Buying A

Car

Andrew Gilman

Introduction
I did not consider myself to be a strong negotiator before taking this course. I took
this course to learn how to become a better negotiator. It was my intention to use
my newly acquired negotiating skills to purchase a car once I had completed the
course. However, due to severe mechanical issues, I was forced to purchase a new
car in September. So, instead of writing about an upcoming negotiation involving
the purchase of a car and how great it will go, I will write about my experience
involving the purchase of my wifes car, which coincidentally, was my first car
buying experience. Looking back, I certainly made some mistakes, but, considering
my lack of experience, I think I did OK for myself.

Preparation & Information Gathering

As this was my first experience buying a car from a dealership I was naturally
scared of getting a bad deal or being taken advantage of. It did not help that I had
little confidence in my negotiating skills. It is no wonder that I put this car purchase
off for as long as possible. As much as I dreaded it, eventually, it came time to
purchase my wife a new car. I had done my research and narrowed the field down to
about five or six different vehicles that we were considering. We spent the summer
test driving the different vehicles, eventually narrowing our list down to one vehicle
that we both liked. In fact, we knew that this was the vehicle we would purchase
even before test driving it. We had our hearts set on a used 2008 Acura MDX.
Before going in for the test drive, I tried to do as much preparation as I could
anticipating that the salesman would try to get us to commit to something before
we were ready, or fish for information that could be used in the negotiation.
Honestly, I did not fine much, and my parents were of little help when it came to
giving me advice on how to approach the situation. The little information I did find

was helpful in telling me what to look out for but not how to prepare or gather
information. One item that I read said that you should avoid talking about financing
until after you have settled on a price. Funny enough, one of the first questions the
salesman asked was how I planned to pay for the car and whether I was going to
finance. I was prepared for that question and told the salesman that we could talk
about that after we had settled on a price.
So, having made our initial trip to the dealership to see what they had in stock,
which was a lot since we were looking at a popular vehicle. We went home to
discuss further. I should note that we did find a particular vehicle in stock that was
in fairly good condition that we were seriously considering. Before leaving, I
remember asking the salesman how long the vehicle we were interested in would
be available. I remember him telling me that the vehicle we were interested in was
a popular color and that it would probably sell quickly. I believed him. Looking back,
I should have asked more questions to try and gather as much information as
possible, then I should have done my own research to determine fact from fiction.
After our initial visit, which was a Saturday, we went home to discuss. This was the
vehicle that we both wanted, it was within our budget and I was confident that I
could talk them down from the sticker price, at least a little. So, the next step was to
go back and make the purchase. We initially planned to go back the following
weekend, but we ended up going back that Thursday. Perhaps a little too eager.
Prior to returning to the dealership I spent the week gathering information in an
attempt to prepare myself as best I could for the impending negotiation. Having no
prior experience buying a car from a dealership, I had no idea what to expect or
how the negotiation would play out. I am glad I did my homework, I was able to find

a number of resources that offered varying degrees of advice, some good, some not
so good. I do remember one source of information that talked about dealing with the
sales pitch after negotiating a price. Basically, it said that they will try to sell you a
bunch of additional crap that I should not purchase. In addition to preparing
myself for the negotiation, I spent a lot of time researching prices trying to come up
with a price that I thought was fair based on the make, model, mileage and overall
condition of the car. To come up with a baseline I looked at listings for similar
models as well as price calculations from Kelley Blue Book and Edmonds. This
research proved useful only for establishing my bottom line. None of the research I
did helped me in determining my MPP. This was something that I struggled with and
I probably worried needlessly about it.
After doing all of my research I came up with a figure of $30,000 as the most that I
would pay for the vehicle, which was listed at around $33,000. Not being completely
nave, I knew that I should not walk in there and tell them that I am willing to spend
$30k for the car. I knew that I should start low and work my way up. But I had no
idea how low I should start. I wanted to start low enough to give myself something
to work with but I did not want to start so low that I was insulting. I remember being
hung up on this, worried that I would insult the salesman. I finally found a bit of
information that mentioned starting at 10% - 20% below the asking price as a rule
of thumb. This was not much, but it gave me a place to start. So, with my research
complete and a plan of attack in mind, my wife and I went to the dealership to
negotiate.

Negotiation/Commitment
Thursday rolls around and I spend the day preparing myself for the upcoming
negotiation, I am nervous and do not know what to expect or how well I will do. My

biggest fear is that I will pay too much for the vehicle. We are scheduled to meet at
the dealership around 6:00 pm. I should also mention that I had a 7:20 pm class the
same evening. So we meet at the dealership and take the car out for another test
drive so that my dad can give it a once over. Aside from the price, my dad gives it
the OK. So we talk to the salesman and tell him that we were interested in
purchasing the vehicle. He leads us inside, sits us down in front of his desk and then
just stares at me, hoping that I will be the first to say something.
This is how the negotiation started. I was certainly intimidated, but, having been in
sales myself for a couple of years, I knew that he was just trying to make me feel
uncomfortable. I also read that the first to speak is always at a disadvantage, so I
did not say anything. Finally, he asked me what I wanted to pay for the vehicle,
again, being prepared for this, I deflected the question and asked him what he could
do for us. After a quick pause he threw out a number that was almost as high as
what they were asking. He then asked me what I was looking to pay. At this point, I
went ahead and gave him my opening figure, I decided that 20% below the asking
price was a reasonable place to start. So I said that I would be willing to pay
$27,000 for the vehicle. He immediately burst out laughing telling me how
ridiculous my offer was, that there was no way that they could go that low and that I
would have to do better than that. Honestly, I was taken aback by this response. I
had read somewhere that this might happen. Even so, I was still rattled, he made
me feel as though I had insulted him and that I should come way up on my price.
However, not completely falling for this ploy, I told him I would not pay more than
$27,000 and then asked him to give me a price. His first price was only a couple of
hundred dollars off of the sticker price. It was at this point that I thought to myself
that I was in over my head and that I was not going to get through this negotiation

without a little bit of a fight. I also remember thinking that I would be lucky to get
the car for 30,000, which was the maximum amount that I was willing to pay for the
car.
We went back and forth a couple of times. I came up in price a couple of times and
he came down in price, but not nearly as much as I had come up. Once I reached
29,000 I put my foot down and said that I would not go any higher and that he
would have to come way down if I were to even consider making this purchase. He
had only come down about a $1,000 whereas I had come up by $2,000; I was
determined to hold my ground. At this point he told me that he would have to talk
with his manager. After about five minutes he returned and told me that his
manager was willing to go as low as $30,500. Still not wanting to pay more than
$30,000, I told him that I could go as high as $29,500. He then told me that he
could not go any lower than $30,500 and I told him that I could not go any higher
than $29,500. After a few minutes of this back and forth I told him that I would not
go any higher than $30,000, he leaned in and said OK, but that his manager would
have to approve it first. Stupidly, I said OK. He had me where he wanted me. He left
to speak with his manager and after a few minutes he returned and told me that his
manager could not do $30,000 but he could do $30,200. This was a tempting offer
but I still did not want to pay over $30,000 for the car. This is the point that my Dad
chimed in and mentioned that I should take it was not worth splitting hairs. Feeling
silly for trying to split hairs with the dealer, I accepted the offer and we shook on a
final price of $30,200.
The hard part was over but we still had to meet with the finance manager to discuss
financing options. Thankfully, the finance manager was not in, affording us a much
needed break in the action. We returned the next day to finalize the deal and

discuss financing. Thankfully, I had done my homework and knew that they would
also try and sell me a bunch of extras such as rust proofing or paint protection. I
was well prepared for this and declined all of the extras the finance manager tried
to sell me. What caught me off guard is the finance manager did not push after I
declined the offer. I had expected her to be more aggressive and not give up so
easily. I was not going to complain. Next, we talked about financing. I had to cut this
one short because we were planning to use our bank rather than financing through
the dealer. This time the finance manager pushed back in an attempt to talk us in to
taking the loan from the dealer rather than the loan from our bank. Try as she
might, we ended up going with our bank. We went with our bank, even though the
interest rate was 0.25% higher, because I felt that we did not get a great deal and I
did not want to give the dealer any more of my hard earned money. We signed all of
the paper work and wrapped things up quickly. Finally, we had our new car. All in all,
I ended up paying slightly more than the maximum amount that I had intended to
pay. I did not feel like I was ripped off, however, I did not feel like I got a great deal, I
could have probably done better had I been more patient and willing to walk away.
On a side note, we were not charged for the roof rack that they put on.

Analysis & Critique

Overview
So how did I do? Honestly, I do not think that I did that well. I was able to talk the
salesman down from the sticker price but I was not able to talk him down as far as I
would have liked. Looking back, I made a number of mistakes and I fell for some of
the tactics employed by the dealership. Having almost completed this course, it is
now clear to me what I did wrong, or not very well, and what I should have done
differently. It is also apparent that the salesman employed a number of tactics

designed to tip the balance in his favor. I will discuss what I did well and not so well
and what I would do differently knowing what I know now about negotiation,
applying the lessons and tactics that I have learned throughout this course.

Preparation
Preparation is one of most important steps of the negotiation process. Each of the
three books mentions how important it is to be well prepared. I knew that proper
preparation was important, but what I did not know was how to properly prepare. I
thought that preparing for a negotiation involved determining what I wanted, why I
wanted it, how much I would be willing to pay, and who I would buy it from.
However,

now

know

that

proper

preparation

begins

with

knowing

and

understanding ones negotiating style and establishing clear goals and expectations.
My preparation should have started with knowing my bargaining style, the first
foundation of negotiation rather than starting with my goals and expectations, the
second foundation. It turns out that my style is competing/compromising. Knowing
my style and understanding my strengths and weaknesses would have given me
more confidence in my abilities and a better idea of which strategies/tactics would
have been more effective. I completely missed this step.
However, I did have a goal and an expectation, albeit, not as high as it should have
been. My original goal was to negotiate a price 20% below the sticker price for the
car. In retrospect, this was a poor goal for two reasons: First, I did not how low my
starting price should be and I could not find any norms or standards to indicate what
an acceptable range should look like so I took a best guess and came up with 20%.
Secondly, since I had nothing to base my goal on I did not know if it was acceptable
or ridiculous and I was worried that I would be perceived as an idiot. According to
Shell Optimistic goals are effective only if they are feasible; that is, only if you

believe in them and they can be justified according to some standard or norm.
(Shell pg. 35)
Without anything to base my opening position on, I should have bracketed my
position. According to Dawson, if the dealer is asking $33,000 and I want to buy it
for $30,000 my starting position should be $27,000. This seems like a perfectly
reasonable opening position now that it can be justified. Additionally, according to
Dawson, you should always ask for more than you expect to get. (Dawson pg. 16)
Looking back, my opening position was probably well within the realm of
reasonableness. And even if it was not, according to Dawson I should not care
because an overstated demand is part of how the negotiating game is played, it just
takes some courage and confidence.
In addition to having a better goal and setting higher expectations. I could have
benefited by arming myself with knowledge about the popularity of the vehicle, how
many vehicles were available, the most popular color and on average, how quickly
the vehicles sell. This knowledge would have given me additional standards with
which to make my case for a lower price on the vehicle. In addition, I would have
been able to refute some of the statements made by the salesman such as we
cant go any lower because this is one of the most popular colors or this is a
popular vehicle and probably wont be available next week. By not learning about
the applicable authoritative standards and norms within the car industry, I had no
way of knowing whether the salesman was telling the truth or merely exploiting the
scarcity effect. Proper preparation and more time spent exchanging information
would have helped immensely. Preparation and information is helpful, but only for
those who know what to do with it. I still would not have benefited much because I
was unfamiliar with the process of negotiation.

Given my tendency towards collaborating, I now realize why the negotiation was
over before it started and why I was unable to talk the salesman down as far as I
would have liked. I was too quick to make concessions and I was too focused on my
bottom line which I based on fair standards such as Kelly Blue Book or Edmunds and
I was unwilling to walk away, I was overcommitted. If I had properly prepared and
taken the time to understand my negotiating style, I would have had a proper MPP
and I would have known my BATNA, which would have told me when to walk away, I
would have asked more clarifying questions and I would have been more alert to the
deceptive tactics commonly used when buying a car.

Information Gathering/Exchange
The information exchange started from the moment we stepped foot on the lot. We
were greeted immediately by a salesman who introduced himself and asked why we
were there, along with a slew of other questions all designed to determine if we
were serious buyers. By engaging in small talk with us the salesman was attempting
to build rapport and establish some type of relationship, he wanted us to like him. In
addition, with rapport established I was more likely to let my guard down and
divulge key pieces of information inadvertently. By asking me whether I drive more
than 10,000 miles per year, the sales man was trying to establish whether or not he
should try and get me to lease a car rather than buy a car. Dealers make a boatload
on leases that they can then sell as pre-owned vehicles. Next he asked if I was
financing. I was ready for this question and told him that we could talk about money
at a later point in time. With this response, I most likely indicated to him that I was
ready to buy. It seemed as though he was peppering me with questions mixed in
with some friendly banter. I on the other hand did not ask many questions, and the
questions that I did ask did not reveal much useful information. Again, by not having

a game plan and by not properly preparing, I was unaware of the questions that I
should have been asking. I may not have asked many questions, but I did indicate
my intentions as well as my potential leverage by telling the salesman that we were
looking at two other comparable cars at two other dealerships. What would have
been better would have been to tell the salesman that we are looking at similar
models at two other Acura dealerships indicating that I am interested but that I
have other comparable options that I could easily go with. Again, I was
overcommitted to the car and I probably conveyed that to the salesman through my
body language. He probably knew that we were going to buy and that we were not
going to walk away, at least if the price was close to reasonable.
We established rapport and I indicated that I was interested in buying. I may have
revealed too much information and I did not do a great job at signaling my leverage.

Negotiation
After we returned from the test drive the salesman asked me if we should go inside
to talk. I said OK. This was the moment I was dreading, the negotiation. I was
nervous but confident at the same time. My strategy was to start low and not go
any higher than my bottom line. Following Dawsons advice, I was not going to
make the first offer. I had read somewhere that you should never be the first to
make an offer. It sounded like good advice, so I gave it a shot.
The negotiation opened in complete silence with the salesman staring at me. The
salesman probably knew that the silence would make me feel uncomfortable, and
motivate me to make the first offer. This tactic of sorts was right in line with the
salesmans competitive style. Sensing that the silence was not working the
salesman switched things up and asked me to make an offer. Sticking to my guns,
instead of giving him my opening bid, I asked him to what he could do for me. He

replied with a really high offer. This may not have been the best opening approach
because the salesman was able to gain significant advantage. He had significant
knowledge about the bargaining range and he was able to anchor me a very high
number. Not only did I fail to guard against the anchor effect, but I also failed to
flinch at his proposal. By not flinching I indicated to the salesman that his offer
might be a possibility. Two key mistakes on my part.
He then asked me what I was willing to pay. I gave him my initial offer, and, without
missing a beat he immediately flinched; it was one of the best flinchs Ive seen.
This completely threw me for a loop. I thought that the salesman was offended by
my offer. I actually felt bad. However, I should have realized that he was simply
responding with a flinch, but more importantly, I should have had some justification
behind my number, rather than coming up with the something like I did and known
that a flinch is just part of the game. With both offers on the table, we set about
making concessions.
He was the first to make a concession, which was fairly significant right out of the
gate. This prompted me to respond with a large concession of my own. The
salesman was leveraging the norm of reciprocity beautifully, I was falling for every
trick in the book. The concessions continued back and forth for a bit, but, his
concessions tapered immediately while mine did not. Once I reached $29,000, what
I would call my trip-wire, the red flags went up and I told the salesman that I would
not go any higher. This is the point that I should have taken some time to reexamine the situation and ask myself if I should continue negotiating, but I did not
have a proper BATNA and no way of knowing how well or how poorly I was doing. All
I knew was that I did not want to go any higher than my bottom line. This is when
the salesmen pulled out the higher authority tactic by telling me that he would have

to talk with his manager. He came back with an offer telling me that this was the
best that his manager could do for this particular car. It was still too high but it was
closer to an offer that I would accept. I made another concession, this time coming
right down to my bottom line. This time he accepted my offer telling me that this
looks good but that he had to get approval from his manager before anything was
final. This was a clever variation of the good guy/bad guy tactic. By doing this he
was able to get me to commit prematurely, I was thinking that I had this wrapped
up and all that was needed was an OK from the manager. Did the manager approve
the offer? Of course not. The salesman came back and said that his manger could
not let him sell the car for that price and that he could only go as low as the offer
that he came back with. This offer was pretty close to my bottom line, and I
reluctantly accepted the offer.

Closing and Gaining Commitment

Closing must have been a breeze for the salesman, all he had to do was use higher
authority once or twice and a good guy/bad guy routine to get me to agree to a final
price that was just over my bottom line. Not to mention, I was probably
overcommitted to the car. Although I had been told that I could always walk away,
deep down I knew that I was not going to leave without buying the car. My over
commitment to the car caused me to pay more than I wanted to. If I had a proper
BATNA, I should have realized that the price he was offering was worse than my
BATNA and I should have leveraged the scarcity effect to inject urgency into the
situation by walking out. If I had, I would have probably been able to get a better
deal.
As for the actual commitment phase, we shook on an agreed to price but there
nothing signed. I would have to meet with the finance manager before anything was

finalized. In actuality, the deal was not complete because I did not yet have a
commitment, only an agreement from the salesman.
Like most car dealers, the finance manager would try to sell me a bunch of extras
before finalizing the deal taking advantage of the contrast principle. All I knew was
that I was not going to buy anything else from this dealer. I just wanted to sign the
paperwork and be done. After sitting through a couple of sales pitches about this
and that we finally got to the paperwork and we were able to sign on the dotted
line. I had done it. I had purchased a car from a dealer.

Conclusion
All in all I did not do very well. I lacked proper preparation, I did not have a strategy
and I was unfamiliar with the negotiation process. I was a nave rookie. For me, the
biggest lesson learned from this experience and from this course is to know what
you are doing before you go and do. In other words, I should have at least
familiarized myself with the negotiating process before going off and negotiating
with a skilled negotiator. I was setting myself of for failure right form the get go.
Another important lesson is that I should have done a more thorough job preparing
and gathering information and formulated a BATNA before engaging in the
negotiation. Lastly, I should have had a strategy for how I wanted to approach the
negotiation. Since this was a transaction and I was negotiating with a competitive
negotiator I should have adjusted my style accordingly. This type of situation would
have been best served with a competitive strategy. Having learned about
negotiating I am eager to try again, I may have to wait a few years, but, the next
time I buy a car I know that I will do much better. I may never be an all-star
negotiator but at least I now know how to effectively negotiate and protect myself
from tactics that are less ethical but commonly used. I have learned a lot about

negotiating and I am no longer intimidated by it. Now that I have the knowledge, I
will be able to approach future negotiations with confidence, I may not always come
out ahead, but I will at least know how to play the game, improvement will only
come with experience. Lastly, know when to walk away. There is nothing worse than
being overcommitted and accepting a less favorable deal.