Road map to buying right car at right price

By John Corrigan

Nov. 18, 2007 12 AM PT

Times Staff Writer

The salesman caught me eyeing the sporty coupe and offered a test drive. “Just looking,” I said. “Come on,” he said. “Hop in. What have you got to lose?”

Ten minutes later, we were breezing down the coast highway north of San Diego. Sunny skies, blue waves and a sweet new ride. “Whaddya think?” he asked when we cruised back into the lot.

The two-tone car was cool. But I was just out of college and making $200 a week in my first reporting job, so replacing my battered 1974 Toyota Corolla was out of the question, and I told him so.

Let’s just see what the payments would be, he said, leading me into the office. Soon I was facing off against the sales manager, who was brandishing a contract and, with increasing pressure, demanding a signature. But I really wasn’t in a position to buy, and when that message finally got through, he released me with disgust.

“What do you think -- we just let people come in and drive our cars along the beach for fun?” he said, or words to that effect.

That was my first, and worst, experience at a car dealership. In the years since, I’ve learned not to even step on a lot unless I am serious about buying and have done a little homework. The good news is that comparing prices and features is easier than ever, thanks to the Internet, which can provide car buyers a wealth of information before they head to the dealership. But once a year, an especially useful research tool comes to Southern California: the Los Angeles Auto Show, which began Friday and runs through next Sunday.

The gleaming sports cars and futuristic concept vehicles may get most of the attention, but the auto show is a smart place to start when you are looking to buy any new car, experts say. There’s a wide range of vehicles on display, there’s no sales pressure, and you can quickly compare features such as cargo space and cup holders.

“If you start with a long list, you can really narrow it down,” said Philip Reed, author of “Strategies for Smart Car Buyers” and consumer advice editor for Edmunds.com. “I’m surprised at how often it’s overlooked as a place to shop for cars.”

No, you can’t take that Audi for a test drive; the Los Angeles Convention Center floor is a bit too jammed for that. But you can get in the cars and try them on for size. Are the seats comfortable, and are the controls within easy reach? Enough legroom in back for the kids? How about the sightlines from behind the wheel?

“It allows you to see and quickly compare different vehicles,” said Rik Paul, automotive editor of Consumer Reports magazine. “If you go from dealer to dealer, you don’t get the immediate, back-to-back impression.”

You can also check out the latest models, including some that aren’t even on showroom floors yet. Maybe you’ve got to have that fresh ’08. Or maybe you would rather save money by hunting for a new ’07 that’s still in inventory. The auto show can help you decide.

The sticker prices are pasted on the vehicles, so you can see whether your wallet has the horsepower to match the car. And who knows? You may be pleasantly surprised by coming across a car you hadn’t even considered.

No-pressure zone

For me, the biggest benefit of the auto show is that you can shop without any pressure from the dealer’s sales force.

That’s no knock against salespeople; they’ve got to eat too. But time is money, and their interest is in closing a deal quickly. As a car buyer, your interest is getting a good look at a broad range of vehicles and trim lines without being rushed.

Outside big cities, shoppers are known to prowl car lots on Sundays, when small-town dealerships typically are closed and they can linger as long as they like, Reed noted. But in Southern California, the car business runs seven days a week.

At the auto show, “you can sit there and think about the car,” Reed said. “It’s hard to do that when a salesman is standing right next to you, talking about how great the radio sounds.”

The auto show is just a first step, however. If you’re seriously in the market to buy, there are some other things you should do before making a deal. Near the top of that list is the test drive.

Behind the wheel

The car may look good, and may be priced right, but there’s no substitute for a test drive to assess a vehicle’s handling and power and how well it’s insulated from road noise.

And to really gauge those factors, you need to keep distractions -- including an overly chatty salesperson -- to a minimum.

“You need to concentrate on the actual car-driving experience,” says Jack Nerad, executive editorial director of Kelley Blue Book’s kbb.com and author of “The Complete Idiot’s Guide to Buying or Leasing a Car.”

When possible, Nerad advises buyers to take the test drive by themselves, without the salesperson. Failing that, he says, don’t be shy about telling a talkative salesperson to hold the pitch during the short time you have for the ride.

It’s a good idea to take the car on the freeway, Nerad says, because they are such a big part of the driving experience here. The onramp also offers a good opportunity to test the car’s acceleration and handling, he said. Just don’t do anything unsafe, he says, like slamming on the brakes.

Let’s make a deal

OK, so you’ve been to the auto show, you’ve driven a few cars, and you’re ready to make a deal.

Now what?

Most people know the sticker price is just the starting point in a negotiation. What you’ll actually pay hinges on a variety of factors, including the scarcity of the vehicle, the salesperson’s desire to make a deal and, yes, your skill at negotiating.

Most experts agree that after you’ve settled on the car, the next step is figuring out what you should pay.

Various consumer automotive websites, including kbb.com, edmunds.com and cars.com (which is partly owned by Tribune Co., The Times’ parent), offer pricing information, including the manufacturer’s suggested retail price (better known as the sticker price) and the invoice price, or what the dealer paid for the car.

For a $14 fee, Consumer Reports will sell you what it calls the “bottom-line” price: the invoice price minus any incentives or rebates that the manufacturer offers the dealers.

The magazine, published by the nonprofit Consumers Union, says this should be the starting point for negotiations. Automotive editor Paul suggests that paying 4% to 8% above the “bottom line” price should ensure a fair profit for the dealer.

Others disagree, saying the Consumer Reports method fails to take into account whether the vehicle is scarce or abundant -- a big factor in pricing. Websites such as edmunds.com and kbb.com tout their own proprietary pricing data, saying it shows what buyers are typically paying for a car in their area.

These sites also offer buyers a chance to solicit price quotes from several dealers, which Reed says is the single most important thing you can do to get the best price.

“These people know that they are bidding against each other,” he said. “They know the only way to get your business is on price.”

Paul adds that dealers will often make better deals at the end of the month or quarter, when they are trying to meet a sales goal. The week before New Year’s is usually considered the best time to buy, he added: Business is slow, and dealers see it as a last shot to boost their annual sales figures.

Watch the back end

Sales managers, like the one who cornered me, often play the role of a closer, swooping in to close a deal when a buyer starts to waffle. But the sales manager can also be a shortcut to a better deal, Reed said. If you can work with the sales manager directly, you can avoid the routine of the salesperson running numbers back and forth between you and the manager.

At the same time, Reed cautions that a common mistake among buyers is to focus on the purchase price and then get skinned at the back end, when they arrange financing.

The people working in the car lot’s finance department may seem like mere paper pushers, he said, but in reality they are often among the dealer’s best and most experienced salespeople -- adept at pushing high-profit add-ons such as alarm systems, extended warranty programs and paint protection.

“The dealer’s got to make money somewhere,” he said. “If they don’t make it at the front end, they’ll try to make it up at the back end.”

His advice: Keep your eyes open and don’t buy what you don’t need. In California, there also is a Car Buyer’s Bill of Rights that provides customers certain protections, including limits on finance fees paid to dealers. You can get more information from the Department of Consumer Affairs at www.dca.ca.gov or by calling (800) 952-5210.

Another vantage point

There’s no doubt that the availability of information on the Internet has shifted the carbuying equation in the consumer’s favor, said Fritz Hitchcock, who has been in the car business for 42 years.

“The buyer of today is far better equipped to buy a car than in the past,” said Hitchcock, who owns five Southland dealerships, including Puente Hills Toyota.

“Years ago, it was a mistake to walk on a lot and say, ‘I’m just looking,’ ” he noted. “A lot of people, frankly, got stuffed into a car. They probably wanted a car, but they didn’t know they wanted it, or they didn’t want it right away.”

I was curious to hear what advice veteran car dealers such as Hitchcock would give people shopping for a car. Surprisingly, perhaps, all agreed that the most important thing is to do your homework.

That means not just researching the price of your target vehicle, but taking a hard look at your own finances too. “The biggest mistake most customers make is to put themselves in a car more expensive than they can afford,” Hitchcock said, adding that “a big down payment makes it a lot easier to negotiate a skinnier deal from the dealer.”

Buyers also need to know their credit score. Dealers can often provide better financing than most banks -- as low as 0% in some cases -- but you won’t be able to push for the best rate if you don’t know your own credit.

No matter how much research you do, however, can you really put yourself on a level playing field with the dealership? After all, they sell cars every day. How often do you buy one?

David M. Conant, who has been selling cars since 1984, contends that the buyer-seller relationship isn’t as lopsided as one may think. Salespeople may have more experience at the art of the deal, he concedes, but they also have to operate in a competitive market.

“No good salesperson is going to use their experience to get the upper hand,” said Conant, who owns nine Southland dealerships, including three Norm Reeves Honda Superstores. “They’re going to use their experience to ensure that the customer has a good experience so they can get that person’s business and to keep someone else from getting that business.”

The key to getting a good deal, he says, is to thoroughly research the purchase and be prepared to pay a realistic price.

“Put your cards on the table. Tell them what you want and what you are willing to play,” he said.

And don’t forget: The buyer always has the final say on a deal.

“If someone seems slick,” Conant said, “move on.”

john.corrigan@latimes.com

(BEGIN TEXT OF INFOBOX)

Key tips

Do your homework

Narrow down your choices by researching models and trim lines at manufacturer and consumer websites. Compare prices online and check newspaper ads for deals. The L.A. Auto Show, which runs through Nov. 25, is a good place to see the latest models without sales pressure.

Know your credit

Be sure you can qualify for a loan and know your credit score before stepping on a dealer’s lot. Get pre-qualified from a lender or credit union so you have an alternative if you don’t like the dealer’s financing.

Go for a ride

Always take a test drive, and try to do it without the salesperson so you can keep your focus on the driving experience, not the sales pitch.

Be wary of options

Dealer add-ons such as alarm systems, paint protection and extended warranties can be costly and unnecessary.

Have it delivered

If you know what car you want, consider having the vehicle delivered to your home or office and sign the papers there. This can save time, especially when the dealership is busy on a weekend.

Source: Times research

How much should

you pay for a car?

In most cases, the manufacturer’s suggested retail price (“the sticker”) is just a starting point. A variety of services promise to help you figure out what you should be paying. We checked out three of them for a base model 2008 Mazda Sport sedan:

Edmunds.com: This free automotive website listed the sticker price at $14,490 and the invoice (what the dealer paid) at $13,617. It also lists a “True Market Value” price of $14,161, which it says is the price consumers are typically paying for the car.

kbb.com: This unit of Kelley Blue Book listed the sticker at $14,530 and the invoice at $13,657 (both $40 more than Edmunds.com). The free website listed its “New Car Blue Book” value, described as “what consumers are really paying for this vehicle,” at $14,385.

Consumer Reports: The magazine, published by the nonprofit Consumers Union, offers a pricing service for $14 per vehicle. It pegged the sticker at $14,490 and the invoice at $13,617, the same as Edmunds’. In addition, it offers a “bottom-line” price of $13,339, which it says is what the dealer paid for the car minus any incentives or holdbacks (a percentage of the sales price the maker holds back and returns to the dealer at the end of the year or quarter).

Not surprisingly, each service believes its method is best. Consumer Reports recommends paying 4% to 8% over its bottom-line price, which it says is fair to both buyer and seller.

At 4%, the Mazda3 would sell for $13,872 -- hundreds less than what other consumers are paying, according to Edmunds.com and kbb.com. But both those websites contend that their methods take into account whether the car is scarce or widely available, which can have a big effect on price. To be sure you are getting a good price, consider using all these services.

-- John Corrigan

2007 Los Angeles Auto Show

Where

Los Angeles Convention Center, 1201 S. Figueroa St.

When

Now through Nov. 25

Hours

Sundays: 9 a.m. to 8 p.m.

Monday to Wednesday: 11 a.m. to 10 p.m.

Thanksgiving Day: 9 a.m. to 8 p.m.

Friday, Saturday: 9 a.m. to 10 p.m.

Admission