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Cross shopping is a technique which some consumers use to get a better deal from automobile dealers. In addition to being used to get deals on cars, cross shopping also sometimes works for other big ticket items, like appliances, and sometimes it is possible to save a substantial amount of money on cross shopping. While cross shopping turns a purchase into a complicated and time-consuming process, it can sometimes be quite revealing.
Basically, when a consumer cross shops, he or she plays multiple car dealers against each other. For example, Jane Doe looks at Car A at Dealer A, and is quoted a price on the car. After saying that she wants to think about it, she goes to Dealer B to look at the same model of car, and asks for a quote. Then, she says that Dealer A offered her a better deal on the same car, and waits for a response; most typically, Dealer B will cut the price, offer extra amenities, or otherwise attempt to keep her business.
Cross shopping has become much more prevalent in the car sales industry because of the growing number of car dealers. Historically, consumers often had a limited number of dealers to choose from, and if they had a specific type of car in mind, they were essentially locked into the prices offered by a specific dealer. Now that many new dealers carry a large inventory, as do used dealers, there are more options for consumers, and dealers are well aware of this. Individual salesmen are often willing to go to great lengths to get a commission, and consumers can exploit that by cross shopping.
Consumers aren't limited to a specific car when they cross shop, either. Many may choose to compare several different cars, sometimes radically different cars, which can make the situation even more complicated. If cars X and Y have very different base prices, for example, our hypothetical shopper would need to focus on the amount of discount or extras offered by the other dealer, rather than the direct price.
Many dealers have wised up to cross shopping, so shoppers need to be careful. Some will call each other to see if they can find out if the shopper is telling the truth about the better deal, and in some instances, dealers have friendly relationships with each other, so they will steer consumers in a particular direction by mutual agreement.
If you want to cross shop when you buy your next car, do your research first. Narrow down your preferred choices, and research their base values. When you talk to dealers, make sure to talk specifically about the sale price of the car, not monthly payments, and avoid clouding the issue with discussions about warranties and methods of payment. If you want to cross shop with flair, get your dealer to make you a formal written offer which you can show to another dealer; you can also use this document to force the dealer to commit to that price later, if you need to.
You're right, Glasis. There is little guesswork left in car buying.
This benefits the customer, especially, because dealers have to be careful to price vehicles closer to their true value.
Well-informed consumers should now come prepared with questions on why one vehicle may cost a few thousand less than another on the lot with the same year, make and model.
If the dealer can't answer that question satisfactorily, that may be an opportunity for those who like to negotiate price.
In an age where vehicle history reports, other dealers' inventory and prices and even the value of a trade in can be accessed instantly with a smart phone, prices for big ticket items are usually more or less universal from one dealer to the next.
Car dealers know the buyer will most likely know all of the facts before they step onto the lot.
In addition, customers are more savvy, too. We know that the great super, employee-only deal we are being offered is most likely the actual cost anyone would get for the vehicle.
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