Hi there, I'm going to be buying a 2006 Lexus RX400h soon, and I'm wondering if anybody can help me out with some buying tips. First of all, I'm in Canada, so the prices are drastically different. Altogether, I am looking a total price including taxes, freight, PDI, etc of around $80,000 for the 2006 model with the ultra premium package which basically includes everything. One question I have is, does anybody have any idea what the dealership markup is? I've been offered a discount of around $2000, but based on a total price of around $80,000, it doesn't seem to be very much. I am wondering if I can get a better bargain. Also, is it worth waiting a few weeks for the 2007 model to roll out in the hope that the 2006 models will be discounted? Thanks in advance for your help.

 

I would surely let me your dealer know, when you are negotiating the price, that you are aware the 2007 models will be released soon and are expecting the 2006 to be heavily discounted. Take a look at edmunds.com for pricing and cost questions.

 

When I purchased my last luxury car(2004 Volvo S80 AWD), I finally negotiated a 10% discount from invoice. While this may seem a lot, I went into the negotiations knowing what true invoice was and other factors such as holdbacks for the dealer meeting sales quotas. I believe the key is arming yourself with as much information as you can and also not letting yourself becoming emotially involved in the purchase. You are entering into a business transaction....the dealer deserves to make a decent profit....you deserve to get a price you are happy with. You are in the drivers seat as you can walk away whenever you want. Everyone can win if you are knowledgable and resonable.

 

Thanks for the suggestions!! I found out from a website that the dealer markup is only like $6000 or so, so I guess the $2000 savings they offered me is substantial. The only thought I have now is whether I should wait for the 2007 models to come out in the hopes that the 2006 model prices will drop even more.

 

I am pretty certain he means he negotiate 10% below Manufacture Suggessted List Price (MSRP), not Invoice. You can find actual invoice cost off sites like Edmunds. Most dealers will discount off of MSRP. Most sites recommend that you start at Invoice and word "UP" form there. In a few RARE cases, there wil be discounts BELOW MSRP but these are usually for cars that have EXCEPTIONAL MFG rebates to get them off the lot or are older cars that had undesirable (or overpriced) options. In these cases, a few hundred (or even a thousand) off Invoice may be possible. The ONLY time I have EVER seen 10% BELOW Invoice is in the rare case of VERY high end cars (such as the Benz SL65) that started around $150K and went up form there. And those were also for cars that were nearly a year old as well. Recent reports had Benz dealers listing a $130K INVOICE (i.e. Cost) on the car and selling it for $115K (approx 10% off) but the one thing the Benz dealers did not have to publish to the buyer is that they were getting an additional $20K back from Mercedes in the form of incentives. So, 10% off INVOICE off of a fairly inexpensive Volvo is probably a mistake in appropriate terms use by that poster.

 

I did some searching and found my original spreadsheet. The amount I paid was 10% less than invoice and 13% less than MSRP. In addition, I ended going with overseas delivery, where Volvo paid for 2 round trip air (Phil to Gothenburg), hotel for 2 nights, factory tour, lunch, local transportation airport to hotel to factory, insurance and shipping. I picked up the car at the factory in Sweden, drove it for a week across Sweden, and had it shipped home (included in the figures). The dealer gave me a free loaner while I waited the five weeks for US delivery. In addition, as a special Volvo promotion I paid an additional $500 for a 4 day side trip to Barcelona (included air for 2, hotal, and transfers). Hopefully this helps explain.

(sorry --- but after posting I found out that the spreadsheet cut and paste didnt work. I have attached the actual Excel spreadsheet)


InvoiceMSRP GothenburgUSDS-80 2.5 AWD $ 35,003.00 $ 37,200.00 Pict $ 34,225.00 Prem Pkg. $ 2,145.00 $ 2,495.00 $ 695.00 Climate Pkg Incl Incl Incl Touring Pkg $ 537.00 $ 625.00 $ 625.00 Versatility Pkg.Metallic PaintTransportation $ 685.00 $ 685.00 Advertise $ 250.00 Profit $ 750.00 Total $ 39,370.00 $ 41,005.00 $ 35,545.00 Less TradeS/P $ 39,370.00 $ 41,005.00 $ 35,545.00 % Savings Domestic Purchase vs. OSD (Invoice) 10%% Savings Domestic Purchase vs. OSD (MSRP) 13%Additional Fees:State & City Tax $ - $ - Tags & Doc Fees $ 149.87 $ 149.87 $ 149.87 Tax Savings Based on Selling Price (Invoice)#DIV/0!Lease InceptionOverseas Insurance 15 Day Minimum Included INCL Marine InsuranceINCLPurchase Total: $ 39,519.87 $ 41,154.87 $ 35,695.10 Savings Domestic Purchase vs. OSD (MSRP) 13.3%Notes:# 1-- No Trade value factored in# 2-- PA Sales Tax & State Registration (Tags) not paid until O/S Delivery Car returned to US # 3-- The $695.00 Premium Pkg is applicable to 5 AWD's in O/S inventory and ready for immediate delivery.# 4-- Delivery on these cars must be by April 1, 2004

 

Congrats on your shrewness. Since this is Toyota/Lexus and they don't offer any overseas delivery options, I neglected to outline was the overseas delivery discounts that other luxury dealers will extend. These are basically the dealers ways of giving you a free trip to their country by discounting the vehicle $4K or $5K which appears to be what you did. Sounds like you had a great trip! Your spreadsheet does work by the way. Looks like your almost as **** about these types of things as I. Your totals on the left hand side include things like "transportation", Advertising and profit fees that most people would not consider as "Invoice". Your domestic Volvo dealer probably had reasons why he hadto put those in there but most buyers do not consider those as true Invoice price. By backing those out, your actual Invoice price is $37,685. I alsonoted that your "Premium Package" appears to only have an unusually low $300 mark up on it vs. MSRP but according to your spreadsheet your were only charged $695 for that $2,195 Invoice Cost" option. Recalculating to actuals gives a more realistic 5.3% discount to Invoice and ANY discount to Invoice is goodbut not available to Lexus buyers (at least it wasn't to me when I bought my business GX470 about 2 years ago)

 

The purpose of my showing the spreadsheet was to illustrate one way of approaching purchasing a car. I usually create a more sophisticated spreadsheet that allows me to easily see whether lease, finance, or purchase is best and further lets me know the real impact of "deals" the salesman may offer. Knowledge is power, and to avoid the saleperson having that power over you, know what they know. Having that type of information shows the sales person you are not approaching the sale from an emotional viewpoint, that you have done your homework and he better be straight up or you'll take you business elsewhere. It also gets you out of their best sales tool "how much a month are you willing to spend". There are also other peices of information that you may be able to learn from searching the web such as manufacturer to dealer incentives (which are usiually based on volume of cars sold in a month or in a quarter), special manufacturer incentives available to the purchaser, and how to see on an invoice where the holdback is (additional profit for the dealer). Figuring out how long a dealer has had the car also may help, since the dealer also has carrying charges for every car in stock. I like shopping for a new car and have fun in the process since I am in charge and have the ultimate power of just walking away.

One caveat...the salesman is just earning a living and often doesnt make the rules at the dealership. Treat him/her with the same respect you want to be treated. Dont create an adversarial environment......somewhere in the myriad of numbers is a win/win situation. If you find a stubborn dealership.....simply say goodbye.

 

Thank you very much for your spreadsheet!! It was very helpful and informative. I understand that there isn't much margin on imports compared to domestic since they are hit with high duties. That Volvo purchase program sounds incredible, I only wish Lexus has something similar with a trip to Japan. I found out that the wholesale price is $56,565.00 and the MSRP is $62,200, but unfortunately I didn't find out what the markup is for the ultra-premium packge which has an MSRP of $7500. I am going to assume that the dealer pays an invoice price for the ultra premium package of half of MSRP, $3750. This means that the dealer would make $9385 if selling at MSRP.

The quotes I was given by two different dealerships offered me savings of $2000, and $2800 respectively for the 2006 model. I was told that 2007 models are going to be arriving Oct 2, but the 2006 models would not go on sale. Rather, they would offer an incentive program for financing at a lower rate. This however doesn't help me out at all since I'm in a position to pay cash for the vehicle in its entirety.

At this point, I'm inclined to bargain further to attempt another savings of $2000 as I think its more reasonable for the older model.