Tag Archives: Car Below Invoice

HowTo to Finding the Loss Leader Car

I sold a car yesterday, a 2016 VW Jetta SEL 1.8 TSI. According to TrueCar, this morning (4/17/16) the target price for this car is $22,556, or $2,909 below the MSRP of $25,465.

I sold it for $20,900. That’s a huge saving- a $4,566 discount! How did the client score this deal? Were they super negotiators? Were they friends and family? What’s the secret? I often get shoppers looking for the best deal on the lot, and this certainly was the best deal. But why was it so low?

It all has to do with marketing. Every company has a myriad of marketing tools that they try to use to get buyers in the door. During one of our sales meetings, I heard that on average we spend something like $350 per car sold.

We do traditional things, like television and radio. We’ve been doing PPC and SEO. We are even trying to push into social media. Each sales person goes through lists of past clients trying to drum up repeat and referral client. All of it pushing hard to make sure we bring people in.

One of the big no-nos in every industry is lying to your clients. It just shouldn’t happen, and if the company is reputable, which mine is, they have to back up promises with reality. How does a company trying to make a profit make giant claims about huge discounts and still stay in business?

Enter one of the oldest marketing strategy, the loss leader. A loss leader is a pricing strategy where a product is sold at a price below its market cost (Wikipedia). Our dealership has a few things that dictate the price of cars. One of which is the age of the vehicle, as in how long it has been on the ground at our dealership. Another is availability. Sometimes manufacturers let us know that we have ten cars of the same model coming in next Tuesday, and we will be overstocked on that model. And finally, the prices at which our competitors are listing their cars. All of these things create room for us to sell one of the cars at a little bit of loss. One of our cars we will listed as a loss leader, leaving all of the other cars priced regularly.

We advertise that loss leaders heavily. We use all our usual channels to let the clients know, and get them excited about that car. Here’s the catch, if you want that car, but it’s missing some feature you need, we’ll switch you to a different car. The special pricing doesn’t apply.

To get the best deal on the car- you have to want that particular car. If you are a value shopper, keep an eye out for those loss leaders. One great way to ferret out loss leaders that I have noticed recently is to turn your cookies on in your browser. Cookies are a small text file (up to 4KB) created by a Web site that is stored on the user’s computer either temporarily for that session only or permanently on the hard disk (persistent cookie). Cookies provide a way for the Web site to recognize you and keep track of your preferences. (Source: pcmag)
Once you have turned them on, figure out which brand of car you want to buy. Go to their website. Go to the dealership website. Look at the car you like.

Do it a few times.

Now keep an eye out for banner ads! Cookies will let advertisers know which car you are interested in, and will tell them with what to tempt you. Suddenly you might notice that there are ads for cars recently looked by you! I know this sounds pretty creepy but trust me it’s totally worth it.

If you liked this article, check out my Guide to Researching Cars.