Buying a new car is often a significant financial commitment, and the allure of customizing your vehicle with a factory order can be incredibly appealing. But does opting for a factory order mean you’re forfeiting your right to negotiate? The answer, thankfully, is more nuanced than a simple yes or no. While the negotiation landscape differs slightly from buying a car already on the lot, there’s still ample opportunity to secure a favorable price. This comprehensive guide will delve into the intricacies of negotiating a factory order car, equipping you with the knowledge and strategies to drive away with your dream vehicle at a price you’re comfortable with.
Understanding the Factory Order Process
Before diving into negotiation tactics, it’s crucial to understand how the factory order process works. When you factory order a car, you’re essentially commissioning the manufacturer to build a vehicle to your exact specifications. This means choosing the model, trim level, color, interior options, and any additional features you desire.
The dealer acts as an intermediary, facilitating the order between you and the manufacturer. They’ll typically require a deposit, which is usually refundable but it’s important to clarify this upfront. The waiting time for a factory order can vary significantly depending on the manufacturer, the popularity of the model, and any supply chain constraints that might be in place. It’s also worth noting that incentives and rebates can change between the time you place the order and when the car arrives.
The Dealer’s Perspective on Factory Orders
Dealers often have a slightly different perspective on factory orders compared to cars already in their inventory. They might see factory orders as guaranteed sales since you’ve already committed to buying the vehicle. However, they also avoid the costs associated with holding inventory, such as floorplan financing (interest they pay on the vehicles sitting on their lot) and the risk of the car becoming outdated or less desirable. Understanding this perspective is key to crafting an effective negotiation strategy.
Negotiating the Price of a Factory Order Car
While the perception might be that factory orders are non-negotiable, this isn’t always the case. There are several avenues you can explore to potentially lower the price. The key is to approach the negotiation strategically and armed with information.
Research is Your Best Friend
Before even stepping into a dealership, conduct thorough research on the vehicle you’re interested in. Use online resources to determine the invoice price (what the dealer pays the manufacturer), the MSRP (Manufacturer’s Suggested Retail Price), and any available incentives or rebates. Knowing this information gives you a strong foundation for negotiation. Websites like Kelley Blue Book, Edmunds, and TrueCar can provide valuable insights into market pricing and potential deals.
Focusing on the Out-the-Door Price
Instead of getting bogged down in individual aspects like the vehicle price, destination fee, or specific options, focus on negotiating the out-the-door price. This is the total price you’ll pay, including all taxes, fees, and dealer add-ons. By concentrating on the final number, you can better control the overall cost and ensure that you’re getting the best possible deal.
Negotiating Incentives and Rebates
Incentives and rebates can significantly reduce the price of a new car. These can come from the manufacturer, the dealer, or even government programs. Be sure to research all available incentives for which you might qualify, such as military discounts, student discounts, or loyalty programs. The dealer should apply these incentives to the price of the car, but it’s crucial to verify that they’re doing so correctly.
Leveraging Competition
Contact multiple dealerships and get quotes for the same factory order configuration. This creates competition and allows you to leverage the quotes against each other. Let each dealer know that you’re shopping around and that you’re looking for the best possible price. Be prepared to walk away if you’re not happy with the offers you receive. Dealerships are often more willing to negotiate when they know they’re competing for your business.
Timing is Everything
The time of year, month, and even day can impact your negotiating power. Dealers are often more eager to meet sales quotas at the end of the month or the end of the year, making them more willing to offer discounts. Weekdays tend to be less busy than weekends, allowing salespeople to dedicate more time to your negotiation.
Consider Dealer Add-ons Carefully
Dealers often try to sell add-ons such as extended warranties, paint protection, or fabric protection. These add-ons can significantly increase the overall price of the car. While some add-ons may be valuable, it’s important to carefully consider whether you truly need them and whether they’re worth the cost. You can often negotiate the price of add-ons or decline them altogether.
Strategies for Effective Negotiation
Beyond the basic principles, employing specific negotiation strategies can significantly improve your chances of getting a better deal on a factory order car.
Be Polite but Firm
Maintaining a polite and respectful demeanor is crucial, even when negotiating aggressively. Building rapport with the salesperson can make them more willing to work with you. However, don’t be afraid to stand your ground and be firm about your desired price.
Be Prepared to Walk Away
One of the most powerful negotiation tactics is being willing to walk away from the deal. If the dealer is unwilling to meet your price, simply thank them for their time and leave. Often, they’ll contact you later with a better offer. Showing that you’re not desperate to buy the car gives you significant leverage.
Document Everything
Keep a detailed record of all communication with the dealer, including phone calls, emails, and in-person conversations. This documentation can be helpful if there are any discrepancies or misunderstandings later on. It’s also a good idea to get any agreed-upon prices or terms in writing before placing the factory order.
Understand the Fine Print
Before signing any paperwork, carefully read and understand all the terms and conditions. Pay close attention to the interest rate, the loan term, any fees, and the total amount you’ll be paying. Don’t hesitate to ask questions if anything is unclear. If you’re not comfortable with any of the terms, be prepared to negotiate or walk away.
Factors That Can Limit Negotiation
While negotiation is possible, certain factors can limit your ability to get a significant discount on a factory order car.
High-Demand Vehicles
If the vehicle you’re ordering is in high demand and short supply, the dealer may be less willing to negotiate. This is especially true for popular models or those with limited production runs.
Rare or Unique Options
If you’re ordering a car with rare or unique options, the dealer may be less flexible on price. These options can increase the cost of the car and may be more difficult for the dealer to source.
Dealer Policies
Some dealers have strict policies regarding pricing on factory orders. They may have a set markup over invoice price that they’re unwilling to deviate from.
Alternatives to Negotiating the Price
If you’re unable to negotiate the price of the car itself, there may be other ways to save money.
Negotiating the Trade-In Value
If you’re trading in your old car, make sure you get a fair price for it. Research the value of your trade-in using online resources and get quotes from multiple dealerships.
Exploring Financing Options
Shop around for the best financing options. Get pre-approved for a loan from your bank or credit union before visiting the dealership. This will give you a better understanding of your interest rate and monthly payments.
Consider Leasing
Leasing can be a more affordable option than buying, especially if you don’t plan to keep the car for a long time. Leasing typically involves lower monthly payments and may require a smaller down payment.
Final Thoughts: Securing the Best Possible Deal
Negotiating a factory order car requires a strategic approach and a thorough understanding of the process. By conducting thorough research, leveraging competition, and being prepared to walk away, you can increase your chances of getting a favorable price. Remember to focus on the out-the-door price, negotiate incentives and rebates, and carefully consider any dealer add-ons. While certain factors may limit your negotiating power, exploring alternative options like trade-in value, financing, and leasing can also help you save money. Ultimately, the key is to be informed, patient, and persistent in your pursuit of the best possible deal on your dream car.
The bottom line is, while it may seem like factory ordering a car puts you in a less advantageous negotiating position, that’s often a misconception. By arming yourself with knowledge and employing smart negotiation tactics, you can drive away with a customized vehicle and the satisfaction of knowing you got a great deal. Don’t be afraid to ask questions, shop around, and be prepared to walk away – the perfect car and the right price are out there waiting for you.
Can you actually negotiate the price of a factory order car?
While it might seem like factory orders are immune to negotiation because they’re built to your specifications, the truth is, there’s still room to haggle. Dealers often have some flexibility in pricing, even on custom orders. The key is to understand what aspects of the order you can negotiate and which are more fixed.
Focus your efforts on things like incentives, rebates, and financing rates. The actual base price of the vehicle or the cost of individual options may be harder to move, but you can often reduce the overall cost by leveraging available discounts and comparing offers from multiple dealerships. Remember to research current market values and manufacturer incentives before you start negotiating.
What parts of a factory order car are typically negotiable?
The negotiable aspects of a factory order often include the overall vehicle price (though perhaps not individual option pricing), dealer add-ons, and the financing terms. Incentives offered by the manufacturer, like rebates or special financing rates, are always worth pursuing. Trade-in values are also a key area where you can negotiate to lower the final price.
Conversely, the factory invoice cost for specific options tends to be less flexible. However, you can still explore package deals or bundled options that might offer a discount. Furthermore, don’t hesitate to negotiate on the documentation fees or other administrative charges the dealer tacks on. Always be prepared to walk away if the terms aren’t favorable.
How does manufacturer incentives and rebates factor into negotiating a factory order?
Manufacturer incentives and rebates are crucial elements in negotiating a factory order. These are directly offered by the automaker, not the dealer, and can significantly reduce the final cost of the vehicle. Researching and understanding which incentives you qualify for, such as military, student, or loyalty discounts, is essential before entering negotiations.
Dealerships are required to honor valid manufacturer incentives. Be sure to confirm that all applicable rebates are applied to your order. You can find this information on the manufacturer’s website or by contacting their customer service. Don’t assume the dealership will automatically apply all available rebates; actively ask and confirm.
Should I negotiate the price before or after placing the factory order?
Ideally, you should negotiate the price before officially placing the factory order. This gives you the most leverage and ensures that you agree on the final price before committing to the purchase. Once the order is placed, the dealer might be less inclined to budge on the price, knowing you’ve already made a significant commitment.
Before finalizing the order, obtain a written agreement from the dealer that clearly outlines the final negotiated price, including all taxes, fees, and incentives. This document serves as a binding agreement and protects you from any unexpected price increases when the vehicle arrives. Don’t be afraid to get quotes from multiple dealerships to ensure you’re getting the best possible deal.
Are there any disadvantages to ordering a car directly from the factory?
While factory ordering offers customization, there are some potential drawbacks to consider. The most significant is the waiting time, which can range from several weeks to several months, depending on the manufacturer and the vehicle model. This delay can be inconvenient if you need a car urgently.
Another potential disadvantage is that incentives and rebates can change during the waiting period. The dealer typically honors the incentives available at the time of delivery, which might be less favorable than those available when you placed the order. Be sure to clarify with the dealer which incentives will be honored and if there’s any protection against losing those discounts.
What kind of deposit is typical for a factory order, and is it negotiable?
The deposit amount for a factory order can vary widely depending on the dealership and the vehicle. It typically ranges from a few hundred dollars to a few thousand, or even a percentage of the total vehicle price. While the specific amount might be negotiable, understand that dealerships require a deposit to protect themselves against order cancellations.
Before paying the deposit, ensure you understand the dealer’s cancellation policy and whether the deposit is refundable. Get all terms in writing. While you may have some room to negotiate the deposit amount itself, focusing on securing a fully refundable deposit provides the best protection for you in case of unforeseen circumstances.
What strategies can I use to get the best price on a factory order?
To get the best price on a factory order, start by doing thorough research. Compare pricing from multiple dealerships and understand current market values for the vehicle you want. Use online car buying services to get quotes and understand typical transaction prices in your area. Knowledge is power when negotiating.
Be prepared to walk away if the deal isn’t right. Dealerships are often more willing to negotiate if they know you’re serious about buying but not desperate. Leverage manufacturer incentives and rebates, and negotiate on all aspects of the deal, including trade-in value, financing rates, and dealer fees. Don’t be afraid to negotiate aggressively and politely.