By Rohit Kumar
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Learn essential tips for negotiating the price of a new car with a dealer. Understand market value, discounts, and effective negotiation strategies. Save money on your car purchase.
Purchasing a new vehicle can be an overwhelming experience, particularly if it is your first time. From selecting the appropriate car to securing a reasonable price, it takes a lot of effort to get the job done. It can be challenging to negotiate the price of the vehicle with the dealer, especially if you are not familiar with the various aspects of car pricing. If you do not negotiate effectively, the dealer may propose a price that is far beyond your budget. However, with the right negotiation skills, you can strike a good deal. This article provides you with essential tips for negotiating the price of a new car with the dealer, so keep reading.
Here are the tips for negotiating the price of a new car with a dealer. Understand market value, discount, and effective negotiation strategies. Save money on your car purchase.
If you are planning to purchase a vehicle, you may wonder how to negotiate car prices effectively. Keep in mind that there is always some room for negotiation when the dealer quotes a price. You must be prepared and approach the negotiation strategically to lower the price.
One of the critical factors to consider when negotiating the price is to understand the car's market value and the discounts available from the dealer and the manufacturer. This article will explain the different types of discounts available for a vehicle, which may seem insignificant but can save you a significant amount of money when added up. Therefore, be sure to ask about discounts when shopping for a new car.
Negotiating the price of a vehicle requires skill, and you must be shrewd when bargaining with a dealer. Conduct thorough research and familiarize yourself with the car's exact market value. This way, you will have a clear understanding of the price you are bargaining.
Furthermore, educating yourself about the various types of discounts available before visiting the dealership can strengthen your negotiation skills and boost your chances of getting a good deal.
The ex-showroom price is the factory cost of the new car and includes transportation charges, taxes (GST, cess, etc.), and the dealer's margin. Typically, a dealer earns a margin of around 3-6% of the ex-showroom price, depending on the make/model and variant.
RTO charges are the sum of the road tax and vehicle registration fees paid at the Regional Transport Office (RTO). It's essential to ask for relevant receipts when making the final payment and ensure that the dealer does not overcharge for registration.
Car insurance is compulsory when purchasing a new car, and the dealer margin for insurance is around 1%. However, a dealer may quote a higher premium, so it's always best to negotiate or buy insurance independently.
Accessories and services are added to the final invoice, and the dealer maximizes their profit margins in this component. The dealer margin for accessories or services stands at 25-30%.
Financial Charges If you are opting for a car loan, the dealer earns a payout from the bank for selling a car loan, and the margin is around 1% of the loan amount. It's important to negotiate for the best rate of interest to avoid overpaying on finance charges.
The on-road price is the sum of all the components mentioned above and is the final amount you pay to the dealer before driving away your new car from the showroom. By understanding the breakdown of the price and dealership margins, you can negotiate with confidence and secure the best deal possible.
To give you a better idea about the dealer margin, let’s look at the price break up for the Maruti Breeza LXI Petrol base variant.
| Component | Price | Dealer Margin ||------------------------------------------------|----------|---------------|| Ex-showroom Price | 8,29,000 | 6%(Rs.49,740) || RTO Charges (Delhi) | 62,860 | Nil || Insurance Premium | 45,127 | 1% || Others (FASTag) | 2,000 | Nil || Optional (Accessories, Extended Warranty etc) | 18,000 | 30%(Rs.5,400) || Total OnRoad Price | 9,57,987* | |
*Note: The above numbers are just for information purposes only. The dealer margin varies depending on the make/model, variant and the dealership.
| OEM | Volume Brands | | | | | ||---------------|---------------|-------------|-------------|--------------|---------------|---------------|| Price Range | < 4 lakhs | 4 - 6 lakhs | 6 - 8 lakhs | 8 - 12 lakhs | 12 - 15 lakhs | 15 - 20 lakhs || Maruti Suzuki | 5.58 - 6.05 | 2.90 - 5.68 | 4.43 - 6.32 | 3.79 - 5.84 | - | - || Hyundai | - | 4.22 - 5.57 | 4.55 - 5.52 | 3.28 - 5.24 | 3.99 - 4.50 | 3.93 - 4.39 || Tata Motors | - | 3.59 - 4.42 | 3.02 - 4.46 | 3.08 - 4.44 | 3.02 - 3.75 | 3.75 - 3.90 || Mahindra | - | 4.35 - 4.54 | 3.93 - 4.18 | 2.75 - 3.91 | 3.29 - 3.94 | 3.55 - 3.92 || Honda | - | - | 3.42 - 3.44 | 3.41 - 3.44 | 3.43 - 3.45 | 3.38 || Toyota | - | - | 3.49 | 1.38 - 3.49 | 2.42 | 3.04 || Volkswagen | - | 4.44 - 4.46 | 4.30 - 4.31 | 3.63 - 4.71 | 3.7 | - || Renault | 4.32-4.33 | 4.34 - 4.35 | 4.35 | 3.87 - 3.88 | - | - || Skoda | - | - | 2.6 | 2.19 - 4.36 | 4.23 - 4.40 | 4.59 - 4.97 || Isuzu | - | - | 4.32 - 4.62 | 4.55 - 4.57 | - | 4.09 - 4.17 || Kia | - | - | - | 2.47 - 5.15 | 5 - 5.05 | 4.93 - 4.97 || Jeep | - | - | - | - | - | 3.88 -3.96 || MG Motor | - | - | - | - | - | 4.70 - 5.74 |
*Source: As per the data released by FADA (Federation of Dealers Associations)
Having effective negotiation skills can be a game-changer when it comes to purchasing a car. As a first-time car buyer, you may be vulnerable and easily swayed by the dealer or salesperson. However, it is crucial to avoid this and take charge of the negotiation process to get the best price for your new car.
Be confident and assertive: Don't shy away from bargaining with the dealer/salesperson. Show that you are knowledgeable and confident about what you want. Being hesitant or scared may make the dealer less likely to consider your offer.
Speak with confidence: Communication skills play a significant role in successful negotiation with the car dealer. Speak confidently and present your facts, such as the actual market value of the vehicle.
Don't rush: Take your time while negotiating the car price. Rushing through the process may cause you to miss out on important things such as car maintenance offers, free extended warranty, free accessories, etc. Remain calm throughout the negotiation process.
Listen more, speak less: Avoid speaking unnecessarily with the salesperson. They may be more interested in closing the deal than listening to you. Speak only when necessary, and think of points that can strengthen your negotiation.
Start with a low offer: This is an age-old trick in the negotiation process. Begin by offering a lower price than the car's actual value. The dealer will likely refuse your offer, but it gives you room to offer a slightly higher price that you're willing to pay. This increases the likelihood of the dealer agreeing to your final price.
Determine the market value: Research the market value of the car you plan to buy before initiating the negotiation process. This will serve as a reference point when the dealer starts quoting the price.
Research dealerships: Do thorough research on dealerships before visiting them. Identify showrooms that offer the best discounts on the car model you're interested in. This increases your chances of getting the best deal in town.
Ask for a lower price: If the salesperson quotes a price that is too high, present yourself as an informed buyer who has researched the market value and already shopped around. Present a lower price quote issued by another dealer and ask them if they can beat that price.
Stick to your numbers: The salesperson may initially dismiss your offer, saying that the car cannot be sold at the price you're demanding. If you have a lower price quote from another dealer, use it to support your argument and put an end to the discussion.
Discuss exchange value: Once you have agreed on a price for the new car, initiate a conversation about exchanging your old car. Research the current value of your used car and present documents to back it up. This will ensure that you get the best value for your second-hand car. If the negotiations are not fruitful, consider selling your car elsewhere.
As previously mentioned, when buying a new car, there are various discounts you can take advantage of. However, it's essential to be aware of them to make the most of the offers available. Here are some discount options you can request while purchasing a new car to get the best deal.
OEM Discount: The OEM (Original Equipment Manufacturer) may offer a discount, which is typically available & changes on monthly fashion. However, you may not receive such discounts on newly launched cars or high-demand vehicles. Although the dealer may offer this discount without you asking, there is still room for negotiation to maximize the offer.
Corporate Discount: Car manufacturers often offer a discount to attract employees of highly reputable corporate firms or MNCs. Always ask the dealer about such discounts while buying a new car. If you're unsure about eligibility, the dealer can provide you with a vast list of companies applicable for discounts.
Loyalty Bonus: Some car manufacturers offer this discount to their existing customers. If you own a car of the same brand and purchase another vehicle, you may be eligible for a loyalty discount or bonus. However, not every manufacturer provides this type of discount, so it's always a good idea to ask the dealer for such offers.
Exchange Bonus: If you're exchanging your old car while buying a new vehicle, you may be eligible for an exchange bonus. Dealers generally offer an exchange bonus because they can earn a good margin on your used car. Therefore, ask for such offers if you're exchanging your used car via a dealer.Finance Discount: Finance companies usually pay out dealers for selling car loans, making it a profitable option for dealers. Hence, always ask for the maximum discount the dealer can offer if you opt for a car loan to purchase your new car.
Car Insurance Discount: You can also ask the dealer for a discount on car insurance premiums (excluding third-party liability insurance and taxes) while purchasing a new car. If the dealer isn't offering a discount, you can get insurance on your own to save on premiums by purchasing car insurance online or, via a different insurance provider.
Discount on Additional Charges: Dealers levy various other charges when purchasing a car, including handling charges, vehicle registration charges, and service charges. Always ask for a discount on such additional costs to ensure that you get the best deal possible.
When it comes to purchasing a new car, choosing the perfect make and model is only half the battle. The other half involves negotiating with car dealers to get a fair price on your dream vehicle, which can be a daunting task for many. Without the right negotiation skills, you could end up overpaying for the car and other related services, throwing your budget off balance.
However, there is a simple solution that can save you from the hassle of bargaining and visiting multiple dealerships to find the best deal. That solution is buying through CarBike360. With CarBike360, there's no need to negotiate, as the platform takes care of it all for you. Not only that, but you can also take advantage of attractive discount offers. All you need to do is visit www.carbike360.com, choose your desired car, and sign up for a specific month offer.