On a cross-country plane trip, a gentleman from a small town inquired about car buying. After explaining how he should be using the Internet to get price information, we asked him how he bought cars in the past.
"When I need a new car I call my guy at the Ford dealership," he said. "I pay what he tells me to pay."
Negotiating a deal on a car depends on having the ability to take your business elsewhere. In rural areas, however, there is often only one dealership for miles around.
In the modern era of car buying, those with one dealership in the county have just as much bargaining power as those with 10 dealerships within a square mile. In fact, rural buyers can often find themselves at a significant advantage when buying because of how the dealership networks are set up.
Edmunds.com sent out consumer advice editor Mike Hudson to the rural West and Midwest to talk with dealers about how their businesses differed from those in the major cities of America. Here's what he learned.
Bargaining With People You Know
Our typical advice for buying involves budgeting, test-driving and finally doing research on the invoice price and True Market Value (TMV)® of the vehicle. You can use this information as you bargain with multiple dealerships over the phone and finally in the showroom.
For the rural buyer, these steps are basically the same. The biggest challenge will be finding enough cars similar to the one you want to buy. If you only have one dealership in town from each manufacturer, then you'll have a more difficult time finding the perfect car. And in many parts of the country, there just isn't access to any import dealerships, which decreases your options as well as your ability to drive a hard bargain.
Perhaps most difficult for rural consumers is the actual bargaining process, which can pit you against a person you know. Owners of small-town dealerships often stand as pillars of the community, sponsoring football field scoreboards or charity golf outings. The dealership has stood for decades, selling cars to generations of people. And now you're going to go in there and tell the salesman that you've got his invoice prices and want a better deal?
You can expect a small-town dealer to plead poverty with you. They'll say how the big-city guys are running them out of business. While there are challenges to being a small-town dealer these days, you should understand that these dealerships can make huge profits even today. And just because they are small doesn't mean they get to charge you hundreds or thousands more than another dealer would.
The key is to use the Internet to open other markets to you. Search for other dealerships that have a car you want. They might be 50 or 100 miles away, but having another option can save you thousands of dollars. Make sure the dealership knows you're willing to go above and beyond to get a fair deal.
It's a difficult prospect to be sure. But small-town dealers who talked with us say both sides can win. If you can offer repeat business to a dealer, they will work with you.
"Repeat business is the lifeblood of our store," said one Ford dealer in Utah. "If we know we can count on someone to do their repair work and sell a few more cars to them down the line, it makes sense to make them happy with the sale price."
Because small dealerships need to make their money off a smaller number of cars, you need to be extra careful of hidden charges and dealer add-ons, like new rims or paint protection coatings. A Dodge dealership we visited a few hours north of Las Vegas charged $400 to $800 for various dealer-installed options on nearly every car on the lot. While these items have some value, they aren't nearly as pricey as the lot was charging.
By opening your options up beyond the rural dealerships, you can bargain your way around outrageous charges.
There are a number of particular situations where small-town dealerships can offer better deals than the city. This occurs when there is a significant imbalance between supply and demand. If a large-city dealership orders a few models that won't sell, they can simply push them over to a competitor with dealer trades. But in a small town, the dealer is going to be stuck with the car until it sells or face steep transportation charges when he or she ships it to a different dealer.
One GM dealership in a rural Rocky Mountain region, for example, had ordered a handful of Pontiac GTO sports coupes when the model was first released in 2004. Some 10 months later, only one had sold. The general manager quietly reported that he needed to severely discount his stock to get them off his lot because he needed the space for more popular products.
Another Ford dealer in a small Denver suburb was offering great deals on cars damaged by a hailstorm. Because the dealership wasn't large enough to have any indoor storage or warehousing, they simply had to discount their damaged vehicles.
Customer service can often be a selling point for the rural dealership as well. One of our editors once bought a car from a very small Pennsylvania dealership over the phone with a verbal contract. And he was pleased to find the dealer kept his word on price when the car was picked up a week later.
Rural dealers say this type of old-fashioned attention is drawing customers from the city and out to the country. With this in mind, city dwellers should keep rural dealerships in mind to use as a bargaining chip against their local lots.
"We get a large number of our customers from the city," said one Ford salesman who worked at a dealership outside Grand Rapids, Mich. "People just feel more comfortable. And we'll work to get and keep customers like that."
Small-Town People, Big-City Attitude
In the end, while the rural buyer may think he or she doesn't have as many options, it's important to not be held hostage by your local dealer. You have options out there and the local dealer will make an effort to keep you as a customer.
By following Edmunds.com's buying advice, rural buyers can get a great deal and support their local dealer. The key is letting the local guys know you'd prefer to buy from them, but that you're willing to take your business elsewhere. If they are a good dealership, they'll make sure you leave a happy customer. And you'll have a convenient place to service your car and buy many more in the future.
To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.