Why Canada’s used-car world is becoming a buyer’s market

TORONTO — The balance of power in the used car market is shifting towards shoppers as improved data and online offerings create more opportunities to push for the best price.

A fast-evolving online marketplace is providing more intelligence on the fair value of cars, said Cliff Banks, a Detroit-based auto retail expert.

“I don’t know that it can be any more transparent…they all provide intelligence on the pricing and the deal of the vehicle, whether it’s a good deal, a fair deal.”

Kijiji Canada recently announced it will add a standalone auto sales site that will roll out later this year to keep up with shifting expectations. The site will add reviews of dealers as well as market pricing information from Carproof.

“The key feature for us, and one of the biggest, the biggest win for us is what’s called price transparency or price analysis,” said Matt McKenzie, general manager at Kijiji Canada.

The online classified company, owned by eBay, already boasts of being the largest player in the Canadian market with about 500,000 vehicle listings. Autotrader, owned by Etobicoke-based Trader Corp., lists about 444,000 vehicles on its site while there are many other offerings on the market as well.

Listing companies are boosting their online presence as the used vehicle market is set for significant growth, said Dennis DesRosiers, president of DesRosiers Automotive Consultants.

“There’s tremendous opportunity, and that brings in all the different retail players and their approach of, how do I get a piece of that?”

While new vehicle sales are expected to be largely flat at about two million this year, the used vehicle market is set to add half a million more in sales in the next three to five years, on top of the three million that changed hands last year, said DesRosiers.

The rise in the used vehicle market comes as improved quality in the past decade means cars and trucks are lasting much longer, allowing for a potential lifespan of four to six owners from the two or three expected not long ago.

“It takes 23 years to remove the vehicles from the road now, a decade ago it only took about 12, so it’s essentially doubled,” said DesRosiers.

Used vehicles also offer margins that are two to three times higher than for new cars, adding to their appeal, he said.

The quality and information improvements have significantly changed the overall used retail market, said DesRosiers.

“It’s not that far long ago, call it 15 years ago or maybe 10 years ago, where the used car market was largely a culture of deceit…even if the online capacity was there, there was just so much riffraff in the used car market that it was very dangerous. A lot of that has changed.”

The improved access to data means used-car retailers have to be more transparent and competitive about their pricing, said Jamie Tekela, director of pre-owned operations at Pfaff Automotive Partners.

“You need to really justify what you’re asking, why you’re asking it, and you can’t go asking $500 more for the same Honda Civic with the same mileage. It just it doesn’t work any more.”

“It’s night and day, to be perfectly honest. It’s gotten a lot more customer friendly,” he said.

The improved information on crash reports, comparable sales, and other metrics hasn’t done away with potential negotiations but does give more justification, said Jamie.

“There’s always going to be negotiations when trying to buy and sell vehicles, but with so much information available to each and every one of us, it’s a lot easier to explain our rhyme and reason why we’re asking what for a car.”

How to get the best possible deal when buying a new car

Buying a New Car? Be a smarter shopper.

Most consumers making any big purchase will undoubtedly shop around for the best prices. This is definitely the case when it comes to the second most expensive purchase most consumers will make aside from their home — a new car.

The difficulty is that it can be an intimidating and time consuming process. The old fashion way of buying a new car for most people involves spending their evenings and weekends driving between different dealerships and negotiating with sales people and sales managers.

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In this Feb. 19, 2012 file photo, a line of 2012 Chevrolet Cruze sedans sit at a dealership in the south Denver suburb of Englewood, Colo. (AP / David Zulubowski)

The reality is that very rarely does a consumer pay full manufacturer suggested retail price for most vehicles, and often two people can purchase the exact same car but at vastly different prices that could amount to hundreds or even thousands in lost savings, depending on how well they negotiate. And so it is worth it to do your research to make sure you’re being smart about your money and getting a good deal.

Luckily, there are some great online tools that can help make the whole process a bit easier — saving you both time and money. Here are three common mistakes consumers make when negotiating a new car deal:

1. Negotiate the total price, not the monthly payment

Most people will finance or llease their vehicle and are focused on whether their monthly payment is affordable. When it comes to negotiating though, you should negotiate based on the total vehicle price including all fees and taxes, not the monthly payment. It is easy to forget that a $10 or $20 change to a monthly payment may not sound huge, but it can quickly add up to hundreds or thousands of dollars over the life of the vehicle.

It can also be difficult to compare monthly payments between different dealerships as you may be looking at different maturities or down payments. Negotiate based on the total vehicle price, and remember that all dealerships will be able to provide you with the same advertised financing or lease rates from the manufacturer, so the dealership with the best total vehicle price will still be the best deal whether you lease or finance.

2. Check for manufacturer incentives

When negotiating a discount, make sure any available manufacturer incentives are applied before you start negotiating. You’ve seen the advertisements where a vehicle manufacturer offers a big cash incentive that can be worth thousands off the vehicle price. For example, if there is a $4,000 incentive from the manufacturer and a dealer offers you only $4,000 off the manufacturer suggested retail price, well then the dealer is not really offering any discount at all. Keep in mind that the $4,000 incentive comes from the manufacturer and everyone will get it. So your negotiation with the dealer should start after subtracting all applicable incentives.

3. What is a good deal?

The most common question consumers ask when buying a new car is
“What is a good deal?” Unfortunately, the answer is that it can be different for each car. One of the most effective ways to negotiate is to find out the dealer invoice cost, which is the wholesale cost of the vehicle, essentially what the dealer paid to purchase it from the manufacturer before adding profit and selling to the consumer. The difference between the full manufacturer suggested retail price and the dealer invoice cost is essentially your negotiating room. Keep in mind that dealers are businesses and they do need profit to keep the lights on and provide good service, but getting the dealer invoice cost gives you a better understanding of the negotiating room.

You can get dealer invoice cost reports for free from Unhaggle.com if you’re preparing to negotiate on your own. Unhaggle.com also offers a tool called Quote Your Own Price that allows you to make offers to local dealers for the price you want to pay from the comfort of your computer. This lets you skip any awkward in-person negotiations. Unhaggle.com’s tools will also provide you with an estimate of the average price of what other consumers have paid for the same vehicle and a recommend target price for your negotiations based on data gathered from a national network of new car dealers.

In any case, it’s okay to buy nice things once in a while and a new car is definitely one of those exciting things. Just remember to be smart with your money and follow these tips to ensure you’re getting the best deal.

Car Shopping: 3 Ways to Offset Bad Credit

When you try to get a loan for a car from the dealership, one of the first things we look at is your credit score. If your score is low, however, there is still hope. There are ways to get approved for the car loan you need even if you have bad credit.

 

Qualified Co-Signer

 

A co-signer with better credit can be your saving grace. Having someone co-sign the loan can help you get the car you want while reassuring us that the loan will be paid. The co-signer agrees that, in the event that you do not make payments, he or she will take responsibility for them. You get approved, and we get assurance that the loan will be paid.

 

Trade-In

 

Another way to be approved for bad credit car loans is to trade in your old vehicle for the one you want to purchase. The value of the trade-in can lower the total loan amount, making lending to you less of a risk, even if you have bad credit. The car you no longer need can help you get the next car.

 

Large Down Payment

 

As lenders, we tend to consider bad credit a big lending risk. If, however, you can demonstrate that your credit is not indicative of poor cash flow, it is not so much of a problem. One way to do that is to offer a large down payment on the car. If you are able to put a significant portion of the car’s value down, this increases your chance of being approved for a loan. It lowers the amount you will need to borrow and proves that producing money is not an insurmountable challenge to you.

 

Even if you have bad credit, it is still possible to be approved for a car loan. Credit score is just one factor used in determining approval.

6 Questions to Ask Used Car Dealers

The purchase of a used car is major monetary investment. There are risks involved, such as buying a vehicle with hidden flaws and mechanical issues. However, a potential disaster is avoidable when you ask dealers the right questions. With a little due diligence on your part, you’ll walk away with the right car for the best deal.

Is This a Certified Pre-Owned Vehicle?

Certified used cars give you an added peace of mind. These vehicles undergo extensive inspections. Additionally, these autos are covered by a manufacturer’s warranty.

Do You Accept Trade-Ins?

Trading in your current vehicle has two major benefits. One, you avoid the hassle of selling it yourself. Second, your car’s value is applied toward the used automobile, which lowers your payment.

Is There a Discount for a Cash Purchase?

Buying your vehicle with money is a win-win situation. With a cash only deal you can buy the auto below the sticker price. In turn, the dealer gets a quick sale and money on the spot.

Where Was the Car Purchased?

Dealerships acquire used cars from a variety sources. The common places include other dealers, rental car companies, customer trade-ins and auctions. Knowing where an automobile comes from gives you a complete picture of the vehicle’s maintenance and ownership history.

Can My Mechanic Perform an Inspection?

Trustworthy dealers have no problem allowing your mechanic to look over the auto. Your repairman can spot existing problems as well as potential hazards.

Have You Performed Maintenance Checks?

Used cars often sit on a dealer’s lot for weeks or months. In many cases, repairs and maintenance checks are conducted during that time. If there is any recent work done, it helps you cut the cost on future repairs.

Reputable dealers look forward to answering your questions. The more you know about a used auto, the better. Asking questions helps ensure your dream car doesn’t turn into a nightmare. Here at Walker Auto Sales we welcome any and all questions. Please drop by and visit us soon.