How to Buy From the Dealership and Not Get ScrewedMost people would choose a root canal or the DMV over going to a dealership to buy a new...
Most people would choose a root canal or the DMV over going to a dealership to buy a new motorcycle. Rightfully so. Dealerships maintain an image of the big bad salesperson who is trying to screw you over. The bad news is that there are still a few dealers out there like that. The good news is that not all dealerships or salespeople are like that. Don’t expect the dealer to lose money either. Rest assured, nobody at the dealership took a vow of poverty to make sure you got the best deal. After years in this business on both sides, allow me to give you some much needed tips for that next bike purchase.
Whether or not you believe it, a dealership is still a relationship business. Salespeople very much enjoy building a relationship with their clients. If you storm into a motorcycle dealer with your fists up ready to battle, they are not likely to give you any special treatment. Visit the dealership you want to buy from multiple times and introduce yourself to the General Manager. Chat about bikes with different salespeople and find someone you like. Give them your contact information and stay in touch to discuss your future purchase. When the deal is ready to be inked you will have a lot of allies, not enemies.
The internet contains a lot of bogus information like “invoice” pricing for motorcycles. Don’t look like an idiot claiming you know their “invoice” price is $5,000 below MSRP. Factory invoice is different from dealer invoice, and dealer invoice is designed so that they make at least some money on the deal. These built in profit margins (usually about 5 percent) called holdback are set in place to ensure profitability for the dealership and absorb any floor plan costs for having the vehicle in inventory too long (yes, dealers pay interest on unsold inventory.) Keep in mind, most sales staff do not make any money from holdback. You can ask for a ledger balance or ACV (Actual Cost of Vehicle) if you are really curious what they own it for; however, dealers aren’t likely to give it up if you are hostile. Buying a motorcycle at or under invoice price is a great deal, so use the invoice price they give you as your starting point for negotiations.
Dealer Handling is Sacred
The joke was that if Jesus himself walked in to buy a new bike, he would be charged D&H. There are many state laws that prevent “discrimination” on D&H, so don’t act surprised if they do not budge on that fee. It's a sacred fee that cannot be avoided. You can, however, ask for them to take it out of the assembly and delivery fee, which is usually higher and less than necessary with the way bikes are shipped now. You can also offer to pay the set up fees up front in cash in exchange for a discount.
The average time it takes for a vehicle to sell at dealership is called “days supply.” When a motorcycle has a low days supply, it means that it won’t take long for the vehicle to sell. Conversely, if a motorcycle sits on the lot for 200 days, it has a high days supply. The lower the days supply on a motorcycle, the less likely the dealer will be to discount the price. For good reason too, since it doesn’t matter if you don’t buy it since it will likely be sold soon after. Don’t assume every motorcycle can be discounted simply because you ask.
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Negotiate the Negotiable
Just because a dealer won’t discount the price of the motorcycle, doesn’t mean that you don’t have leverage. Most dealers love to give away parts and accessories in lieu of discounted price. I was able to get a fresh set of gear with every new motorcycle purchase I made. You can also ask for oil changes, tires, service, or a new exhaust to help offset the cost of your shiny new ride. Another way to help your wallet is to offer to write 10 stellar reviews across all the online review sites in exchange for a small price deduction. These reviews matter and most are hard to come by, so use it to your advantage.
Financing is Important
Unless you have a large wad of cash burning a hole in your pocket, normal people usually finance vehicle purchases. Understand how APR, term, finance reserve, and buy rate works before walking into the finance office. The standard operating procedure is for them to fire your information off to about 5-10 lenders in order to find the best rate, then they add “points” on top of it and sell it back to you at a higher rate. This is how the dealer makes money on financing.
There are legal limits on how high they can mark up the rate, and the OEM financing can often be deceiving. Be smart and save yourself some time and money by shopping for financing before coming to the dealership. The credit score you pull for free is going to be completely different than the credit score they use for purchasing vehicles, so it’s always best to have your financing prepared beforehand. Avoid expensive service contracts, but seriously consider GAP insurance if you're not putting any money down.
Above all things, just remember that dealers are truly interested in making you happy, and as long as you aren’t hostile or rude, they will try to reach a scenario where you get a great deal while they make a profit. It works best when you are educated and they are honest. Good luck!
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