If a car is in demand, it sells near MSRP. If it's a high volume commodity that's hard to sell in the required numbers, you can discount it heavily. If everyone wanted to buy a car at "the best possible deal you've done in the last 90 days" dealerships would basically be out of business by definition. So someone has to hold the line or the entire system doesn't even work.
Im a very frugal person and don't even buy new cars, but why some people think they deserve to pay less than their neighbor did blows my mind still to this day.
Deserve has nothing to do with it. It's about both parties negotiating for the best price.
That said, there may be very good reasons not to push too hard. You might want to do business with the other party in the future. You might want a good review on Google. You might not want to take advantage of an elderly person or an inexperienced wide-eyed kid.
But any party going on about what they "deserve" is not going to earn sympathy.
BTW, did you ever watch "King of Cars", a reality TV show at a car dealership? I found it both entertaining and instructive.
My basic summary of the entire absurdity of the common tactic of "what's the best price you can do?" is as follows..
The best price is a vague concept depending on where we want to draw the line.
Best price I can do and keep my boss happy with my performance?
Best price I can do if I want to be below average at this company?
Best price I can do if I want to ask for a personal favor from my boss to allow me to heavily discount this car beyond established metrics we have and sell it this one time?
Best price I can do if I want to be yelled at tomorrow morning?
Best price I can do if I want both my boss and I to be yelled at tomorrow?
Best price I can do if I want my boss to negatively impact his career by the owner seeing him make deals like this too often?
Best price I can do if I want to get myself or my boss fired the next day? I could probably somehow secretly sell a car $10k under what I should... Once.
Where do we stop? Some nice people pay MSRP. Some people ask for a gesture of a discount. Some people ask for what discount is fair to market and we'd be ok with, and take it. Some people want below market, and we try to stop it if the car is in demand or we have enough volume. Some people want prices so low they'd fall into the "negatively impact the salesperson or teams career". Sometimes we even take those, but it's always a calculation between taking a below market average offer or waiting for one of the earlier described people to walk in.
Unsold cars on the lot are burning cash, as they're there on borrowed money.
BTW, he had to get the manager's signoff on the final price, so I'm sure he wasn't getting fired for it. A savvy manager isn't going to let a salesman underprice a car to sell to his buddy.
You mention a lot of considerations, all perfectly valid. That's what makes the game interesting and fun :-) I'm sure the salesmen also size of the customer based on his clothes, the car he arrived in, his demeanor, etc. I remember shopping for a new car long ago, arriving at the dealer with my usual worn out jeans. None of the salesmen would talk to me. So I bought the car from the dealer's rival. These days, Seattle is full of millionaires wearing jeans, and the salesmen know that, and don't make that mistake.
1. the final paperwork has an interest rate a full percentage point higher than the agreed upon number
2. the "new" car turned out to have 5,000 miles on it in the final paperwork
3. an extra $1000 charge magically appeared on the final paperwork
4. the total on the final paperwork was quite a bit higher than the sum of the figures above it
2. I assume the car was looked at and maybe test driven. I find it hard to believe this was a 'ruse' left for the final moments. I can imagine people getting confused or not hearing or understanding I suppose.. someone wants a discount, salesperson says we have a demo over here we can do a large discount on.. and somehow the miles or reason for discount were not discussed. I wouldn't call this a ruse, and once again not something I've done or seen since it's just a waste of time. Obviously the person will discover the miles at some point, so why have the drama.
3. Illegal to pad a term sheet and then stuff a $1000 'charge'. You'd atleast have to have the customer sign the contract for what they were getting for their $1000. Dealers attempt to add things often, but they can't be secretly padded into the initial payment discussions. It's superficially easy for a customer to snap a photo of a preemptive term sheet and burn a dealership at the DMV dealers office or back out a whole deal months or even years after purchase if this was documented. Again, not something I saw in 10 years.
4. I saw countless people get confused by the "total" on the contract, usually when selling a used car to a less mathematically and logical buyer for some reason. You can sell a Porsche to an accountant and all goes great everytime, but sell a used Corvette to someone that personally requested a 72 month loan and watch drama unfold as he wonders why the total of payments on his $50k car is $70k. Luckily I was good and could always explain reality of sales tax, registration, and interest to these people. But not everyone is so lucky.
Maybe the dealerships I worked at were above average in integrity, because they were high performers and high performers don't have time to fraud induced drama, but honestly if you land on a dumb salesperson that can't explain your confusion to you, you can end up thinking your confusion was their attempt at a scam.
2. A "new" car doesn't have 5,000 miles on it. They told me it was new. There was no ambiguity there. They pushed the papers at me hoping I wouldn't notice it.
3. Illegal or not, that's what they did on the next day final paperwork. Of course, they said it was just a clerical error and they'd fix it. The original deal was not documented.
4. When you have a column of numbers and a total, the total should match the sum. There's no excuse for this.
These issues were from multiple dealerships, so I figure it is common practice. One was from a friend of mine, who I warned to check the numbers on the final next day paperwork. He laughed at me, saying nobody would do that. The next day he called and thanked me, as he discovered a $1,000 error in the dealer's favor. He said he'd have never checked it if I hadn't warned him.
My dad said the manager's expression was priceless.
No, I am not confused about things like compound interest, what the sum of all the payments would be, etc. I often tell kids who complain "who needs math" that failing to learn about compound interest is going to cost them plenty.
The salesperson then attempts to discern which of the 3 the customer is actually paying attention to and optimizes that one at the expense of the others.
Because the input vars (e.g. interest rate, term length, MSRP) and dealership profit are concealed behind the displayed numbers, the deal can be "adjusted" to please the customer but keep the same sale profit.
