What does a new car really cost? A strange question you may well ask but is there really any point in having a recommended list price when it bears little or no resemblance to what the actual invoice price ends up being? Having recently visited several car dealers as part of my day job, I have been fascinated by the fact they all seem to be very process and customer driven, and want to build value in the service they offer and the range of cars they have for sale but the guys I spoke with could not remember the last time they sold a customer a car ‘full up’ as they say in the trade i.e. the list price with no discount given.

Even though lead times for certain prestige models had grown considerably and therefore there were no cars on the ground some sales people were prepared to offer a discount when the incentive for the customer was just getting his hands on his new car.

The point is why bother training and coaching sales people if they are just going to distress the products they are selling to get a sale?

New car prices

Is the retail price of a new car just a yardstick, a notional figure on which to start negotiations? Maybe it’s like a westerner doing buisness in China when they find out the signed contract is just the start of negotiations. But let’s remember, usually you can’t negotiate on the price of an expensive electrical item even if you do buy the overpriced extended warranty.

In my long experience I recall that if I made a connection with the customer, took them through a careful qualifying process and made sure I delivered the promises I made then I would often get the sale simply by being better than the competition and whilst of course I by no means sold every car full up I made sure that the deal worked for my company and myself as well as the customer.

However in this day and age it seems that price is the focal point, before any value has been built in. This, in and of itself, may explain why so many customers end up with cars that they don’t necessarily want because they have been so hung up on the best price to the detriment of all other aspects of the transaction.

We also need to consider, of course, that with the vast array of extras being offered alongside every car, sales execs can still make the deal work by attaching some finance and insurance products to the car so that there may be a bigger discount on the metal as long as the customer is happy to take the add-ons.

New car prices

It is certainly an interesting transformation the car trade is going through but I for one would be quite worried if I got a massive discount off a new car without really trying too hard because I would be slightly concerned that firstly it simply wasn’t worth what the manufacturer thought it was and secondly what the car may be worth in three years time.