How to out-negotiate the car dealer: Cultivating your alternatives

My last post discussed one of the toughest negotiations—convincing a toddler to comply. This post considers one of the most feared—dealing with a car dealer. Most people would rather extract their teeth through their eyeballs than talk to a car dealer. How can we hope for a decent deal when the guy across the table is continuously snapping his jaws?

This problem is formidable, but negotiable. The key is to recognize that there is not just one guy or one table—that you (like the dealer) have alternatives.

Anytime you negotiate anything, you have a primary negotiation partner and you have a next-best alternative: whatever you would do if the current negotiation fails. Since the landmark book Getting to Yes, this alternative has been called your BATNA: your best alternative to negotiated agreement. As I usually repeat ad nauseam in a negotiation course, BATNAs are your greatest source of power in a negotiation. If you have a good BATNA, you can walk away from the current crocodile. If you don’t, he might as well snap away. So, speaking now to those of us who don’t “like” negotiating, take heart! Being a powerful negotiator doesn’t mean acting like Donald Trump; it means having a viable plan B.

I know of few negotiations where BATNAs are more important than car purchases. As the buyer of a car, you typically have multiple—often many—dealers to choose from. The single-most important thing you can do to get a good deal is to visit enough dealers (by taxi, if you have to) to fall in love with at least two cars—each at a different dealer. As I often remind my students, falling in love with one person is a beautiful and wonderful thing in everyday life. Yet, falling in love with one house, one car, or one job is almost guaranteed to make you a sucker. Why? Because if you’re head-over-heels over one car, for example, you have no choice but to submit to every snap of that crocodile’s jaws. You have to accept whatever terms they offer.

Conversely, what happens if you find yourself swept away by two cars at different dealers? At a minimum, you learn about the market. Quite often, the cars are quite similar, but one is inexplicably cheaper. I recently found the exact same car at two dealers, 10 miles apart, but $3000 different in price. That’s right, a $3000 discount, no “negotiation” in the traditional sense. In addition to learning about the market, cultivating an alternative immediately affords you confidence. With a $3000 discount in hand, I can assure you that I felt much more comfortable pushing back on the original, higher-priced crocodile. As a result, and most importantly, having a good BATNA immediately gets you a better deal. Without revealing the exact amount of the discount to any other dealers (which is a topic for another post), the $3000 discount gave me the confidence to go to a third dealer and get the same discount on the same car with better features (all-wheel drive for those icy mid-Atlantic hills).

In sum, one of the single-most important strategies in any negotiation, especially a consequential purchase, is to cultivate a good alternative, a strong BATNA. Doing that is not only effective; it’s heartening for the non-born negotiator, as it doesn’t require negotiation tactics as much as time. As little of that as we all have, I would advise any serious negotiator, negotiating any serious issue, to find enough time to find a BATNA.

Have you cultivated your alternatives in a past negotiation? How has it worked?

17 thoughts on “How to out-negotiate the car dealer: Cultivating your alternatives

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