I took a little break after my failed attempt to lease a Leaf and then started looking around at other options. If an electric car wasn’t going to work for me, how about a plug-in hybrid? They’re like hybrids, but cooler: you plug the car in at night and get some initial pure-electric range that costs you zero gas.
I considered the Plug-in Prius, the Ford C-Max Energi, and the Chevy Volt. Their respective pure-electric ranges are 11, 17, and 37 miles. The Volt has the largest range, but it also costs about $6k more than the Energi, which is about $6k more than the Prius. I also had an abysmal experience when I returned to the Chevy dealership to discuss Volt numbers, although that isn’t the car’s fault.
After much consideration, I settled on the Energi. And the negotiations began.
|The dealer’s first offer was to write down, on a piece of paper, the MSRP ($36,155) and then immediately subtract off $6500 in incentives. He then wrote $29,655 and wrote “Wow!” next to it. This threw me. I’d come in with data from TrueCar and was ready to haggle at least down near the average price for recent sales of this vehicle… which was about $31,000. What he was offering was lower, so there was nothing for me to do.
Ever get that feeling that you must be missing something, when it’s just a little too easy?
We therefore moved on to discussing other elements of the potential lease agreement. I asked for the residual value (estimated as 52% of MSRP, which I noted was a higher fraction than the Leaf’s 49%; maybe they expect the Energi to retain its value a bit better?). I asked for the money factor, which he punted on to give me an APR instead (3%, which translates to a money factor of 0.00125). I somewhat arbitrarily decided to pay $2000 down on a 36-month lease, which put me at $420/month. I went home to think it over.
|The next day, I googled for any other Ford incentives for which I might qualify and found two:
I went back in and asked for these incentives. And got them.
|They didn’t have the color I wanted on the lot, but they said they could trade it and have it ready by the next day. So I went home to think about it again.
At home, I suddenly realized my tactical mistake. Because the first numbers we discussed had the incentives attached, we’d never actually negotiated the price. This is a mistake.
So I went back to TrueCar, and this time dug in to find out how to select my option package and deselect all of the incentives, so I could do an apples-to-apples comparison. I was a little apprehensive going back intending to negotiate more. We’d practically shaken our hands on the deal already. But nothing was signed, so it was still up for grabs.
The next day, the dealer called to say the car was ready — freshly washed, freshly charged, and with a full tank of gas.
Me: “That’s fantastic! I’ll be in this evening. And by the way — everything happened so fast yesterday that I realized we skipped an important step! We never negotiated the price.”
So I went in with my TrueCar data, which pointed to an average sales price for this car with these options of $34,455, or $1700 less than what we’d discussed the day before. And I said, “I want that price.”
Him: “But that’s only $20 above invoice!” [True.] “That won’t even cover the tank of gas I put in for you.”
A weird feeling came over me. I REALLY REALLY wanted to say yes. This guy was super nice, he’d just knocked $1412 off the price, and how much of a jerk did I want to be?
Why did I feel like I was being a jerk?
With a supreme effort of will, I forced myself to say, “No.” And we sat there in silence for what felt like 3 million years. Finally I said, “How about halfway between, at $34,600?”
|Him: “Would you feel 100% satisfied by that? And would you give me an Excellent rating in the survey?”
Me: “You care about that?”
Me: “Okay. Yes, I’d be satisfied.”
The rest of the process went smooth as silk. The salesperson showed me the controls on the new car until the finance person was ready, and I then signed a bunch of papers.
The Ford staff, especially the sales manager, were great. None of them pressured me at all, and the sales manager patiently went over every single number until I was satisfied. That gave me a lot of confidence in the deal. (This was not true of other salespeople I interacted with at other dealerships. The Chevy dealership was the WORST.) Likely I could have haggled harder for this car, but I came away feeling that I got a good deal, and I didn’t have to go all nasty to get it. That made me feel good about myself, too!
Other lessons learned:
- When leasing (at least in California), you only pay tax (use tax, not sales tax) on the amount of your lease payments, plus your down payment, plus any incentives for which the dealer is being reimbursed (e.g., by the manufacturer). The exception is for incentives paid by the federal government (like federal tax rebate for PHEVs) (not taxed) or cash rebates that the dealer is not reimbursed for (not taxed). I had to finally call the CA Board of Equalization to get a clear interpretation of this, because I couldn’t find an authoritative discussion of it online, and (to my chagrin) I found regulation 1660 extremely difficult to interpret myself.
- You can look up the DMV registration fee yourself to confirm that you’re being charged the correct amount.
- Plug-in electric hybrid vehicles qualify for a California rebate of $1500. Not the $2500 that pure electric vehicles get, but not bad!
- They also qualify for California carpool lane access stickers. Still waiting for mine!