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August 31, 2016

Why We Bought a Brand New Car

Editor's Note: Sorry about the long delay in getting a new post up. We've been really busy with a bunch of exciting things you will read about soon, including the topic of this post.

Alternate Title: Why People Hate Car Dealers
I work in the automotive industry, so any time we are in the market for a new (to us) vehicle, I get excited. I tend to over-analyze every purchase, but with a car, I have much more expertise and can therefore extra-over-analyze it. What should have been a fairly simple purchase ended up being an extremely stressful experience, and we ended up with a completely different car than we expected.

Why We Needed a Different Car
There were two primary reasons we needed to get a different car. The first is that our beloved diesel VW Golf (with a manual transmission) is at the very heart of Volkswagen’s emissions scandal and they have offered us an estimated $22,000 to buy it back so it can be crushed. Considering the original MSRP was around $24,000 five years ago, that is a pretty generous offer.

The second reason, which sealed the Golf’s fate, is we want/need a bigger car. The Golf is great, but it isn’t quite big enough to comfortably accommodate a baby seat and two six-foot-plus parents. When I’m driving, the baby seat can’t fit behind me, so it goes behind the passenger seat, which must be pushed so far up Chrissy can’t comfortably sit there, so she has to sit behind me. It’s not ideal.
With these two issues coming to a head at the same time, the obvious solution was to find another car that will fit our family and hopefully not pollute excessively.
This would be considered clean for a diesel VW.
What to Buy?
Like any good cheapskate financial blogger, I started looking at used cars. My number one concern was reliability, so after briefly considering several brands, focused on Toyotas. While they may be boring, I have a very high level of confidence in their reliability. I settled on a sedan because we want good fuel economy and we plan to buy a large truck soon, which can handle any large loads we may need to carry. To get the space we need we had to pick between a Camry or an Avalon. After checking prices and a quick trip to a dealer to make sure the car seat fit, the Camry was the clear winner, so I started shopping.

Ballooning Budget
I started out with a $15,000 budget in my head. I figured that would allow us to get a fairly new vehicle with relatively low mileage and still pocket some of VW’s hush money. I also determined I would like a “Certified Used Car” to give me a warranty and a little more peace of mind. Considering this will basically be Chrissy’s car, I don’t want any nasty surprises when she’s driving our child somewhere without me.

I also had to take into account the one feature Chrissy requested the vehicle be equipped with: a “proximity key.” That is an electronic key that you can leave in your purse/pocket and the doors will magically unlock when you walk up to the car. It is incredibly convenient, especially when your arms are full of baby and baby accessories. Unfortunately, proximity keys are a relatively new feature and tend to be on more expensive cars.

Slowly but surely, the budget inched upward until I put a firm cap at $18,000. I went so far as to test drive and enter negotiations on a 2013 Camry, but we couldn’t reach an agreement. I was also thoroughly disappointed by the interior of the car. I know Toyotas are a little behind the curve on styling, but this interior, in a top-of-the-line Camry, felt cheap and looked like it came from 1999. Considering we plan to keep this car for a long time, I decided I probably didn’t want to spend that time in the depressing Camry.

With my confidence in the Camry shot, it was back to the drawing board.
2013 Camry Interior - It looks much worse in person. Photo Credit: Motor Trend
New Car, Used Price
After more or less dismissing the Camry, I was back at square one. I put the car search on hold for a couple days to regroup when we happened to have a very relevant discussion at my office, completely unrelated to my car search. The discussion was about the difference between MSRP and actual purchase price on new cars, and how many people pay well below MSRP.

I’ve always assumed you basically pay MSRP for a car, minus a bit if you negotiate. This belief was reinforced by the vehicle purchases I’ve been involved with in the past. What I failed to take into account is that I’ve only been involved with purchases of very sought-after vehicles, where the dealers have lots of pricing power.

This time, I’m shopping the most boring, commodity segment possible--mid-sized sedans. This segment is also very cool right now due to the crossover boom. That means bargains abound for smart shoppers, and I’m a smart shopper.

My first and basically only stop to explore new car pricing was TrueCar. I have no affiliation with TrueCar and won’t profit in any way by you using them, but they provide a fantastic service. You tell them what kind of car you’re looking for and they provide a pre-negotiated price at a local dealer. It’s great.

The one downside of TrueCar is that as soon as you sign up and express interest in a particular vehicle, you will be bombarded by dealerships desperate to sell you a car. Be prepared to ignore some calls and make sure you don’t give them your primary email address.

I checked prices on all the current mid-sized sedans that I could actually stand to drive (Chevy Malibu, Ford Fusion, Toyota Camry, Kia Optima, and Hyundai Sonata), and most offered a couple thousand dollars off MSRP, except the Sonata. On a base, SE trim Sonata, a local dealer was offering about $5,600 off MSRP. That meant a brand new Sonata, with a 10-year, 100,000 mile warranty would cost around $17,000. It didn’t have the proximity key, but that is an amazing price, and if you recall, it happens to be under my inflated budget. This caused me to immediately shift gears and focus on getting a brand new car for roughly the same price as the used Toyotas I had been looking at.

I will take a minute to point out why the discount was so large on the Sonata, which could be helpful if you’re hunting for a deal. The biggest factor is the 2017 model is out and this deal is for a 2016, which everyone is eager to get rid of. The other factor is that Hyundai has been pretty disappointed by the sales of the latest Sonata, so they are offering deals in order to move some metal.

Trim Level Trepidation
As soon as I saw the deal on the Sonata I printed the discount certificate, which guaranteed $5,600 off MSRP on any 2016 Sonata SE on the lot, and made an appointment to stop by the dealership on my way home. Their website indicated they had four qualifying cars, so I would have my pick.

When I arrived at the dealer, Win Hyundai in Carson, California, I asked for the associate I had spoken to on the phone. He was an older gentleman and was very accommodating, but he was mostly incompetent. It took much longer than it should have for him to determine all of the SE trimmed vehicles I was interested in had been sold. He indicated he could make a similar deal on the next trim up, so we spent a bunch more time selecting the next best alternative. That ended up being a Sport trimmed Sonata with the “Value Edition Package.” As far as I’m concerned, the only advantage to this vehicle over the base car is the addition of the beloved proximity key and a leather-wrapped steering wheel. It also included a number of other “features” like bigger wheels, leather trimmed seats, and a more aggressive, and generally more attractive, front fascia, but I’m not inclined to pay extra for that stuff. It even comes with a sunroof, which I specifically don’t want. All that makes the Sport cost about $2,500 more than an SE.
Sonata SE
Sonata Sport
When we sat down and went over the numbers, true to their word, they offered the same discount on the more expensive car, but the price was still $2,500 higher than the $17,000 we planned on spending. We decided we didn’t want to spend that much, and went home. I figured if one dealer was willing to offer that price, others would be too.

After stewing on the situation for a couple days, I came to the conclusion that the Sport was probably the car to get since we plan to keep the car for a long time and the proximity key is something we would enjoy every single time we used the car. Chrissy agreed, so she visited the dealership while I was at work to try to buy the car we had previously refused. On the bright side, I discovered the same dealership was offering $5,800 off the Sport model through TrueCar, so we would save a little more than if we bought an SE.

Unfortunately, the car we wanted had sold and they only had unacceptable colors left. D’oh. It was time to put my theory about other dealers to the test.

Dishonest Dealers
This is where the story gets really frustrating.
After losing the car we wanted twice, I finally realized the 2016 Sonatas were disappearing fast, likely due to the amazing discounts, and if I wanted one, I had to act fast.

After a long day at work, I went online to look for appropriate cars near home. I found several at Hooman Hyundai so I called them and asked if they could match the price I was quoted by Win. They said they could if I qualified for the right discounts. I was skeptical, but it wasn’t too far away, so I drove over. After a prolonged negotiation, in which I walked out and was dragged back in, they refused to match the price, but they did get pretty close.

That weekend, we drove to central California to visit my parents and I decided to see if any Hyundai dealers up there would play ball. After several phone calls and emails from each, Peninsula Hyundai and Gilroy Hyundai said they couldn’t match the price from Win. Finally, little Hanford Hyundai assured me they could match the discount. They only had SEs and it was two hours away, but I was ready to be done with this car buying experience, and I wasn’t going to complain about getting the cheaper car. Chrissy warned me I was probably wasting my time by driving over there, but I trusted the salesman and took off with my dad.

When we arrived, the salesman I had spoken with had gone home and we were quickly informed there was no way we could get the price we were asking for, despite what I was told on the phone. They could give us $3,000 off. I informed them that was not even close to the discount I was promised and I didn’t appreciate them lying to me and wasting my time, so we left to make the two hour drive back to my parents’ house.

I decided I would try to get someone to match the discount one more time, so I contacted Keyes Hyundai in Van Nuys. They promised they could match the price. I explained how the last dealership said that too and they still insisted they could match the price, so I said I would stop by on my way home to southern California.

We arrived just before closing and once again, the salesman I spoke to wasn’t there. Strike one. The car I was there for was also gone. Strike two. But they had a similar car. The only catch is that it was purchased and returned, so it had 1,000 miles on it. Strike two point five. I said that would be fine if there was nothing wrong with it and the price was right. They eventually offered to give me the discount I wanted, but I would have to pay for the dealer installed accessories that were on the car: $700 for an alarm, $700 for door edge guards, $700 for “Theft Code,” and $500 for nitrogen in the tires. Every one of those items is ridiculously unnecessary and expensive. Strike three. I left, but not before lecturing the manager on their lack of integrity.

Win for the Win
By this point we had our hearts set on a Sonata, but I was completely frustrated and tired of trying to buy a car. It was pretty clear the only dealer who would give us the price we wanted was the one who originally offered it, so I decided to contact Win Hyundai in Carson one more time to see if they had any 2016 Sonatas left. I was prepared to take anything, even if it wasn’t one of our preferred colors.

When I called I spoke to a helpful fellow who asked what I was looking for. After I told him he said he would go see what they had and would call me back. Shockingly, he called me back a short time later and informed me they didn’t have the car we wanted, but he found one at another dealership and would trade for it if we wanted it. I said we definitely did, and the next day they had it.

When I went in to seal the deal I was guarded because I had been let down before, but the deal went shockingly smoothly. The only hiccup was when they tried to charge me $700 for the door edge guards the previous dealer installed. I said no. They said they would give them to me “at cost,” which was $400 (and is still absurd). I said no. They relented and dropped the charge completely.

After all that, we finally got the car we wanted for the price we wanted. Ironically, we ended up with the exact same trim and color we turned down the first day. However, we did pay a couple hundred dollars less than we would have that day, but it definitely wasn’t worth the hassle.
Drive it Home
If you’ve made it this far, congratulations; I assure you living it was much worse than reading about it. I’m happy to report we are finally the proud owners of a 2016 Hyundai Sonata Sport with the Value Edition Package in Nouveau Blue. The retail price was $25,500. We paid about $19,500 plus tax and fees, bringing the total cost to $22,045.85. If you recall, that is pretty much exactly how much we expect to get back from VW for the Golf. We won’t get to pocket any money, but we did end up with a much nicer car than expected and one hell of a long blog post, so at the end of the day I’m pretty pumped.

If you have any great vehicle purchase stories, share them in the comments.



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4 comments:

  1. Interesting decision making process. We got a new car not too long ago, simply because we needed a bigger car due to an extra car seat in the back (new baby). We ended up buying a new car as it makes more sense to us.

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  2. Great job getting the car you want. That was a ton of work. The last time we purchased a new vehicle, it was pretty easy. The model we got was having a refresh so most people didn't want the old model. I emailed all the internet manager and make them match the lowest price. It was a great buying experience. Didn't have to go in and talk to sales people, manager, and all that BS. The new car we got didn't cost much more than used car. Buying at the end of model life is awesome. :)

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  3. Good price.
    I have proximity key which makes it nice it's a little 4 cylinder but has the turbo wich to me was a no brainer

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  4. I wanted to thank you for this great read. I definitely enjoying every little bit of it I have you bookmarked to check out new stuff you post. Cars Tips & Tricks

    ReplyDelete