Automotive

Buying car - how to calculate a reasonable offer?

  • Last Updated:
  • Aug 12th, 2017 10:30 pm
[OP]
Newbie
Aug 8, 2017
4 posts

Buying car - how to calculate a reasonable offer?

Hello,

I'm calculating a reasonable price to make a dealer an offer, and I'm not sure I'm doing this right.

So I requested Rav4 pricing from the unhaggle thread and received the following quote:

2017 Rav4 LE AWD
Base MSRP: $29,710
Invoice Price: $27,490
Cash Rebate (After Tax): $1,000

2017 Rav4 XLE AWD
Base MSRP: $32,950
Invoice Price: $30,639
Cash Rebate (After Tax): $1,000

So based on this, a good offer for an LE would be something like:

Invoice: $27,490
+ 3% profit: $825
+ Freight: Per Car Cost Canada, this should be around: $1,885
Lowest offer I should make before GST: $30,200.

The thing is, I've been to dealers and have quotes - and can see on dealer websites that pricing for this model is around $30,000 all fees included except GST -> lower than what I calculated. These are quotes I got with zero negotiation; i.e. I haven't tried to haggle at all. I'm not including the $1000 cash discount because I'm not paying cash, and I'm tacking on $1000 to dealer prices on websites since I'm assuming their quoted "discounts" include the cash discount which I don't qualify for.


Am I doing this right?
Last edited by Jaxon2555 on Aug 12th, 2017 1:44 pm, edited 2 times in total.
3 replies
Deal Expert
User avatar
Jul 22, 2006
21845 posts
2475 upvotes
Just ask the dealerships for the on the road/out the door price.
[OP]
Newbie
Aug 8, 2017
4 posts
george__ wrote: Just ask the dealerships for the on the road/out the door price.
Sorry - I'm calculating a reasonable range to make an offer in. I'm saying that the out the door price I've been quoted is lower than what I'm calculating as my lowest offer - I'll edit my original post to make this more clear.
Deal Expert
Aug 2, 2001
16281 posts
6422 upvotes
Jaxon2555 wrote: Sorry - I'm calculating a reasonable range to make an offer in. I'm saying that the out the door price I've been quoted is lower than what I'm calculating as my lowest offer - I'll edit my original post to make this more clear.
A reasonable offer on the part of the buyer is one that is lower than what the seller is willing to accept but within a range you can still have a conversation about it. The seller then comes back with an offer that is in between the two points. You then can go back and forth a little and find some common ground. The first thing you do is remove the "profit". That's for the dealer to tell you what they think is reasonable, and for you to say "I'm sure you can do a little better than that". So for starters, go into it with an offer that assumes they make no profit and allow them to come back to you with the profit they expect to make.

The key piece of information you are missing in your offer is the profit on the PDI/Freight. This is why some dealers will be happy to sell at "invoice" price, because they have profit built into the PDI/Freight item. So even at "invoice" pricing you may find your offer accepted because of this. This also negates any sort of kickbacks/incentives/etc. the dealer receives for selling vehicles from the manufacturer.


I'm not saying offer $25,000 out the door - that's not reasonable. But your starting offer should be based on invoice pricing + mandatory fees + taxes. It's up to you if you try negotiate lower based on the profit from PDI/Freight.

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