[JSY217c]

If the MSRP for example is $50,000 should my "out the door price" be generally lower or higher? Like, do the dealerships only negotiate on bringing down the price of the vehicle? which in the end you may be paying more than $50,000 because of all the fees and GST that gets added on afterwards. Or can you negotiate the "out the door" price to be lower than $50,000 which includes all the fees and GST?

[gunnersfan10]

Originally Posted by JSY217c

If the MSRP for example is $50,000 should my "out the door price" be generally lower or higher? Like, do the dealerships only negotiate on bringing down the price of the vehicle? which in the end you may be paying more than $50,000 because of all the fees and GST that gets added on afterwards. Or can you negotiate the "out the door" price to be lower than $50,000 which includes all the fees and GST?

"Out the door price" means all fees included. This can be sales tax, liscense plates, doc. fee, registration, any dealer fees, totaled up minus any rebates that you are applying.

[JSY217c]

Originally Posted by gunnersfan10

"Out the door price" means all fees included. This can be sales tax, liscense plates, doc. fee, registration, any dealer fees, totaled up minus any rebates that you are applying.

Should I be aiming my "out the door" price to be lower than the MSRP when negotiating? or is that unreasonable to the dealership?

[gunnersfan10]

Originally Posted by JSY217c

Should I be aiming my "out the door" price to be lower than the MSRP when negotiating? or is that unreasonable to the dealership?

It all depends on what kind of car you're buying and what type of programs(rebates) are running. Just an FYI most new cars have about 8% markup in them and rebates vary greatly from model to model(they are usually posted on the manufacturer website). It also depends on your tax rate ( I'm in Illinois and my taxes/fees add about 10% to the total.

Simple answer your "OTD" is usually higher than MSRP, unless there's crazy rebates, or the car is a demo, or it's last years model they desperately want to get rid of. Or your a church and don't have to pay taxes, I had one of those once!!

I used to sell cars FYI.

[Beartato]

Originally Posted by JSY217c

Should I be aiming my "out the door" price to be lower than the MSRP when negotiating? or is that unreasonable to the dealership?

You negotiate the core price of the car first, but make sure to know what fees/licensing will cost.

I don't know what Canada's equivalent to Truecar is but if such a service exists and your choice of dealer is partnered with the equivalent service there shouldn't be much negotiating anyway.

[gunnersfan10]

Originally Posted by Beartato

You negotiate the core price of the car first, but make sure to know what fees/licensing will cost.

I don't know what Canada's equivalent to Truecar is but if such a service exists and your choice of dealer is partnered with the equivalent service there shouldn't be much negotiating anyway.

Edmunds is a pretty good guide as well. You can spec the car exactly how you like it and they tell you MSRP and Invoice. Be careful with Truecar the dealers set those prices and at least around Chicago the Truecar price is complete and utter B.S. no more accurate than the shitty newspaper or Tv ads. I know Truecar is more reliable outside the major cities.

[Beartato]

Originally Posted by gunnersfan10

Edmunds is a pretty good guide as well. You can spec the car exactly how you like it and they tell you MSRP and Invoice. Be careful with Truecar the dealers set those prices and at least around Chicago the Truecar price is complete and utter B.S. no more accurate than the shitty newspaper or Tv ads. I know Truecar is more reliable outside the major cities.

Totally. I got my car in Idaho for $2K under invoice thanks to Truecar and USAA.

Hopefully Canada has something like that.

[overcoil]

Someone mentioned negotiating core price first, I think I know what that means, but I would do it differently.

I would negotiate an Out The Door price, you tell them your OTD price and they respond.
But a salesperson will attempt to move away from OTD in a litany of ways and each time he tries to alter just tell him to figure OTD and get back to you, that's where using text or e-mail messaging is helpful in minimizing your time in the dealer.

Obviously, the seller tries to sell for as much as possible / the buyer tries to buy for as little as possible. The seller of a new car has an easier time finding the dealer cost and profit / the buyer has a hard time knowing what the dealer profit is.
You need to ESTIMATE the dealer cost of the vehicle and you need the definitive charges for: tax, licensing, title - all the valid state and local fees. The dealer will try to add fees that aren't required by law but by the dealership, so know what each fee is and whether it's a dealer charge.

As a buyer, you need to evaluate what you think is a fair price for the car, and it is certainly appropriate for the buyer to have an OTD figure lower them MSRP. Use BMW forums to find what others paid OTD for the same equipped vehicle.

The most destructive negotiation tactic is to start off thinking with taxes and legitimate fees it must be over MSRP to drive away with the car.
Also, it's not a bad buyers negotiation if the buyer believes the salesman and dealer should have profit - you can negotiate to what you think is fair - but be aware that some dealers will try to mislead, use high pressure tactics and answer questions verbally that are not accurate. And it means nothing till all the paperwork is signed because I've seen salespeople and dealer finance people have the buyer believe they have an agreed upon price, but the paperwork will show additions that weren't mention or listed in non committal paperwork and I've seen dealers ask for an additional check even once a sales order is complete but the keys haven't been turned over yet.

[JSY217c]

awesome, thank you for all your replies! its very helpful

[raleedy]

"Out the door pricing" (a new one on me) doesn't seem like a useful concept. After all, there are taxes, licensing and registration fees imposed by the government that are not negotiable and are not the same from place to place. Why confuse things by including them?

[overcoil]

Originally Posted by raleedy

"Out the door pricing" (a new one on me) doesn't seem like a useful concept. After all, there are taxes, licensing and registration fees imposed by the government that are not negotiable and are not the same from place to place. Why confuse things by including them?

Well a dealer can charge more then the MVA for doing your licensing and registration, and even calculate taxes incorrectly.
You simplify your negotiation by doing OTD.
The buyer can figure out all required fees himself plus the buyer can research a good price for the vehicles - and then present that figure to the seller.

Advertising fees, prep fees even transport fees are all bumps and OTD helps the buyer negotiate those fees away.

[BEM-S4]

Don't mean this in an insulting way at all, but based on your question you seem to have very little experience buying cars. I'd take a friend with you who has bought cars in the past, post the best deal you can get here to get some opinions (maybe in the Canada section) etc. depending on who you are dealing with there are all kinds of ways you can get yourself screwed if you don't know what you're doing.

[Abstraction]

Originally Posted by JSY217c

If the MSRP for example is $50,000 should my "out the door price" be generally lower or higher? Like, do the dealerships only negotiate on bringing down the price of the vehicle? which in the end you may be paying more than $50,000 because of all the fees and GST that gets added on afterwards. Or can you negotiate the "out the door" price to be lower than $50,000 which includes all the fees and GST?

Margin is around 8-9%, typically in Canada you'll get around 6-6.5% off the price of the car + options only. Then add on fees (PDI, Freight, Admin, etc), and then add on tax.

So on a 50k car with 2k in fees and 13% hst, it would be $58,760. Knocking off 6.5% would be $55087 ($47650 + $2000 + HST).

Your results may vary. You can negotiate some of the fees down, but not others. Some dealers will try to charge you for gas, wheel locks, all season floor mats and Ride Green - none of these are mandatory fees. Be particularly aware of "Ride Green", which some dealers (including non-BMW) make sound like a government environmental program, but it's actually just filling nitrogen in your tires and charging you $400 for it.

[DanG]

Since we don't know where in Canada you are, I don't know if there is a Costco near you. They have a car buying service and pre negotiated prices on most cars. The one near me has two BMW dealers in their program.

[Viffermike]

Originally Posted by Abstraction

Margin is around 8-9%, typically in Canada you'll get around 6-6.5% off the price of the car + options only. Then add on fees (PDI, Freight, Admin, etc), and then add on tax.

So on a 50k car with 2k in fees and 13% hst, it would be $58,760. Knocking off 6.5% would be $55087 ($47650 + $2000 + HST).

Your results may vary. You can negotiate some of the fees down, but not others. Some dealers will try to charge you for gas, wheel locks, all season floor mats and Ride Green - none of these are mandatory fees. Be particularly aware of "Ride Green", which some dealers (including non-BMW) make sound like a government environmental program, but it's actually just filling nitrogen in your tires and charging you $400 for it.

This post, as well as the point @BEM-S4 makes, are why it's soooo important to know this when negotiating a price for a car:
- Typical profit margin between invoice and MSRP (BMW's is 9% in the U.S.; looks like it's similar in Canada. That's among the highest in the industry, by the way, short of exotics)
- Fair profit margin for a dealer (3% is generally fair. I personally aim for 2%)
- How to calculate tax in your area
- What license & registration fees are EXACTLY for your area (Easy to find. They do not change unless a government mandates it.)
- Which additional fees are mandatory and which ones are not; which ones that are not are not are fair and typical; and which ones are nonnegotiable (for instance: the Destination Fee is nonnegotiable because it's charged by the manufacturer, not the dealer. Therefore it should NOT be included in profit calculations.)

"Out-the-door" negotiating works ONLY if you have a firm grasp of all of these purchase costs, and know to negotiate separate from other potential financial considerations (financing, trade-in value, etc.). If you do not have a firm grasp, then take BEM-S4's advice and find someone who does to help you negotiate.

Also, be aware if a particular model could purposefully be being sold at a loss: Mazda3s (fuel pump recall created overstock and slowed sales in late 2015) and many VWs (Dieselgate) are currently being sold at losses by the manufacturer.