Fighting Chance

Fighting Chance is the only car-buying/leasing method that's been featured by the Wall Street Journal, under the headline "Get a better deal on a new car by using this strategy." It positions our approach as the game-changer every smart new-vehicle shopper needs in this endorsement from its 9/26/17 edition.

New-Car Shoppers Need To Know These Facts

1. FACT: You are shopping for a commodity. It's the same car with the same price structure at every dealer selling that brand. We learned that in 1997, when a customer shopping for a Ford Contour sedan called and said, "I contacted 12 Ford dealers for price proposals, and it was like rolling a bottle of wine into a jail cell full of drunks!"
2. FACT: The "art" of any deal is one little word: leverage. Yet most new-car shoppers still walk into car stores to haggle the price, a game they always lose because their leverage in each store is zero.
3. FACT: The leverage shifts dramatically to you when you get several dealers of that brand competing for your business — ideally 10, no matter how far from you they are.
4. FACT: "Holdback" is slowly fading into the sunset. That’s money dealers get from the automaker after a sale is made. These luxury brands have either dumped it or never had it: Audi, BMW, Cadillac, Infiniti, Jaguar, Land Rover, Lexus, Lincoln and Mercedes-Benz. We expect other brands to follow suit over the next several years.
5. FACT: The bulk of factory-to-dealer cash programs today are not vehicle-specific. Instead, they're based on total new-car sales targets, set dealer-by dealer and typically stretching 6 to 12 months. The rewards are nice bonuses, and earning them is critically important to every dealer.
6. FACT: That’s because dealers make almost nothing selling new cars. This detail is from a recent Annual Report of AutoNation, the country’s largest automotive retailer, with 317 new vehicle franchises in 231 stores. New vehicle sales were 52.3% of its revenue, but just 14.3% of gross profit. Used car sales: 25.6% of revenue, 10.4% of gross profit. Total car sales were 77.9% of revenue, but only 24.7% of gross profit. Parts & Service: 16.7% of revenue, but 46.1% of gross profit. The shocker? Finance & Insurance: 4.8% of revenue, 29.0% of gross profit — 17% more gross profit dollars than new and used car sales combined. Together, that 21.5% of AutoNation’s revenue provided 75.1% of its gross profit. This has always been true in the retail car business. If dealers only sold cars, they’d be extinct.
7. FACT: AutoNation's average revenue per new vehicle sold was $39,513, including the bonuses earned for reaching sales targets. But the gross profit per sale was $1,783, a paltry 4.5%. And every dealership has a minimum overhead expense of 10% to 12% of its revenue. Without those bonuses, dealers’ gross profits would be 2% to 3%, not 4% to 5%.
8. FACT: The new-car business has a significant up-and-down seasonality pattern, with monthly sales ranging from under 7% to over 11% of the year's total. So dealers in those multi-month bonus programs must keep their cumulative sales in synch with cumulative monthly seasonality, day-by-day and week-by-week, throughout the promotion period. That makes end-of-month timing much less important. If they had one poor sales week or 10 days early in a month, they'd have to sell more cars per day in the balance. They couldn't wait until the last few days to do that.
9. FACT: Your negotiating leverage comes from all those facts. There are almost always some dealerships trailing their targets and more strongly motivated to make aggressive price proposals than others. Involve 10 dealers, and there's likely to be one or two stores having a poor month or two who will be the low bidders. They might be next month's high bidders, depending on their sales status then.
10. FACT: Don’t get price proposals from TrueCar, Kelley Blue Book, Cars.com, Edmunds, Costco or any other sites. Their salesmen will be on your phone like hobos on a baloney sandwich. They’ll send you to a tiny number dealers in their networks, who reward them nicely with money that's built into the price you’ll pay
11. FACT: There is never a good price or a right price to pay for any new car. The only right price is the best out-the-door price you can get by getting 10 dealers to compete for your business. That's the agreed-upon price of the car plus sales tax, registration fees and any other dealer charges. (If you're leasing, the best offer is the one for which you shell out the lowest total dollar amount over the lease term.)
    Example: A customer got 9 dealers to compete for a redesigned Honda CR-V without leaving his home or office and paid $1,090 below invoice. The eight other bids were $900 below, $510 below, $410 below, $180 below, and $300 over invoice, $460 over, $530 over and $930 over - a $2,020 spread from low to high! (What should we have told him would be a “good” price? Any number we picked would have been dead wrong.) The winning Sales Manager said, "This is the only smart way to buy a car. But if everyone did it this way, we'd be out of business." We hear that response frequently from customers.

The invoice hasn’t been a vehicle cost for well over two decades, and probably forever. In the mid-1990s the auto industry launched a phony “redesign” of the automaker-dealer financial relationship by raising the invoice price by more than it raised the retail/sticker price year after year, cutting the difference between the two dramatically and turning the invoice into a bloated imposter. Of course, that's what they want us to think they pay for vehicles.

James unearthed this scam in 2012 by analyzing almost twenty years of new-car pricing files, then wrote a book titled Letting The Cat Out of the Bag — How The Auto Industry “Redesigned” The Dealer Invoice Price When The Internet Arrived. A copy was sent to a friend at USA TODAY and James was invited to an 11/27/12 Automotive Roundtable discussion, based on that book, “as to whether online car shopping and information services are believable and are relevant in today’s market.” The industry heavyweights there were senior executives from Cars.com, Edmunds, Kelley Blue Book, TrueCar and Consumer Reports.

You could have heard a pin drop as they read the “bombshell" pricing exhibit that was the discussion’s early centerpiece. No one was aware of that fact, though it had been right under their noses for 17 years! James asked the Consumer Reports participant, “Who’s been running your New Car Pricing Service for the past 17 years, Rip Van Winkle?” (He was not amused.)

Read the USA TODAY “Don’t Trust The Invoice Price” write-up, which dubbed James a “peppery contrarian,” and see his take on that meeting.

That subterfuge has made new-car pricing laughable. Check the tiny percentage differences today between the base invoice and retail/sticker prices for the most expensive trim levels of each brand. Acura/5%-7%. Audi/7%. BMW/6%. Buick/4%-5%. Cadillac/5%. Chevy/5%-7%. Dodge/3%-4%. Ford/1%-7%. Genesis/4%-5%. GMC/5%-7%. Honda/3%-9%. Hyundai/3%-5%. Infiniti/7%. Jeep/2%-5%. Kia/4%-7%. Lexus/5%-8%. Lincoln/4%-6%. Mazda/3%-5%. Mercedes/7%. Mitsubishi/2%-3%. Nissan/2%-7%. Ram/4%-9%. Subaru/5%-7%. Toyota/4%-9%. VW/4%. Volvo/6%.

And that’s if you pay the full sticker price! Who does that? Not you!

Common Sense: If you wanted to start a retail business selling a product with a $100 MSRP (that no one would pay), but cost you $91 to $98, you'd’d never open the door to customers! But for decades, we consumers have swallowed — hook, line and sinker — the preposterous notion that the automakers have been telling us what their dealers pay for their cars. If that were true, and we owned a dealership, we’d have gone ballistic decades ago. But that’s never happened.

Ready for a good laugh? Check out this 2020 pricing on the Limited model of the Chrysler Pacifica Hybrid minivan. Base invoice: $45,794. Retail: $45,845, a $51 difference on a $50,000+ car! Add the fact that a typical dealership’s overhead expense is at least 10% to 12% of its revenue, and you'll understand why all invoice prices are a total joke. Clearly, the industry is laughing now at our gullibility.

The industry has figured out that we're laughing at them for giving us those bogus invoice prices. And so they've stop publishing them.

But that wouldn't change our recommendation on how to get the best price proposals when you're buying or leasing a car. As noted above, if you get 10 dealers involved in the bidding process, there will usually be one or more who need sales urgently to stay on track for a bonus. They'll be the low bidders. They might be the high bidders the next month because they're selling cars then like Slurpees on a hot afternoon in Death Valley.

Apparently mortified by its embarrassing two-decade failure to recognize the industry’s phony pricing scheme, Consumer Reports dumped its major cash cow, its New Car Pricing Service — the one they claimed would tell you “the dealer’s true cost” and how much “wiggle room” you had. It took just one blatently obvious fact, unearthed by this old marketing guy, to kill it. James' multiple articles on the website of Clark Howard, the country’s best-known and most respected “general” consumer advocate, may have accelerated its demise. Can there be any stronger evidence that the way to get the best deal when you buy or lease a new car has changed forever?

The inside story of the discovery of that game-changing fact is told in our book, "Letting The Cat Out Of The Bag: How The Auto Industry 'Redesigned' The Dealer invoice Price When The Internet Arrived," available in paperback and Kindle formats at Amazon.

What’s In The Fighting Chance Package?

1. You'll have the only independent, unbiased source of truthful information and powerful negotiating advice on the Internet. James has been focused single-mindedly on this subject since before the Dead Sea got sick, and much of that knowledge has come from customer feedback learned from loose-lipped salespeople.
2. After checkout, you will receive links to individual invoice and retail pricing info for all trim levels for your chosen vehicle(s). This is the first step in becoming an informed consumer and changing the narrative.
3. The first INFO-Pak contains a cover note and articles on these “knowledge base” subjects: (1) Test Driving 101, (2) Can You Get The Vehicle Configuration You Want?, (3) Have You Chosen A Crashworthy Vehicle?, (4) Thoughts on Buying a “Demo” or Last Year’s Model, (5) Things To Consider About Placing a Factory Order, (6) Should You Buy An Extended Warranty?, (7) How To Handle a Trade-in, (8) Dependability Ratings by Brand, (9) How and Why The Fighting Chance Package Changes Over Time and (10) What Did You Pay? - a short form we hope you’ll complete and email to us about the deal you get.
4. The second INFO-Pak contains “pricing details,” so you can better analyze your vehicle data and includes the following articles: (1) Common Sense About New-Car Pricing, (2) Where Can I Find The Destination Charge?, and (3) Important Note On Pricing of Dealer-Installed Accessories.
5. The third INFO-Pak details some helpful “dealer insight” and includes these articles: (1) How New-Car Dealers Make The Big Bucks (And How they Don’t), which is likely to shock you, (2) Two Big “Fake News” Come-Ons To Ignore, (3) The Crucial Financial Importance of a Dealership’s Customer Satisfaction Rating, and (4) How the Industry Has Turned the Invoice Price Into a Bloated Imposter By Continually Raising It By More Than The MSRP For Over Two Decades.

Our unique package includes all the information you need to negotiate the best purchase or lease deal in the market. You may place an order here on a secure, encrypted order form at any time.

The Cost Of This Package: $69.95

That includes all the information you need for any one vehicle.

Additional vehicles: $20.00 each. More than half of our customers add one or more vehicles as "fallback" alternatives. This could become a small, but wise $20.00 decision if you find it difficult to deal on your first choice. (The average price of a new car last year was $36,718.)

How To Place An Order
& How and When You’ll Get It.

If you plan to get a new car this month, now is the time to place an order.

Whether you're buying or leasing, we look forward to helping you get the best deal in the market. (And we hope you’ll visit us when we have to join the Witness Protection Program.)

-James Bragg