I kept the camera that had been hidden in my shirt pointed directly at the car salesman as I hit him with my opening offer. Meanwhile, a Good Morning America producer at my side recorded me with a camera hidden in her purse. Another producer and a cameraman hovered nearby, pretending to rock out to their iPods, which they were actually using to capture the whole scene on video.
This elaborate ploy, involving visits to two different dealerships in the Phoenix area, was not set up to catch dealers doing anything illegal. We just wanted to demonstrate simple negotiation tactics played out in a typical buying situation. While Edmunds and Good Morning America hope that the undercover assignment will educate car shoppers, it wasn't just an exercise for TV. I really did need to buy a certified used Honda Odyssey for the Edmunds photography department.
Face-to-face negotiation used to be the only way to buy a car before Internet car shopping provided a stress-free alternate route. But Good Morning America needed visuals to make good television. And since I was buying a used minivan, I needed to inspect it before I began haggling. Finally, many consumers have heard of Internet car shopping, but a fair number are still drawn to the less-than-optimal traditional dealership shopping experience.
Before I left on what felt like a secret mission, the Edmunds accounting department deposited $25,000 in my checking account. My goal was to get the Odyssey for below our True Market Value (TMV®) pre-tax price of $22,300, which was the average amount other car buyers paid in the Phoenix area.
Outfitting the Car-Buying Spy
The day before we set out, I went to the hotel room of Good Morning America producer Elisabeth Leamy, author of Save Big, to get my shirt rigged up with a tiny camera, battery and microphone. When I entered, the cameraman, Jim, had electronic gear spread out on the bed. It was like the lair of Q in a James Bond movie, with cameras in purses, BlackBerrys, eyeglasses, iPods and Bluetooth earpieces. The Good Morning America crew selected a shirt from several they had purchased, cut a slit where a button would have been and poked the camera lens through the opening.
"The only thing you have to remember is to point your toes at the salesman," Jim said. "That will put him in the frame. Oh, and remember, when you sit down, don't lean back."
"And when I tap my head, that's your signal to turn to me so I'll be on camera," Leamy said. "That's all you need to think about."
It seemed like a lot to remember in the heat of the moment, particularly since we were dealing with real money, a real van, the needs of the Edmunds photography department and the knowledge that the footage would eventually be seen by a national television audience.
But that, as they say, is showbiz. And so here we were at a Honda dealership, sitting at a sales desk, negotiating for a minivan.
Trouble at the First Dealership
Leamy and I posed as friends buying the car for my company. We had devised a negotiating strategy ahead of time and decided on the key points we wanted to demonstrate, such as trying to get the salesman to name the first price. The dark blue 2007 Honda Odyssey EX-L had 43,000 miles on it. The dealer's used-car window sticker had a big, fat asking price of $27,999. However, the salesman said the dealership's Internet price was $23,470. Despite repeated requests from me, he stuck to this as the best he could do.
"I'm willing to pay you $18,500 for the Odyssey," I said, aiming the camera at the salesman and studying his face. Outwardly, he had little response. But behind his eyes, I saw a flicker of disappointment. Actually, I named this low price so he would reject my offer and we could then demonstrate an underrated negotiating strategy — walking out.
The salesman stood up and promised to present our offer to his manager. As he prepared to depart, Leamy told me, "Chandler Phillips called and needs us to call him back right away." Chandler, the name of the author of "Confessions of a Car Salesman," was our code word. If Leamy told me that Chandler wanted us to call him right back, that meant we had to leave the dealership.
We hurried back to our car, parked out of sight around the corner and Jim, the cameraman, pulled out the tiny memory card in the recorder I was wearing. "We have a major problem," he said. "I ran into a guy who knows I'm a cameraman." Even worse, he said, the guy's brother worked in the dealership's service department. He might tell the sales staff who we really were. It was like that moment in a cop movie where a character blurts out, "I've been made!"
Nevertheless, we decided to go back into the negotiation. What followed was a frustrating, hour-long barrage of managers grinding us. At one point, a manager wearing a pair of shades tucked into the back of his shirt collar said, "What if I could make $21,000 work? Would you be interested?" We said yes. He disappeared and we felt we were making progress. But then another manager appeared and disavowed any knowledge of this $21,000 counteroffer. Furthermore, they were going to charge us $870 for the already certified vehicle — a clear duplication of charges.
Finally, we left the dealership and regrouped over lunch. The producers reviewed the footage while I reviewed my negotiating strategy. The morning had shown me that an opening offer that is too low doesn't put you on the path to a firm purchase price. And I had a deadline: I needed to end this day with the purchase of an Odyssey. So we loaded up our cameras and headed to a second dealership just outside the city, where a dark cherry red 2007 Odyssey EX-L was for sale for the "Internet" price of $23,988.
The Second Negotiation Starts With Jokes
On the second dealer's lot, it was over 105 degrees, and the sun beat down so mercilessly that it was impossible to stand in the open for more than a few minutes. But when I located the Odyssey, I was pleased to see that it was in better shape than the one we had seen that morning.
"Salesman's coming," Leamy said under her breath
A Tim Allen look-alike appeared, carrying cold bottles of water for all of us. He handed them out as he said, "Hi, I'm Rich. Actually, I'm not rich — that's just my name." I laughed, but he must have used that joke a million times.
After a short test-drive, during which the van checked out fine, we sat in air-conditioned comfort across the table from Rich, ready to begin Round Two of negotiations. I pointed my shirt camera directly at him. "We are willing to offer you $20,500 for the van," I said, and forced myself to remain silent and still once I'd put the number on the table. He immediately stood up and promised to return quickly with an answer.
Meanwhile, "Chandler" had called again, meaning we needed to leave the dealership. We hurried back to the car, checked the footage and found everything working. We returned to the sales office and waited for an answer. Rich returned with his manager, a stern, barrel-chested man who looked like actor Bob Hoskins. After the usual preamble, during which he justified his price, the manager said that the best he could do was $22,900.
Leamy keyed in the figure on a pocket calculator and showed me that this was a discount of $1,088 from the dealer's Internet price, That was actually a signal that we were going to hang on to our number of $20,500. Leamy then used another tactic, telling me that she really liked the Honda we had seen in a different color elsewhere. If we didn't get our price here, she said, we should head back to the other dealership. While not-rich Rich and his manager didn't acknowledge this opening gambit, it seemed to put pressure on them to speed up their counteroffers.
I improved my offer by $500 to $21,000 and eventually moved up to $21,500. This was still well below the TMV price of $22,300, but it left me with very little room to negotiate unless I did it in much smaller increments.
Then the unexpected happened. The manager left to talk to the "big, big boss." A tall, clean-cut young man arrived and sat down in front of us. He began another lengthy justification of his price and then suddenly said, "So, we accept your offer of $21,500." After I got over my surprise, I asked to review all the fees. When I decided they looked good, I said we had a deal.
Our trip through the finance and insurance office was smooth. The only tense moment was when I handed over my debit card and watched the F&I manager key in $23,934.48 (the total cost with taxes and fees added). We all stared at the computer, which seemed to be considering the request. It then spit out a small receipt, just like the kind you'd get if you'd just bought a burger at McDonald's.
As I drove away in the freshly detailed Honda Odyssey, I thought about how thankful I was that Edmunds' car-buying tools and the Internet have given us an easier way to buy cars. Still, doing it old school gave me a real sense of accomplishment and something extra — the peace of mind that comes with knowing I had fought for the best price and gotten the most car for the money.