4 Rules of Buying from Car Dealers in Australia

Previously, tips of buying used cars were posted here: "Buy Lao Pok Chia Tips"


So how about buying new cars from car dealers? I have 4 rules to share.


Rule 1: Buy in June

Why June?


June is the end of the financial year in Australia. All car dealers have two objectives at this time. One, do a final surge to achieve the annual sales target. Two, clear as much stock as possible. With these two factors behind your back, you can only do better buying your new car in June than other months of the year. The best timing to begin in early June and complete the deal is in mid June - and not later than that - or else, you will never get a better deal.


Thus, if you visit a car dealer and found that they do not have the car model/specifications of your choice in stock, move on to the next one. Avoid booking for one because you will be unlikely to get a best price for it because you will have to put down a deposit and sign an agreement of purchase for the dealer to procure your car. In contrast, cars in stock are partially/fully paid by dealers and incur inventory costs so dealers will be more motivated to clear them as soon as possible.


Rule 2: Know your Specifications

It is important to know what exactly you want because you are going right straight for the kill. Spend some time to research on the cars on your shortlist and aim to reduce your shortlist to not more than 2 cars before you set off to the market.


Be specific. Something is not done right if you are end up with a Ford Ranger and a Toyota Echo as your final two. Identity your needs and strike off cars that do not fulfill them. Some common specification categories that buyers consider are: engine capacity, make, model, body type, fuel consumption, transmission type, interior, exterior and of course the price. 


Take the price of fuel in Australia into consideration. While some cars may seem cheaper than the others because of the fuel type it consumes, the real money saver can be in the subsequent years if your fuel is cheaper. Diesel is more expensive the petrol here as compared to Singapore. Gas is a viable option here because it is widely available in fuel stations. Do a cost estimate according to the different types of fuel types and their projected consumption rates. 

When you are clear with the exact specifications you need, choose the car according to them. That way, you save time and avoid choosing something on impulse.


Rule 3: Know the Market, Get At Least 3 Quotations

Target the car dealers with the most cars of your choices in stock. The more cars in stock, the bigger their motivation to sell. Shortlist the car dealers with the car model (including colour etc) of your choice in stock. Strike off the rest and don't waste time with them.


Some bigger car dealers may have branches scattered all over the metro area. Try to look for the "Head Office" of a company. It is a misconception that cars sold by car dealers located in the city are pricier than the ones in the suburbs. That may not necessarily be the case. Sometimes, the "Head Office" is in a better position to give you a bigger discount than the others. Don't buy from a dealer who have to obtain stock from another branch because profits will be shared between the two branches thus you will be unlikely to get a best price to dilute their slim margin further.


Do the hard work and get at least 3 quotations from different dealers. This way, it protects you against paying above the market rate.


Rule 4: Negotiation

A big part about the art of negotiation is about psychology. Car dealers handle many customers a day. Many customers are just casual browsers. Having done your market and product research and know exactly what you want, if you go straight to the point, the car salesman will qualify you as a genuine buyer. You can impress him further by telling him you can place a deposit on the spot if they can offer you a price that you are willing to pay. In this situation, a car salesman will regard you as a high return of their shorter invested time and is likely to consider your offer seriously.


The dealer will never offer you the real best price in the first negotiation round even if you ask for it. Instead, ask if they can accept your impossibly low asking price, way lower than the initial best price they offer. The car salesman will predictably tell you that cannot be done. Do not offer another figure and ask the salesman to check with his manager if they can offer you a better price instead. Increase your initial asking price and repeat this for a few rounds, aiming to meet somewhere in the middle. Bear in mind, the longer you drag the negotiation process, the more time the salesman will have invested on you. So he will not want to see you walk away without a deal in his pocket.


If the price movement comes to a abrupt standstill too early, insist on freebies as compensation such as car services, longer warranty, gifts, add-ons. Don't forget the golden rule, though we are trying to get the best possible deal, the car salesman needs food on the table as well. Always aim for a win-win situation whenever possible. A happy salesman is likely to help you out with a quick decision good deal.

9 comments:

  1. Good tips. This will come in handy when I buy my Landcruiser Prado.

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  2. One other thing. After doing your homework and you managed to get a few quotes, go to a car broker.

    Tell them exactly the make model and accessories you want. And the target price. They will send it out to all dealers to do quotes and get you the cheapest.

    ReplyDelete
  3. I offer an alternative view about the season for buying:

    December is also a good time to buy car:

    1. Most people are spending money to buy gifts and food and decoration so not that much liquid cash to spend on cars.

    2. December has at least 7 days of 'holidays" for many people who take leave to travel out of town so less people in the cities. Car yards often closed 22 or 23 Dec to 2 Jan.

    3. December is also the last month of the year. When you buy or sell cars the usual thing is to ask which year it the car made? No one really bothers whether it is Jan 2013 or Dec 2013 but only focused on the year 2013 (although the dealer always tries to tell the buyer otherwise). So come Jan 2014, by definition Dec 2013 model is last year's car so automatically you lose value on that (that's why in Jan - Mar they have previous year compliance plate but new car sale.

    4. Which is why often the dealers often don't expect to hit their sales target in Dec....

    Although one thing is that don't leave in too late (like 23 or 24 dec) since the dealers already in holiday mood and can't be bothered to meet target sale quotas....



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  4. BTW:

    Popular small models ironically can be harder to bargain since they tend to have better resale value.

    Nissan Pulsar
    Toyota Corolla
    Ford Festiva (or Laser old model)
    Holden Astra (old model)

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  7. I forget to mention this website: american car imports australia selling american car imports to australia.

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    Replies
    1. I have read your blog providing rules and information about Car Sales in Perth. Thank you for sharing the information. Thanks a lot for recommending me now i can purchase the best model as per my budget and save much.

      http://pacewayauto.com.au/

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