According to a survey conducted earlier this year by the National Automobile Dealers Association, the average dealer profit per new car sold was $1,334. Ah, but even better was the dealer profit on used cars, $2,160. Perhaps this has something to do with why most millionaire next door types buy new vehicles rather than used ones from dealers. Even so most never leave $1,334 on the negotiating table. How do they buy new cars? First remember that the archtype millionaire next door is a self employed business owner. As such he has some inherent advantages in cutting “industrial grade” deals with suppliers including new car dealers as some of the actions described below would indicate.
1. About 1 in 4 (24%) deal exclusively with the owner of the dealership when acquiring a new vehicle.
2. Nearly 1 in 6 (16%) indicates that he refers his associates (clients/customers). . . to a dealer who reciprocates by giving significant price discounts.
3. About 1 in 7 (14%) purchase from a fleet manager [at a dealership]instead of a retail sales professional.
Perhaps you feel uncomfortable about trying to contact the owner of a dealership, fleet manager, general manager, etc. directly. This is understandable. In such cases your surrogate may be able to help you . Several outstanding accountants whom I have interviewed actually negotiate the purchase of motor vehicles for their clients. None of these CPAs ever charged for this service. If your accountant has never provided this service, he may find it useful to receive your tutorial on the subject. Given below is the pro forma dialogue [extracted from Networking with the Affluent and Networking with Millionaires and Their Advisors] by the top networker whom I have profiled, a CPA. To date, he has negotiated over 100 motor vehicle purchases on behalf of his clients.
Hello, Mr. . . .Automobile Dealer. My name is [A.G.] I’m a CPA with 850 . . . clients. That’s why I’m calling you. Several of them have asked me to negotiate the purchase of [a new vehicle]. I hope you don’t mind dealing with an intermediary. These clients just don’t have the time or interest in shopping. I would like to work something out with you. I’m always looking for quality suppliers who can help my . . . clients.
Great post, Dr. Stanley. This speaks very well to a couple trends among many successful people:
1) They relentlessly focus on their strengths and outsource or delegate everything else. As your research and blog post outline, apparently car buying is often not an exception.
2) They place high importance on relationships and their network, which in this case provided the opportunity to deal directly with the key decision maker (i.e. dealership owner) on their car purchases.