Buying a new car through a broker or a fleet sales manager

One of the most unpleasant experiences we can endure, along with going to the dentist, is buying a new car or truck. Negotiating with a retail car salesman, who's paid on commission, is uncomfortable at best and terrifying at worst.

However, there are at least two other ways to buy a new vehicle. First you can hire an auto broker to find the vehicle and negotiate with the seller. For-profit buying services, big-box warehouse stores like Costco, and many auto insurance companies (like USAA) offer this service. You can also work with a dealership Fleet Sales Manager (FSM), or Internet Manager, and it is this second way that I have used with success.

Basically, the process works like this. After you've identified the make, model and options you want, you contact the dealership FSM, give him the specifics of the vehicle you want. He emails you a quote, which should have both MSRP (Manufacturer's Suggested Retail Price) and Dealer Invoice prices for the vehicle and all the options. The quote should show you what you will pay over/under invoice, along with any factory rebates and incentives, freight charges, taxes, license fees, etc. The quote should also tell you the estimated date the car will arrive at the dealership, since it is being built as a special order for you (I will talk more about this later). If you like the quote, you go to the dealership, meet the FSM, review and sign the purchase order and give him a down payment. Then you wait for the vehicle to arrive, which can take 6 to 12 weeks.

The advantages of buying a vehicle this way are numerous:

(1) You specify the exact vehicle you want... color, upholstery, options, etc.

(2) You don't pay for options you don't need or want.

(3) You won't get a car that has been test driven by potential buyers.

(4) The price is negotiated up from Dealer Invoice, not down from MSRP. There is no supplemental sticker with several thousand dollars of Additional Dealer Markup (ADM).

(5) You don't pay a retail sales commission; the FSM is salaried.

(6) You don't pay dealership "flooring" charges; these include dealership overhead (rent/utilities) and finance charges on the dealer's loan (dealers usually don't own the vehicles on their lots). You will typically pay a regional advertising fee, however.

(7) The end result is that you get exactly the car you want, at a much lower price, with far less hassle.

However, there are disadvantages:

(1) You have to special order the vehicle, and wait for it to arrive.

(2) The FSM will be reluctant to work with you if you have been to the dealership and worked with a retail sales person. Why? Because a deal with the FSM excludes a commission for the retail salesman, and these people all have to work together. As a result, if you want to test drive the vehicle, you need to find a second dealership.

(3) You have to wait 6-12 weeks for delivery

(4) Typically you have an 8-month window for special orders (Oct-May). After May it is difficult to order a vehicle because the production line is shutting down for the annual model-year changeover.

(5) Financing and trade-ins complicate the deal, and I have no experience in this area, mainly because I have always paid cash and never traded in a vehicle.

So, why would a dealership FSM be interested in your business? Because special order vehicles are not considered part of the dealer's "allocation", the number of vehicles of each model that are allocated by the manufacturer to that dealership. Since popular models are always in short supply, the FSM is not taking your order out of that limited supply, so he is not negatively impacting the potential total retail sales commission for the dealership. In addition, special orders increase the total dealership volume, and since next year's allocation is based on this year's sales volume, the dealership allocation for next year will increase.

The bottom line is that, if the advantages outweigh the disadvantages, buying a vehicle through a dealership Fleet Sales Manager is something you should seriously consider.