not wasting your time with a specific store.

Edited February 27, 2017 by Wagon Wagon

[Naked Buell]

Nice info Wagon Wagon. It's always nice to hear from a man on the inside. 

[Flowmastered87GL]

There is not $5000 of padding in a Subaru.  My parents just bought an Impreza and it was more like $1200 if I recall.  They got the car below invoice plus I was able to get a $500 Subaru Ambassador coupon to apply on top of that.

 

The dealer should be willing to show you the invoice.

 

Often times if you contact the INTERNET DEPARTMENT, not retail sales, they will give you a very good quote over e-mail and tell you what invoice is.  (I think the two bids I got were $200 under and $500 under)

 

http://www.cars101.com/ used to show the invoice prices, but I couldn't find them tonight.  If you dig around on there maybe you can find them.

[mcstuie]

Thank you all for your feedback. This is so very helpful! No wonder they thought I was insane when I walked into the Subaru dealership with a Chevy pricing strategy. I'm going to call 10 dealerships - talk to the internet sales person and do a bidding war if you will to get the best price.

[Wagon Wagon]

Honestly you're better off working through email. On the phone they're going to try their damndest to get you to just visit the dealership.

 

You can do much of your research without contacting the dealerships. Once you're about ready to make a buying decision:

 

• Check TrueCar to find out the approximate going price for the car you want.
• Browse the websites of dealers in your area and see if they have what you're looking for. Autotrader.com is a great aggregator of multiple inventories- you can use it to see most dealers' offerings in one place, then jump out to their own site once you see something interesting.
• If a dealer has what you want and it's priced at or below the TrueCar range, contact them and confirm the availability of the car and the details of the price, then make an appointment to visit them if it all looks legit. You probably won't find them advertised like this though.
• When you see a car you're interested in use the little "contact us" or "get a quote" button (or whatever they labeled it) to reach out to them.
• Tell them you're ready to make a purchase within the next (day? two days? week?) and you'd like to know their best price on this car.
• Shop multiple dealers, but don't bother with the "I'm shopping you against 5 other dealers!" line- they already know you're shopping and quite honestly the people that use lines like that tend to also be the flakiest customers and therefore aren't given much of the salesperson's effort. Just contact them and see what they get back to you with.
• 40-50% of the dealerships won't answer your question. Cross them off your list.
• If a dealer meets or beats the TrueCar price off the bat, just make an appointment to visit them (ask for the person who emailed you!) and go check out the car. If everything jives with your expectations and they treat you well, buy it. If they try to change the price on you, leave.
• If nobody comes back with an offer in the TrueCar range, make a counter offer. So let's say TrueCar is $22,500- offer a little below it so they'll hopefully counter right in the range you want to be in. "Thank you for getting back to me. If you'll sell this car for $22,000 I'll be in (tonight? tomorrow? Saturday?) to buy it." This is not a contract. If something turns you off about the dealership once you get there you are under no obligation to purchase.
• If someone meets your offer, make an appointment to go visit them (and ask for the person who emailed you), test drive the car, and complete the purchase if you feel comfortable. Always test drive the car even if you know it's what you want. Cars are machines and even new ones are broken sometimes, and you don't want to find out there's a squeak in the interior after you've plunked down five figures.
• If nobody meets your offer, make an appointment with the lowest priced dealer (as usual, ask for the person who emailed you), tell them you think we're really close to making a deal and you'd like to check out the car in person. Once you've test driven the car and are talking numbers, make your offer again. "I'll buy it right now if you sell it for $22,000." Once you've gotten to this point you will almost always end up getting the car within a few hundred bucks of where you want to be. As usual, be prepared to leave if something about the way they're treating you turns you off.

 

Are you planning to finance, and are you trading in a car? I can help with that too.

[mcstuie]

Wow - that is very helpful - thank you! We will either get a loan or lease - depends on how low I can talk them because it's about monthly payments. We also have a trade in that is worth about $700 KBB for trade in. I've been advised to get $2000 for it because of local dealer push, pull, tow kind of specials locally. What do you think?

[Wagon Wagon]

Re: the trade, honestly I'd just either sell it on Craigslist or donate it to charity (around here NPR is big on that) for a tax write-off. Those push, pull, or drag deals are just marketing. Remember whatever marketing the dealer is doing, they're always making money on it- it's a business and that's what they do. In the case of this trade offer, say your car is worth $700, they've got $1500 markup in the new car, and they're offering $2000 push pull or drag. They're going to allot $700 to your car and then shunt another $1300 of their markup over to the "trade allowance" line of the purchase order, and then they'll tell you "We're being so generous on your trade, we just can't come that far off sticker on the new car." The net result is either the same or a few hundred bucks higher for you, but it'll make the whole process much easier to understand if you just skip the push-pull-drag offer.

 

For financing... check with your bank or credit union. Credit union is best, if you're a member of one. Tell them you're going to buy a new car and you want a preapproval on a car loan. They are going to need to do a credit check for this- no worries on this, while a credit pull does slightly affect your scores, multiple pulls in a 60 day period for the same purpose (car loan) will only affect it as if there was just one inquiry. If they give you a rate quote without a credit check they are not actually issuing a preapproval but rather just reading from their rate sheet. You need an actual preapproval because every buyer is unique and what's on the rate sheet is only an example and may not apply to you.

 

When you have your preapproval and are talking to the dealer about payments, tell them about it and see if they can do better. "I'm approved at xxxx bank for 2.9% at 60 months, but if you can beat their rate I'll finance with you." The dealership will want to do this because they get a small kickback from the bank as thanks for the business, and it's a good thing for you because they usually get a break on the rate thanks to the volume of business they send to the bank. If the dealership's banks can beat the rate, finance with them. If they can't, then you know you've got the best possible rate already at your bank. Win-win for you. Funny example on this- PNC Bank is huge in this town and they offer special rates for their employees that are lower than what the general public gets. Thanks to the large volume of loans we send to PNC we can usually beat PNC's employee rate... financing with PNC via our finance department!

 

For leases- just negotiate the payment. Since you're not actually keeping the car after the 3 years is up nothing else matters.The monthly payment is the only investment you'll make.

Edited March 1, 2017 by Wagon Wagon