Do I hold my cards close with offering cash down? How much room is typically there with negotiating down the price? 5%, 10%, 2%?
OK - there is a flipside to my previous post.
In my opinion (YMMV), in principle, a car dealership is a business not unlike any other and entitled to make a fair profit. As a buyer, my attitude has always been, make a little on me - that's fine - but get fat on the other customer - the lazy mope that doesn't come to the deal table heavy with prep and a willingness to mix it up a bit. Again, that is my opinion.
One thing I forgot to mention in the previous post: When you're negotiating, you need to have at least one and ideally as many as 3 reasons you think your number is fair. A good sales rep will do this with his figures, too - though his justifications may or may not be BS. And a good sales rep will ask you why you think an offer is fair if you don't offer justification. If you don't have an answer, you'll look weak and unprepared.
So with that in mind, where you
start your negotiations will tell the tale. The sales rep will want to start and close you on the price listed on the dealer's bump sticker. (The bump sticker is the sticker the dealer applies next to the OEM's MSRP sticker that shows the "undercoating" or "pinstripe fee", etc. And by the way, the OEM's MSRP sticker has lots of federal regs that go with it - if memory serves. The flipside is, the dealer can do whatever he wants with the bump sticker.) So the sales rep will sit you down and list the selling price of the vehicle with everything and will start the negotiation there and "walk you down", grinding on you each step of the way. And if he's good, he'll have justification for each figure. Do not allow this.
When I sold cars, I'd write up the buyer's order at full MSRP plus the bump sticker, then I'd flip the doc around so the customer is reading it while I walk him down the entire doc, then I'd assumptively point out where he needs to sign, then put the pen down and wait for him to sign. Rarely, they'd sign right there, but more typically, this is where grinding starts. He might say something like, "Wait, that's more than I want to spend" or, "I'm not paying MSRP" or something similar. Good sales reps begin to overcome objections by asking questions. So, I'd feign surprise at his comment and ask 3 questions that map back to the info I gleaned while profiling him earlier in the process. Then I'd have a reply queued up akin pointing out that the retail car business is among the most heavily regulated in our free economy and our federal government has determined that this is a fair price for this car. Yada yada. Then ask him to sign again. You get the idea, right? I started the negotiation where I wanted and I have justification for each figure I put out there.
Ideally, you want to start somewhere way south of the MSRP. Don't even pay attention to the bump sticker. Most of that stuff is crap. If there's something you really want that's on the bump sticker, make mental note of it, then after you have a deal, tell them to throw it in (I am referring to small items like floor mats, etc. They will not throw in 8 10,000 watt stereo speakers...). The wholesale price is a good starting point - or was back in the day. Dealers still make good money if they roll a car at wholesale (sales reps - not so much, though they will be spiffed for rolling the unit and likely make a "mini-deal" commission). There are other revenue streams like holdback and pack fees and probably lots more. All dealerships are allocated cars based on the numbers they sell - sell more this year, get even more next year. And there are all sorts of perks and bonuses that have nothing to do with what they sell the cars for - just that they sell the cars. So, even if you assume they're not making money on you selling at wholesale (and believe me, they are) - there are lots of other reasons they'll want to take a short deal and roll the car to you.
So... someone above reiterated the value of research and went a step further by suggesting lurking on make and even better, model-specific forums. This way, you can learn terminology specific to that brand/model, learn more about the OEM and the dealer's revenue streams and what others have purchased the car you want for. This is an excellent idea and a point I had planned to make. There is sooooo much info out there today for a savvy buyer.
Back to your deal. Based on your research, you may want to start your deal at wholesale less $500 and here's why..... (based on your research). Write down your offer on a piece of paper, sign it and give the guy the check we talked about the other day. Then, shut up. Unless you bite at MSRP plus bump, the sales rep is unlikely to accept your first offer. But you've started the conversation on terms favorable to you and you've shown him you're serious by signing your name (believe me - that's a big deal - even on an "offer" to buy on scratch paper) and giving him a check. Then, walk up from your offer - not down from his. Good reps will have a justification for each counteroffer they make (And believe me, when he goes to "touch the desk" - ie, talk to his manager, he's getting his lips loaded in addition to getting a new counteroffer). And remember I said be in charge yada yada but don't be an a-hole? See why? You need that guy's defenses down, you want him sort of pulling for you while thinking you're a serious buyer and worth spending time on - but one that's well-prepared and intelligent. He'll fairly quickly start thinking of you in terms of just getting the unit out the door - which helps him in other ways - rather than tearing your head off and making lots of money on you.
So again, do your research. Determine what you want and what you're comfortable paying. Be prepared, direct, determined and decent. Don't get emotional (either wanting the car too much or in how you think of the rep). Remember: there are lots of other places you can buy your car and at the end of the day, it is just a car!! Make your best deal that makes you happy and move on to bigger and more important things!