Millennials largely know how to deal and like doing it. This is forcing manufacturers and their dealers to adapt to buyers who are savvy, impatient and demanding – and this has not always been the case with their baby boomer parents.
"Among the generations, Gen Y buyers (born between the early 1980s and early 2000s) negotiate the vehicle price 72 per cent of the time, while Pre-Boomers negotiate only 61 per cent of the time," says Chris Sutton, J.D. Power and Associates vice president. "Gen X negotiates 66 per cent of the time."
Gen Y or Millennials are the best equipped generation in history to negotiate a new car deal "in an increasingly digital world where everything's at our fingertips," adds Sutton. In a nutshell, "savvier consumers are armed with a lot more information to bring into a negotiation" than Boomers and Gen X in their prime.
This is bringing trouble to the traditional dealer model. J. D. Power's Sales Satisfaction Study in the U.S. found that satisfaction with the overall purchase experience is lower among new-vehicle shoppers who attempt to negotiate a better deal than among those who don't (793 vs. 844, respectively, on a 1,000-point scale).
This may be because of confusion at the dealer level about the role of the sales person. Nearly half of shoppers (46 per cent) see the sales person as a negotiator who is in place to help the car buyer get the best deal. The sales person is not an educator or a facilitator, but a negotiator there to work out a mutually agreeable price – and come to agreement on a trade-in, if necessary.
The savvy buyer understands this and works with the sales person rather than take a confrontational stance. So shoppers are often best served by looking at car buying as a business transaction, pure and simple.
Gary Tucker chief executive of DealerRater, which worked with J.D. Power to fashion this research, acknowledges that the Internet and smartphone apps are tools with which Gen Y is eminently comfortable using. Services like Carmigo.com and Unhaggle.com in Canada give buyers access to online bids and detailed incentive information that further empower shoppers.
But at the end of the buying process, there's a deal between a sales person and a consumer. And this is just fine, adds Tucker, noting the research shows "consumers still want sales people to be part of the overall purchase process."
Why? The research shows that negotiating can often lead to a better price (55 per cent of the time), a better trade-in value (32 per cent of the time) and additional sales sweeteners -- cash, a lower interest rate, free service or additional vehicle features (31 per cent of the time).
The lesson for car buyers: look for sales people who recognize that buying a new vehicle is a business transaction that involves respectful negotiation. This requires the shopper to do the research using online tools that are now easily at anyone's fingertips.
If you do that work, you'll find that, for example, Ford of Canada has revived its Recycle Your Ride sales promotion. The buyer of a new Ford Escape will get a $1,000 rebate for a 2008 or older clunker on the purchase or lease of a 2015 Escape – plus another $500 factory incentive and perhaps as much as $1,600 or more in a dealer incentive.
Ford is also offering a zero per cent lease rate combined with $1,250 in factory incentives, or zero per cent financing for up to 60 months with a $500 sweetener. But if you don't negotiate, you might not get all of this money on the table and perhaps more.
Deals of the Week also found nearly $7,000 in combined factory and dealer money money on a Lexus GS, nearly $4,000 on a Mercedes-Benz GLK and more than $3,000 on a Mazda6.
Deals of the Week consulted with www.unhaggle.com, Car Help Canada, www.carcostcanada.com, and other sources on these offers. As usual, pricing information here is subject to change and dealer discounts vary, so consult your dealer for all the final details, including expiry dates for all offers.
2015 Ford Escape SE 4WD
- MSRP: $28,499
- Freight, dealer prep, air conditioning tax: $1,825
- Dealer discount (estimated): $1,644
- Factory discount: $1,500 (manufacturer incentive)
- Taxable subtotal: $27,180
- Total price with 13 per cent HST: $30,713.40
- A $500 factory incentive is available with zero per cent financing for 48 or 60 months, while $1,250 in factory money is available with a zero per cent lease rate for 48 months.
2015 Mercedes-Benz GLK-Class GLK 250 BlueTEC 4MATIC
- MSRP: $48,600
- Freight, dealer prep, fees and air conditioning tax: $2,210
- Dealer discount (estimated): $2,809
- Factory discount: $1,000 (manufacturer incentive)
- Taxable subtotal: $47,001
- Total price with 13 per cent HST: $53,111.13
- All incentive money is available with 0.9 per cent financing for 48 or 60 months, or a 2.9 per cent lease rate for 39 or 45 months. Loyalty rate reduction of 0.75 per cent available for finance and lease rates.
2016 Mazda Mazda6 GT 6AT
- MSRP: $32,895
- Freight, dealer prep, air conditioning tax: $1,830
- Dealer discount (estimated): $1,821
- Factory discount: $1,000 (manufacturer incentive)
- Loyalty incentive: $500
- Taxable subtotal: $31,404
- Total price with 13 per cent HST: $35,486.52
- The factory incentives cannot be combined with a 1.49 per cent finance rate for 48 months, 1.99 per cent for 60 months, 2.49 per cent for 84 months or a 1.99 per cent lease rate for 48 months. Loyalty rate reduction of one per cent available for finance and lease rates.
2015 Lexus GS 350 AWD
- MSRP: $57,850
- Freight, dealer prep, fees and air conditioning tax: $2,180
- Dealer discount (estimated): $4,153
- Factory discount: $2,655 (manufacturer incentive)
- Taxable subtotal: $53,222
- Total price with 13 per cent HST: $60,140.86
- An $885 factory incentive is available with 3.9 per cent financing for 48 months, or a lease rate of 3.9 per cent for 48 months.
and
. Calculations based on Ontario customers. Please note that while the information above is accurate at the time of publication, incentives are given at the discretion of individual dealers, and may be changed or discontinued at any time. Where noted, "dealer discounts" are negotiated with the customer on a case-by-case basis. Unhaggle Savings are actual discounts received by Unhaggle customers.
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