2016 Ford Fiesta
: invoice 21,139, retail 21,460 - a 1.5% gross profit.
2016 Honda HRV
: invoice 25,261, retail 25,990 - a 2.8% gross profit.
2017 Hyundai Elantra
: invoice 21,311, retail 22,350 - a 4.6% gross profit.
2017 Jeep Cherokee
: invoice 37,410, retail 38,595 - a 3.1% gross profit.
And that's if you pay the full sticker price! Who does that? The guy who thinks Taco Bell is a Mexican phone company and the National Guard is an all-American football player.
Add the facts that (1) today there's an average of just a 6% to 8% gross profit built into sticker prices of the high trim levels, and (2) every dealership has an overhead expense of 12% to 17% of its revenue, and you'd have to be brain-dead to believe the invoice price is in the same area code as any new car's real cost.
Yet there's a big auto information industry on the Internet that's built on your believing that fairy tale, which gets further from the truth year after year, as automakers continue reducing the spread between the invoice price and the MSRP!
"I never did give anybody hell.
"I just told the truth, and they thought it was hell.
- Harry Truman
The inside story of the discovery of that game-changing fact is told in our book, "Letting The Cat Out Of The Bag: How The Auto Industry 'Redesigned' The Dealer invoice Price When The Internet Arrived," available in paperback and Kindle format at Amazon. To read the back cover copy, Preface, Table of Contents and the first four chapters, click here. If you'd like a author-signed copy ($14.95 including postage), you can add that to your order for the Fighting Chance information package.
HERE'S BRAGG'S TAKE ON THOSE CONSUMER AUTO PRICING SITES
Those sites are: (a) pitching the range of what other clueless shoppers have paid as the "holy grail" of transaction prices, (b) using rebates (which everyone gets) and a comparison of their prices to the full sticker price (which almost no one pays) to inflate their claims of "savings" from using their services, and (c) sending you on a 'milk run' to a small number of dealers in their "networks," who relish the thought of selling you a car at those prices and reward those "conduit sites" handsomely with the advertising and/or "finder's fee" dollars that come out of your pocket.
Example: For each sale made, TrueCar dealers pay TrueCar $299. Even Consumer Reports sends its "Build & Buy" site visitors to TrueCar dealers, but somehow "forgets" to tell us that $299 comes out of our pockets. Apparently the organization that claims to be our fountain of truth and transparency doesn't want the truth to get in the way of its financial agenda. Because CR admits in the fine print on its site that True Car sends Consumers Union "a fee" for each sale made. My guess: about half of that $299. (That's what I'd pay for slam-dunk sales at prices that have CR's "seal of approval.")
I noted to Consumer Reports' meeting representative that the financial relationship with TrueCar seemed in conflict with the "No Commercial Use Policy" stated then on CR's website, which "helps ensure we avoid even the appearance of endorsing a particular product or service for financial gain." His response was, "Oh, now he's throwing those words at me!" (Guilty, as charged. I don't make this stuff up. A court reporter transcribed every word said in that USA TODAY meeting.) And now CR has removed those underlined words from its website. Can you spell h-y-p-o-c-r-i-s-y?
In that meeting, I challenged their "pay what others paid" recommendations with "You're treating consumers like they're idiots. Why would anyone pay close to an average price, when, by definition, it means that about half the people got a better price, maybe a much better price?" The Kelley Blue Book representative's reply was, "Overwhelmingly, our market research shows that consumers ultimately don't want the best price. They just want a fair price," which he said "means that when I tell my neighbor what I paid for the car, I won't be embarrassed." TrueCar's Executive VP echoed that claim, saying, "We have data to support exactly what he said." No one disagreed.
Do those statements accurately describe your objective when you're buying a new car? Are you sitting there thinking, "I sure hope I get a price that's in the ballpark of what others are paying?"
To read the full USA TODAY "Don't Trust That Invoice Price" write-up on that meeting (in which I was dubbed a "peppery contrarian"), click here. All those executives left with that exhibit, smart enough to realize what it meant but praying that you'd never see it. I was not their favorite participant. I asked the Consumer Reports person, "Who's been running your New Car Price Service for the past 20 years, Rip Van Winkle?" He was not amused.
After the post-meeting lunch, I said to him, "Give me name of that person and I'll update him or her on the two-decade inversion of the invoice-retail price relationship." He gave me a dismissive smirk and left the building, like Elvis, without a word. Was there a message there?
I believe we need to hold powerful institutions accountable for the dichotomy between their talk and their actions, between their claims of competence and their record of incompetence, and for their willingness to abandon their long-term mission statement and commitment to avoid conflicts of interest for financial gain. Those actions should be grounds for charges. (Again, can you spell h-y-p-o-c-r-i-s-y?)
I'll remain the "peppery contrarian," the one who's only on your side, until all the organizations that should be telling you the truth about the second most expensive purchase you make start doing exactly that. But when you get all that revenue from car companies and dealers, I guess your motto has to be "Silence Is Golden," with Golden's six letters being $$$$$$.
"The truth is incontrovertible. Malice may attack it.
Ignorance may deride it, but in the end, there it is.
- Winston Churchill
THIS TRANSACTION REPORT IS AN EYE-OPENER
"Using your method, I got a great deal on a Kia Optima EX with Premium and Technology packages. The total invoice price (including the regional advertising fee) was $28,521. My price was $27,535, $986 below the invoice. And that was BEFORE subtracting Kia's $2,000 rebate!."
"I checked TrueCar.com, and their best estimated price was $27,521, which at first seemed impressive. But when I read further, I learned that their price INCLUDED that $2,000 rebate! MY PRICE BEAT THEIRS BY $1,986! So in reality TrueCar is worthless to anyone who wants the best price."
B.C., Wade, NC. (Here's a cornucopia of great testimonials).
Question: So whom should you trust for reliable information and negotiating advice? The one source that's telling you the whole truth and takes no money from the auto industry? Or all the others, who send you on a milk run to a small number of their network dealers with pre-sold prices that aren't great and hide the truth from you to protect their revenue stream from those dealers, revenue that comes from your pocket?
THESE ARE THE FACTS ABOUT HOW THE NEW-CAR BUSINESS WORKS TODAY
It's 2016, not 1994, and that world isn't flat anymore, it's round.
(But apparently no other auto-info site wants you to know that.)
When you walk into a car store to haggle, you have ZERO leverage and leave with a deal well short of the best price available. But tens of thousands do that every day, believing the invoice price on the Internet is a real cost number. Read my lips again: The only leverage you have when you buy any commodity, including a new car, comes from having several sellers compete for your business.
And given how "The Truth" about the invoice price has revamped the automaker-dealer financial relationship, the 'best price' on your car will change from dealer to dealer and month to month.
90% of the bucks spent on "dealer cash" are in multi-month programs based on total sales targets, NOT sales of specific vehicles. The rewards can be six-and seven-figure bonuses. Some are "stair-step" promotions, in which per-vehicle bonuses increase as dealers reach higher volume thresholds. And no one can tell you any dealership's targets or when these programs start and end.
So whether these programs are based on monthly or multi-month targets, reaching month-end goals is crucially important. That keeps steady sales pressure on, month after month. Dealers trailing their monthly targets will sell for much less, and that will be different dealers each month.
If your objective is to get the best price, you're unlikely to get from the dealer networks of the companies named above. None of them would debate this subject with me in a national media forum. (CNN would love to host that one.)
If what I've said so far isn't convincing, you're probably not a Fighting Chance candidate. If it is, read on for more solid reasons to use us.
WHAT CAN FIGHTING CHANCE DO FOR YOU THAT ALL THE OTHERS CAN'T
1. You'll have in us the only independent, unbiased source of truthful information and powerful negotiating advice on the Internet. We serve our master (you). Those other auto info sites, including Consumer Reports, serve theirs (not you).
2. In the package's "centerpiece," How The Phone+Email Attack Can Get You The Best Deal, Saving You Time, Money and Aggravation, you'll learn exactly what to do and say each step of the way as you conduct a competitive bidding process from your home or office, without walking into a single car store. You'll enlist 6 to 10 dealers (10 is better) that you choose to make price proposals, and you'll go with the winner. We even tell you the best day(s) of the month to start the process.
It's not unusual to have a $1,000 to $2,000+ difference between the high and low bidders on even a mid-priced vehicle. And this month's high bidder may be next month's low bidder, depending on where a dealership stands vs. its hidden targets. (Check our long list of testimonials here. Note there how far off the mark those auto info websites "target prices" can be!) This is why it's nuts to aim for any "target price." That puts a floor under your price, when some dealer might sell for less, maybe a lot less.
3. YOU'LL HAVE US AS YOUR COACHES as you go through the process. Got a question? Call us. Want to run the numbers before you sign a lease? Call us. There's no such thing as a "silly question" here. We've been at this for over 20 years, and much of our knowledge has come from our customers' feedback.
4. You'll receive our signature "Big Picture" analysis of how the brand(s) and the specific vehicle(s) you're interested in have been doing in the market. Are sales up or down so far this year? Does the average dealer sell 2 per month or 22? This piece also reveals the current "holdback" information for brands that use it (several don't). Here's a sample "Big Picture" analysis (not a current file).
5. You will, of course, get the complete current sticker/MSRP and dealer invoice pricing data for the vehicle(s) you're considering, covering all trim levels and equipment packages. Here's a current list of model pricing available. And a sample vehicle pricing file (not a current one) in pdf format.
6. You'll also receive the latest issue of CarDeals, a bi-weekly report of current national rebates/cash incentive offers and cut-rate financing programs. Here's a sample CarDeals report (not a current edition).
(Our unique $39.95 package includes all the information you need to negotiate the best price on for any one vehicle. Additional vehicles are $15 each. You may place an order here on a secure, encrypted order form at any time.)
YOU'LL ALSO GET ALL THESE OTHER INSIGHTFUL CAR BUYING TIPS
"How To Avoid The Big Leasing Rip-Off."
"Things To Consider About Placing a Factory Order."
What I've Learned About "Below-The-Line" Dealer Cash Programs, Facts No One Else Is Telling You.
"Dealing With A Trade-In."
"Should You Buy A Demo? At What Price?"
"The Crucial Financial Importance Of A Dealership's Customer Satisfaction Rating."
"Smart Ways To Buy An Extended Warranty."
"Have You Chosen A Crashworthy Vehicle?"
"Can You Get The Vehicle Configuration You Want?"
"Should You Buy Last Year's Model?"
CHECK OUT THE QUALITY OF THESE PIECES?
As examples of the information pieces we create, read "Leasing A New Car? Here's Everything You Need To Know" the clearest explanation you'll find of what leasing's all about, and "Test Driving 101" to learn how to handle that process without getting into a price negotiation.
SPECIAL MESSAGE TO PREVIOUS CUSTOMERS
The Fighting Chance package is always changing to reflect new knowledge and the best ways to deal with the changing realities in the retail car business. Sometimes the changes are dramatic. For example, the method for getting competitive bids differs substantially from the arms-length "fax attack" process we recommended just a few years ago. At other times the changes are small, but represent worthwhile improvements. The suggested wording in the note you'll send dealers is fine-tuned often. The package you'd receive today will typically include several insightful changes compared to the one you ordered years ago.
THE COST OF THIS UNIQUE PACKAGE?
$39.95 (Includes all the information you need for any one vehicle.)
Additional vehicles: $15.00 each. (More than half of our customers add one or more additional vehicles as "fall-back" alternatives. This could become a small, but wise $15.00 decision if you find it difficult to deal on your first choice.)
Considering the substantial cost of the new vehicle you're about to buy or lease, isn't this a relatively small price to pay for the comprehensive Fighting Chance information package?
To place an order on our secure, encrypted order form, click on the "Ordering" link at the top of the page.
If you'd prefer to place a phone order, or if you have questions that aren't answered on our web site, you may call our order desk at 1-800-288-1134 between 9:15AM and 4:00PM Pacific time, Monday through Friday. (We don't work on weekends.)
Click here for current list of model pricing available.
Important Note: This is a service for NEW VEHICLES ONLY. We have no information on used vehicles. Also, we have NO CANADIAN PRICING DATA. (For Canadian pricing, visit carcostcanada.com)
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