We're considering replacing my wife's car and visited a Mazda dealership over the weekend. We found a 2006 Mazda 3 Sport Hatchback demo vehicle with 14,000 km. It was in excellent shape and had all the fixings (moon roof, manumatic transmission). The only reason we didn't buy it was because we weren't big enough suckers for the dealership.
Here's the offer we made for the car-- do you think it was fair?
UPDATE: We originally thought that Mazda marked up their vehicles by 12-15%. This information came directly from the Lemon Aid Guide to New Cars. I turns out that the true markup is only about half that-- 6-7%. I confirmed this three ways. First a dealer told me the exact "DEALER invoice" price which I then confirmed using CarQuotes.ca. Lastly, using my anonymous connections I was able to verify the dealer's price one more time. Since all three matched to the last dollar, I'm confident this is true.
I won't update the numbers below because the story is about the offer we made.. not the one we really should have made. This might explain the rejection of our offer as well.
In closing, I'll be posting a story shortly about using a fax/email bargaining technique that ultimately saved us $1000 off of our new car. We included the 2007 Mazda 3 in this process and most of the dealers we dealt with were fair and honest. The dealer we made this offer to was from the east side of the GTA.(End Update)
They were asking $24,595CDN but were willing to waive the freight charges, pre-delivery inspection fee, air-conditioning tax and tire tax that would have been added to a brand new car. This adds up to about $1800 and would have been on top of the asking price.
However, they didn't account for the fact that the car had been on the road for 11 months, had accumulated over 14,000km on the odometer and was nearly 1/3 into the warranty. So we did.
After reading about demo vehicles in Phil's Lemon-aid guide as well as on a few reputable new-car-sales-watchdog sites we concluded that the going rate for loss of warranty was about $100 per month the vehicle has been on the road. Therefore we subtracted $1100 from the asking price.
We also did some research to find out how the mileage* should affect the price. We couldn't find any single concrete source, so ended we up using two common figures in combination. The first was that demo vehicles should typically have about 7000km/year (unless the sales people used them for personal vehicles). The second was that the corporate reimbursement rates for travel usually include about $0.10/km for "wear and tear" on the car (the rest is gas, insurance, maintenance etc). Therefore we subtracted $0.10/km for every km over 7000 (personal use that shouldn't be our problem). This worked out to just about $700.
Lastly, since the dealership was insistent on selling it as a "new car," we were insistent on negotiating the price as if it was a new car. Our research suggested that new Mazdas are typically marked up by about 12-15%. We set out to keep a solid 10% of that markup.
Here is our final offer:
$24,595 The asking price $300 Misc fees we didn't want to argue about -$1,100 $100 for each month of warranty that had expired -$700 $0.10/km over 7000km ------------------------------------------------ $23095 -$2309 (10% off) ------------------------------------------------ $20786 Final offer (obviously we'd pay PST and GST on top of this)
We submitted this offer to the dealership on Sunday via email and phone and got a call yesterday. The basic gist of their response was "It's a bit low as is, but in general it's fair. However, we know we'll be able to sell it at just under the asking price so we don't need to sell it to you. We can wait." That's their decision and I understand the value of waiting. All in all the whole thing was enlightening and the only part that rubs me the wrong way is that some other person out there will pay more than they should simply because they'll be bigger suckers than us. I sure hope no one pays sticker price (for any car ever).
Anyway, that's my story. How was your weekend?
* Regarding "Mileage": It's strange that we still use this word in Canada.. but kilomerterage just seems so wrong.
Just as well. My old roommate used to work as a car salesman, and he told me that taking the demo cars was a pretty bad idea.
Comment by Peter — December 12, 2006 @ 5:40 pm
Just ask Terry about his demo Ford Focus - or Bob about his demo Honda Accord. Peter has the right idea - buy new, or really really used and let someone else eat the depreciation.
Comment by Walt — December 14, 2006 @ 8:35 pm
Yes. We're really happy we didn't end up doing this deal. It was an impulse after hours of test-driving (and eliminating) Hondas, Toyotas, VWs etc. It seemed like an opportunity to get a good car at a great price.
We're going to be buying a new 2007 Elantra we think. Mazda has screwed with us in past and who knows what would have happened this time.
Hyundai has been good to Jerry and that's good enough for me.
Comment by Cam Turner — December 15, 2006 @ 11:08 am
Cam-- the fact that you are now turned off by Mazda (for the mnost part) because of their previous attempts to screw you is enough reason for you to look elsewhere.
It's about time that dealerships (and others for that matter) realize the damage they do to their business (and the industry) when they don't do the right thing for their customers.
In your particular example, the Mazda dealer could have and should have sold you the car. They would have ‘earned' a good customer, possibly some great referrals, and they would have moved inventory which is key in the car business.
I say, they made a bad business decision which was influenced by emotion and nothing else. Too bad they don't think about the impact of their actions down the road.
Comment by Arshad Merali — January 25, 2007 @ 3:39 pm
Iw ouldn't take a demo car at all. They're like rentals in a way - people want to see what the car can do at it's fullest and they beat the heck out of them.
I would have paid a little more and gotten a new car - not a demo.
Good haggling though
Comment by Ray McNally — March 29, 2007 @ 11:57 am
Hi Ray,
I didn't end up taking the demo. They wouldn't give me the deal I tried to get and in fact I'm very happy with the car I did get-- a 2007 Elantra. That's the topic of another article though--
I need to get back into writing.
Comment by Cam Turner — March 30, 2007 @ 10:02 am
My brother and I, each purchased brand new 2007 Honda Civic Hybrids from Classic Honda of Brampton, Ontario last week. I think we were both cheated. We were both given cars that had been clearly driven by some one else before. Mine had 26 kms and dirty footprints under the floor mats in the rear and my brother's had 79 kms. I called Honda Canada but was told they have no control on what the dealerships do. Any Idea how we can follow this up. Is it legal for the dealership employees to use new cars and then palm them off to unsuspecting customers as brand new?
Comment by Joaquim — April 13, 2007 @ 8:29 am
Hi Joaquim,
I'm not a lawyer and have no idea what you can do legally, but I would consider this: 26 and 79 kms isn't that much. The car I ended up buying (Elantra GL Comfort Plus-- love it!) had 105km on it when I picked it up. The dealership needs to be able to move the cars around the lot, and Honda Canada would need to move them around the plant and on to/off of transportation trucks/boats/trains. Also, in this weather a little mud isn't hard to imagine either.
What I'd do is take the car back to the dealer and have them finish cleaning it the way they should have before you picked it up and ask them who/how the "extra" kms came to be recorded on YOUR car instead of someone else's. There is probably a completely legitimate reason for it.
The car I describe above had 15,000km on it and had been used as a "demo" for test drives.
I'd consider anything less than 200km to be new, so long as it was completely cleaned and had no signs of wear like paint chips or scratches in the dash.
Good luck
Comment by Cam Turner — April 13, 2007 @ 8:53 am