Need some help when you are shopping for a newer Toyota -- if you want to read my rambling it may help sort out some of the situations you may encounter. Some of this will be from my years of association with auto dealerships and hearing the results in service. Don't forget that whoever drives a car had to go through the same process you are, some know the ropes but others are overwhelmed by the process and choices. I will present this in a question and answer format and as more direct questions are asked they will be added.
What can I expect from the current 2001 economy? In todays economy the auto manufactures and dealers have been pulled in different directions. It all started in the fall of 2000 but no one really paid attention. The manufactures are to blame for what they caused over the last ten years. It's a situation where they have one year of success then they need to improve that sales figure and again the next year or years. They have over financed so may vehicle owners that they in essence have taken some of the "buyers" out of the market place. Now with the writing on the wall you would think that they would scale back on how many vehicles they manufacture but noooo, remember they need to do better than last year.
Now you as the consumer, if you are not saddled with a five year loan (or god forbid longer) are in an envious position. You are going to see deals on the best models well into the 2002 model year and possibly beyond. Toyota is no different than the others and they keep on parading out new models and more expensive models in larger than reasonable quantities for you to purchase. With the economy an the stock market in somewhat a downward trend more people are thinking twice about the impulse of the new vehicle purchase. The longer this goes on the more desperate the auto manufactures are to maintain production the more aggressive the discounts will be to you.
Toyota has constantly been above the sales of the previous year. In Oct. 01 they were actually 27% above last year. My only thoughts on this is the strong product line, consisting of the trucks and SUV's the public demands. The price of fuel has dropped over 50 cents per gallon since May. How long this sales increase will go on is only a guess, the God's at Toyota are pretty sharp, but i have to feel that even they are surprised (or so positive) that the figures are as strong as they are in a declining economy. The down side is that with all the new car sales and lease turn ins the used car market is bloated. What this means is that the price for used vehicles is at the lowest point in years. This means that your trade-in is not worth what it was a couple of months ago (this means that the new vehicle will actually cost more since the value of the trade-in will not reduce the amount you are paying for that new vehicle).
My advice is still to wait as long as you can to purchase the new vehicle and as always wait until the last week of the month to make that deal. The dealer has been the holding point for Toyota Motor Company in the past. What I mean is that Toyota builds vehicles in the states and also in Japan, then they expect the dealers to take delivery once they are manufactured. Toyota is paid from the dealer (most dealers finance the vehicles just like you) so Toyota's financial commitment ends when the vehicle is delivered to the dealer. With the sales downturn you may see this change since how many vehicles can some dealers take and not reasonably expect to sell within a 45 to 60 day period. I kept this short but the "chain" of purchase goes on into other segments of the business, in the end you will see some dealers close or limit the inventory to keep costs down.
Are there really deals out there? In reality the vehicles cost the same to all the dealers in your area from any make. The difference in the price occurs when that dealer may expect a different profit in that particular model than the other dealers you may have called. Some want to make more profit than others and they are entitled to make a profit (lets get that clear from the start). Some dealers will not talk price over the phone and if they do you may see some differences when you actually arrive, its not a trick (normally) but face to face is always more accurate. If you have a dealer that is known for lower prices there may be a reason that is probably explained in one of several ways. If you pay cash or at least offer no trade-in vehicle you are seeing the actual price that the dealer is willing to sell the vehicle for. The trade-in vehicle muddies the water since the dealer will place a value on that used vehicle and project what it will take to recondition and service that vehicle and then sell it. That price is figured into the discount you are getting off the new vehicle sticker price. Let me explain this way:
You want to purchase a $30,000 Camry and you have a 1991 Camry to trade in toward that purchase. The dealer would like to make about $1,000 profit if possible (from the new vehicle sale) and this is where that 91 Camry comes in. You are told that the "book price" value of that 91 Camry is $4,000, and you own the vehicle outright. If you go ahead and agree they will just take the $4,000 off the price of the vehicle and you will pay $26,000 for the new Camry. They will take the trade-in vehicle, recondition and repair it and sell it for $8,000. This gives them a $4,500 profit on your total purchase - $1,000 profit on the new vehicle and $3,500 on the used one (less the $500 they spent on repairs). The salesman will get a commission on each transaction so the actual profit is somewhat less, but you get the picture.
Now each dealer looks at the trade in vehicle differently so if you go to several places that is why the sale price is different, sometimes by a lot. Some dealers out of your town will actually give you a better price than your local dealer to make a sale. They will not have to service the vehicle under warranty since you will probably not make the trip back for problems so their exposure to additional costs is less. They treat their local people the same way your local dealer treated you. It's not fair but the practice is common unless you introduce some competition and go back to the local dealer. If you go back to the local dealer then you will probably get the lower price the other dealer quoted. Remember the new vehicles all cost the same, only the trade in varies in value. In reality it's expected that you will do your shopping and counter offer.
My local dealer is higher in price than the prices I get on the internet, why should I purchase from him? Prices will vary when quoting as I explained above, they all start off costing the same. The internet is a wonderful "tool" to compare models and prices, but it has not reached the status for auto purchasing. They can't see your trade in, you may not be getting the best choices in the models you may want, and in the end you may have to make the trip to the dealer to pick up the vehicle. Say you are comfortable with that process, many are, who do you turn to when you have a problem. That "net" dealer is counting on never hearing from you again and the local dealer knows when you arrive that you "shopped" out of the area to save a couple of hundred dollars (not counting the trip time and expense), so why should they go out of their way to take care of your minor problems like they would if you were "their" customer. I would think hard about the actual savings that can be obtained "net shopping" vs. giving the local dealer a chance to make a fair offer and profit since they will be your best friend when something goes wrong, it's just not worth the savings.
I have seen people come in to the dealer from purchasing the Toyota, states away, and yes they felt that the price was worth it, but they also were sold programs that had no value anywhere else than that distant dealer, and then savings started to erode. I can't emphasize enough to get your prices, visit the local dealer and let them make an offer and a profit, that "internet" dealer made a profit from your purchase.
I downloaded cost prices for the Toyota I want to purchase from the net. What's a reasonable profit I should expect the dealer to make on my purchase? That's a tough one to answer. We, by human nature, would like things as close to cost as possible. The dealer is entitled to make a profit since they have expenses to cover to purchase and stock the vehicles, build the dealership that will service the vehicle you purchase, pay the sales person and the related people that are behind the scenes who are involved in the purchase and maintenance of your vehicle. If a dealer makes $1000.00 on the $30000.00 new vehicle its a good profit ratio for him and they can live comfortably with that 3% profit. If they make a $600.00 profit its now down to 2%. You can bounce figures around all you want but in the real world after all the dust clears the average dealer makes about $100 - $150 per new car sale or less in some competitive areas. The world of the Toyota dealer has changed over the years and the fact that they are selling the most desirable product there is no pot at the end of the rainbow.
Lets look at it this way. If you work at a profession and are good at what you do, you are paid what the company owner feels you are worth in that position. You have your basic bills at home and would like to live a normal life. If you were to take your bills and basic living expenses and total them up and add $150 that's how much would you have left for the extras. This is what you are asking the dealer to do, remember he is not making all that $30,000.00. He had to purchase the vehicle from Toyota, in the first place, so he is only working one the difference of the actual sales amount vs. the cost, not the total.
If I owe money on my trade-in who pays the lender? This is figured into the amount financed on the new vehicle. When you purchase a vehicle it's assumed that you will keep it about 75% of the loan period. If you try to trade out of that one sooner, you will owe more than the vehicle is worth, unless you placed a good down payment when you first purchased it. If you try to trade early and owe more than it's worth you are what they call "upside down in the loan". If you have good credit and a good income you can purchase a new vehicle, but you are refinancing the first vehicle into the second one, sometimes at a higher interest rate, and the payments will be higher. It gets worse when you roll that amount over on the next vehicle purchase to the point that nothing can be done until the amount owed (principal of the loan) is lowered by a cash transaction. So if you went shopping and were told that nothing can be done you may have been in this situation or if the payments were higher than you thought you may have been paying off the other vehicle.
Is there any benefit to financing at the dealer or can I do better on my own? The factory is making more vehicles than they can sell. In late 2000, the sales started to decline and the inventory started to build at most dealers. Toyota projects 6-12 months in advance the number and types and models of vehicles they are going to manufacture. So, its hard to turn off that faucet of vehicles to the dealers. To help themselves keep the factories open and the vehicles moving someone came up with vehicle incentives on certain models. If memory recalls it was Chrysler, when they were in trouble during the 80's, that started the incentives, and they stuck. What Toyota is doing is cutting into the profit of the vehicle and sometimes they give the dealer some of that to lower the price to you in the form of cash off. In some cases the offer comes in the form of lower interest rates. These rates are real and sometimes even a credit union cannot meet the low rate, so going with the dealer is normally the best choice. The dealer normally makes a profit if you obtain financing from them. The dealership offers financing for your convenience and they also make a small profit from that assistance. Again, let me say that profit is not bad. Even that nice woman at the credit union is making a profit on your loan, it's just how much you spend is the important part here. Look at all the figures and compare apples to apples and find out if there is a pre payment clause, all states are not equal. One very important point to mention is try to get "GAP" insurance (if you lease). This has been around for some time and is now more common. What it does is to set up a policy that will cover the difference in the value of your vehicle in case you get into an accident and the "totaled replacement value" is less than you owe. This policy protects you from any money out of pocket, sometimes it can be in the thousands of dollars.
Do vehicles cost the same around the country? No the price is different to a degree. Toyota Motor Company sets the price but the actual price can vary due to transportation costs or regional fees. Along with Toyota Motor Company there are two different distributors for Toyota products in the country. They are located in the southeast, represented by Southeast Toyota and the southwest represented by Gulf States Toyota. The remaining dealers are represented by Toyota Motor Company. The distributors may charge more or less for the Toyota vehicles than the non-distributor dealers and since they operate separate from Toyota, they let the local market dictate the price. Normally, it's the same or at least close in pricing. I will say that they offer their own brand of options that are not recognized by Toyota nationally so if you plan on leaving the area some of the items are not covered under national warranty.
Toyota's famous Toyotathon, fact or fiction? Every 8 weeks we turn on our televisions to see some sort of limited time offer from Toyota Sales. "Hurry on down and save like you never have saved before", unless you wait for the next one that starts the week later, with a different scene. These are real sales but its getting old after six or seven years, I think that we are getting the point, Toyota wants to sell vehicles. Many of the offers are for models that are not selling as well as they want, so they place a low interest rate, lease rate or offer money off the selling price. This is from Toyota Motor Company and the dealer just passes on the savings to you. What you don't know is that you can still bargain from that price. The only item that cannot be discounted is the interest rate for a purchase. The lease selling price (more on that below) can be negotiated to even a lower payment in some cases. Don't just walk in and say I want that one and let them guide you, ask questions and then more if you don't feel that it sounds right.
Can I bargain on a lease? Yes, Yes, Yes. Most dealers count on the customer shopping monthly payments when they lease. What you don't know is that the dealer normally does not discount the price of the vehicle when its leased. You pay the full sticker price and more but they structure the monthly payments to meet your budget. If you negotiate the "capital cost" (the actual selling price of the vehicle) you can save a lot on your monthly payments. If you are going to lease a vehicle drop this bomb on the salesman and listen to the excuses why they can't. In reality, a lease is no different than a purchase of a vehicle and you negotiate that price. The dealer is just selling the vehicle to a leasing company and you are making the payments for the term of the lease. While we are here, don't go over three years on a lease, you will be sorry in the end with the hidden charges for mileage, damage, tires wear and it goes on. You will be tired of the vehicle in three years any ways so if you need to lower your monthly payments don't go longer, change the vehicle or the equipment on the vehicle to meet your needs.