New Car Buying Tips for 2018

While you weren’t looking a new model year has begun, and the new 2018 models offer more tech, more features and more choices than ever before.  Ironically, the wide variety of choices might make it harder than ever to choose the right vehicle for your needs.  We at Driving Today will offer you straightforward, unbiased advice on what to buy and, very importantly, how to buy it. Making a great car deal isn’t as difficult as conjugating foreign verbs, but it does require some steps that you don’t typically take when making a purchase.

As we move into the 2018 model year, which officially began on October 1, the car market is softening, which means that carmakers are having to work harder to make each sale. That’s not good for them, but it is good for you as a prospective car-buyer because that means auto manufacturers are offering more incentives – cash-back, subsidized financing, and cheap lease deals – that can make getting a car much less expensive for you.  Elsewhere on DT we’ll give you the straight story on the best cars and trucks to buy this year, but right here we’ll give you the keys to getting the best deal possible.  You deserve it.

The good news is that getting a great deal is easier now than it has been in years. If you do your homework, take our suggestions and stand your ground, you can emerge with a very satisfying car purchase. Here are a few tips that can help:

Don’t fixate on the monthly payment
Yes, most of us have monthly budgets and consider expenses on a monthly basis, but one quick way dealers can lower your monthly payment is by increasing the length of the loan. If you allow that to happen, you’ll end up paying much more in the long run. A salesperson might also try to switch you from a purchase to a lease. There’s nothing wrong with leasing if the lease term is short (three years maximum), but a longer lease is a money pit. You end up paying a lot for a car you have to give back -- a miserable situation for your overall finances.

Do your homework on prices and values
A car is one of the rare consumer products for which you can quickly and easily find out what the retailer paid for it. Plus, the Internet offers you several websites (e.g. Edmunds) where you can learn what consumers like you are typically paying for the same car you are considering. That is extremely valuable information to have as you negotiate your purchase. Many of those same websites will also give you a precise idea of what your current car is worth. Again, that information can be invaluable at trade-in time.

Shop hard and be prepared to walk away.
Feel free to walk into a dealership, look at the vehicle you are considering and get information from the salesperson, but feel just as free to walk out that door with no questions asked. Don’t be intimidated into making a deal you don’t feel comfortable with because the salesperson tells you the deal is good “today only.” New vehicles are essentially a commodity. At any given time, hundreds of thousands are for sale, and factories are churning out more every minute. You’ll find a deal that is as good -- or better -- the next day and the day after that.  You might find walking toward the door could save you hundreds of dollars.

Car Dealers Take Heart

In this point-and-click world some people suggest that the traditional auto dealership is doomed to oblivion. They argue that the wide variety of information sources on the Net have made the dealership shopping experience superfluous, and the plethora of e-commerce buying options have done the same for the dealership buying process, a process many have equated with dental surgery or sitting through an entire Adam Sandler movie. But new-car dealerships are not ready to throw in the towel yet, and they are gaining solace from an unexpected source - Internet users.

According to a new study released by The Polk Company, a renowned auto research firm, those people who shop and buy cars on the Internet these days are heavy users of information. Certainly, they surf the Web to gain as much information as they can about the vehicle models in which they're interested, but they don't forsake traditional information sources. In fact, the 1999 Model Year Polk Automotive Internet Activity Analysis reveals that Web shoppers put heavier reliance on non-Internet media than do traditional car buyers.

Dealers can take particular solace in one non-intuitive finding - the study shows Internet shoppers place more importance on the test drive than do traditional shoppers. While some might theorize that Internet-savvy customers would feel free to left-click their way into car purchases without bothering with a traditional test drive, the study suggests that is not the case at all. Information-hungry Internet shoppers report that the test drive is the most important source of information influencing their buying decision, and, of course, new-car dealerships have a virtual monopoly on offering test drives to consumers. Sure, Internet users might gather a great deal of information online, but they get a key piece of the buying puzzle from the new-car dealership, and each time one of them walks through a dealer's door there is at least a fair likelihood the dealer will sell her or him a vehicle.

In contrast to Internet shoppers, traditional car buyers who don't use the Web are driven strongly by three factors: the test drive, previous experience with the vehicle and the dealership salesperson. (Internet buyers do not give the salesperson the importance that traditional buyers do, but they, too, cite the salesperson as one of the most important factors in their buying decision.) Living in a "Glass Menagerie" world, they are relying on the kindness of strangers or, at best, acquaintances to get them through unscathed.

"Although the Internet enables consumers to make more informed decisions about their vehicle purchases, the dealership will continue to play a key role in the vehicle purchase process," Karen Piurkowski, director of loyalty at Polk said, summing up the findings. "Dealerships can provide that one key piece of information that consumers cannot access online -- the actual driving experience."

Polk actually predicts the Internet will increase the level of test driving at dealerships, creating a busier atmosphere in the showroom. What that analysis might be missing is the fact that today's Internet buyers are, generally, "early adopters" of technology and more voracious consumers of information than the general public. As the use of the Internet becomes ever-more common, it is likely the less-inquisitive buyers won't suddenly get the urge to engage in test drive after test drive just as they won't suddenly begin thumbing through the pages of Consumer Reports or Motor Trend. On the other hand, dealer test drive traffic isn't likely to lessen either.

While the trend toward info-gathering on the Net doesn't seem to threaten the dealers' test-drive bastion, it does hit them where they live in another area - price.

"By the time Internet shoppers actually visit the dealership, they're already armed with a wealth of information about the vehicles they want to buy," Piurkowski said. "So, besides the test drive, pricing is their key focus. Internet usage will have a significant impact on price competition in the near future. Information-savvy consumers will be in a much better position to comparison shop and to negotiate the price of their new vehicle."

The fact is, in terms of price negotiation, the future is already here. A recent study by J.D. Power and Associates showed that a substantial percentage of new-car buyers now glean so-called "dealer invoice pricing" before they negotiate with the dealer. Although it is probable many of those buyers don't know quite what to make of that pricing information once they have it, there seems to be little doubt this information about dealers' costs puts downward pressure on actual transaction prices, adversely affecting dealers' gross profits. More research remains to be done before this can be definitively established, but a more educated customer might not be the type of customer dealers want.

Of course, most dealers would prefer educated customers to no customers at all, and in the future, those choices might be the only two they have. According to Polk, the trend toward gathering vehicle information via the Internet will require manufacturers and dealers to provide their customers with as much vehicle information as possible. Merely providing a dealer or manufacturer Web site will not suffice. Further fluff and brochure copy don't seem to cut much ice with Web-educated buyers.

The study also shows that, as online shopping for new vehicles rises, manufacturers and dealers will have to work even harder at maintaining customer loyalty. As Polk put it, the focus of Internet shoppers on information gathering and competitive pricing could translate into less loyal customers.

The data from the study speaks loudly on this point. Internet shoppers are less likely than traditional shoppers to be loyal to a particular manufacturer, make or even vehicle segment. Barely a third of Internet shoppers bought a vehicle that was the same make as the one they replaced, compared to half of traditional shoppers. Even with the industry's recent consolidation and merger-fever, the trend was almost as telling at the manufacturer level. Just 54 percent of Internet shoppers repurchased from the same manufacturer, compared to 64 percent of traditional shoppers.

Part of this can again be explained by the "early adopter" phenomenon. It doesn't necessarily follow that as more and more Americans move onto the Net they will adopt all the characteristics of current Net shoppers. But the data also must give manufacturers pause as they continue to spend billions of marketing dollars each year on "branding" and loyalty campaigns designed, in part, to keep their current customers next time around.

An age-old marketing tool that could be brought to bear in the loyalty-building process is one Ben Franklin lauded so heavily -- honesty.

"With this increased focus on information gathering and evaluation, manufacturers and dealers must increase their efforts in building loyalty among their customers," Piurkowski said. "In order to do so, they'll have to put more effort into proving that their vehicle is the best choice for these customers, not merely saying so in their advertising."

How they provide that proof remains to be seen, but there is little doubt that independent testing and third-party endorsements in the form of credible awards programs will increase in importance. And so will the use of the Net in the car acquisition process.

Among new vehicle buyers, about 56 percent reported that they regularly use the Internet, up from just under 50 percent during the same time period in the previous year. Twenty-nine percent of new vehicle buyers said they used the Internet to gather information before selecting their new vehicle. The study also showed that nearly three percent (2.6%) of consumers actually said they purchased their new vehicles via the Internet. The Polk study was based on a mail survey of more than 13,000 new vehicle owners who acquired a vehicle between October 1, 1998 and March 30, 1999.

Among his many jobs, Nerad served as editor of the car dealer publication Automotive Age and director of publications for J.D. Power and Associates. He frequently comments on the auto industry for CNN.