It’s cold on this mid-November afternoon, the high hovering near zero, and there’s no-one looking at any of the new cars on the dealers’ lots in the small northern New Brunswick city of Bathurst.
At a Ford, a blonde saleswoman is trying to strike up a rapport with a big, tall man – a prospective customer – half-interestedly eyeing a grey 2015 F-150.
She’s making eye contact, gesturing. He’s leaning backwards against another truck, shifting his weight onto another foot. Minutes later, he moves onto the next used truck. She follows.
It’s the Let’s-Make-A-Deal dance of car and truck buying.
On the other side of town, another man emerges from a Chevrolet dealership.
A sign on the dealer’s lot screams out “BLACK FRIDAY EVENT ALL MONTH LONG” and promises up to $1,500. In smaller letters are the words: “On total Black Friday value on select models when you apply the GM Card.”
The new car owner leaving that dealership heads towards his wine-red Cruze, keys in hand. His wife is already in the car.
Did he get a good deal?
“Oh, yes!” he says, smiling. “I don’t let people take advantage of me.”
Despite his self-professed assurance, he refuses to elaborate on that deal, how he managed to get a good price – or even how he knows if it is a good price.
Enter the auto broker.
On his website, Toronto-based Car$mart auto broker Jim Davidson makes a pitch that tugs at the emotions and neurosis of anyone who has ever struggled to get a good deal from a car salesperson.
“The system is stacked against you, from all the research you have to do to analyze all the different brands and models that are out there, from driving from car dealership to dealership to test drive all these different models, to the end result which nobody likes, that battle to fight with the car dealerships on the price and the negotiating,” says Davidson in a video on the website. “It’s no fun.”
His pitch? Car$mart offers to do all of that for its customers in the Greater Toronto Area – for $500 plus HST.
And the auto broker makes a bold claim.
Not only will Car$mart take care of all the negotiating for the deal and find just the right car for its customers but the company also claims it will save them more money than the fee it charges.
“I save my customers thousands of dollars in the purchase or lease of a new car,” said Davidson in an interview. “Plus, they never have to leave their home or office as I do all of the hard work and save them countless hours.”
While the prospect of saving money and having someone else take care of shopping for a car might be attractive, Duane Rudge, the director of used car operations at O’Regan’s Automotive Group in Nova Scotia, calls the auto broker’s claim nonsense.
“That’s absolute garbage,” said Rudge in an interview. “We sell cars all day long at our dealerships that don’t have $500 in markup.”
Consumers are so well informed and do so much comparison shopping online that large profit margins in the automotive industry are essentially the stuff of yesteryear, he said.
“There really isn’t any special price to get. Gone are the days when a neighbour would come in and get a better price because they’re a better negotiator. The internet has made the industry transparent.”
The Ontario-based Trillium Automobile Dealers Association agrees. On its website, the more than 1,000-dealer strong association, whose members do roughly $27 million in retail sales every year, bluntly warns consumers to not believe auto brokers’ claims and calls the supposed savings “a myth.”
That doesn’t faze Davidson.
“Dealers always say that about brokers. They hate us. I used to get death threats from anonymous callers back when I started and (a national newspaper) was running full-page stories on me and I was on (news shows) and a regular ‘car expert’ on Breakfast Television and CityLine."
According to Davidson, the dealers’ distaste for auto brokers stems from the tough negotiating they do to get good prices for their customers.
“They really don’t like me turning the tables on them but they should direct their anger at their other dealer friends who are selling lots and lots of cars to my customers for very low prices,” he said.
The auto broker says he’s able to save his customers money because in Ontario where he operates there are many dealers who sell cars at a lower cost to companies that buy fleets of vehicles – and auto brokers there can benefit from those lower prices because of the intense competition in Toronto.
“I can’t do this in Atlantic Canada as they are not equipped for that,” he said. “The highest markups in the country are in the (Prairies) and Atlantic Canada. Dealers (there) are very old school and rely on tactics form the 1950s. Even though the internet has empowered the buyer with ‘information’ it does not get realized out at a dealership down your way. They will throw out people who try to play tough with them armed with ammo from the net.”
An often-touted rule of thumb for those shopping for a new car is to bargain hunt at the end of a car or truck manufacturer’s model year. One industry insider said that in addition to the manufacturer’s discounts during the end-of-the-model-year sales are the extra incentives dealers will throw a customer’s way: winter tires; command starts, and other accessories.
“It’s definitely going to be the best (deal for the consumer) at the end of the model year – even if there’s not a redesign – as the manufacturer tries to blow the cars out,” adds Rudge.
His advice?
“Start your research early. Narrow down the models that you would want. Then, go to the dealerships and try them out. Go for test drives. And then see what ads come up.”
The best time to do that bargain hunting, say the experts, is at the end of the day near the end of the month when sales people are hungry for those last few deals to meet their sales quotas.
“The best months to buy or lease a car … are December but mostly April through to June,” said Davidson. “The spring is really the best ever. For all three months, the deals from the manufacturer are at their zenith.
“I would wait until the spring and go in right at the end of the month when dealers are scrambling for registrations. They … often get panicked right at the end as they have to sell two or three more cars to reach their monthly goal,” he said.
The worst months to buy a new car? According to Davidson, that’s from January through to March as there are often very few sales.
But getting that elusive great deal isn't just about timing, tough negotiating and car makers’ special promotions. When it comes to saving big on a new car, location matters, claims Rudge.
“The small dealer (in rural areas) may have limited funds and inventory,” said Rudge. “When you go to a bigger dealer (in large urban areas), they might give you an extra $500.”
On used cars, a bigger dealer in a larger urban centre with a milder climate can sometimes knock as much as $1,000 off the price, he said.
Pothole-ridden roads, cold, snow and ice all add up to wear and tear on used cars that have to be reconditioned before they can be sold by the dealers. And that can mean a higher price at the used car lot.
“A car in Newfoundland is going to be rougher conditions than one in Prince Edward Island or New Brunswick,” said Rudge. “The profit margin is not much different but the reconditioning costs are higher.”
