Jane Shaw had no idea that she could love the car-buying process. She had three weeks left on her lease and her previous experiences in dealerships was leaving her feeling anxious.
But it was while she was running from dealer to dealer looking to replace her 2006 Volvo XC70 that a personal vehicle-shopping service came to her attention.
“I heard about auto brokers from a friend who felt she wasn't getting the best deal at a dealership. I don't have time for negotiation and I'm not interested in spending hours educating myself on how to get the best deal. My friend saved between $7,000 and $8,000 off the list price dealing through them,” says Shaw, a director of marketing for Nike Canada.
Auto brokers like Auto Mall Network are finding that what consumers experience — and don't experience — in the car buying process is crucial for everyone, from students to CFOs.
“We're so conditioned as consumers to comparison shop and play off another, but the car business is where you can negotiate on retail price,” says Viraf Baliwalla, a broker with Auto Mall Network. In a family situation, 85 per cent of the decision on cars is made by women, yet they leave negotiating up to men to minimize haggling. But the family still isn't getting the best possible price, he says.
“What are the odds of your husband outsmarting that sales manager?” asks Baliwalla, who routinely attends remote auctions from his office in Toronto to find new or used cars for time-pressed clients.
An auto broker can be a helpful tool. They offer four services: providing consultation on finding a car according to budget, sourcing vehicles in Canada or the US, negotiating with the dealer on the car invoice, and arranging delivery. Some brokers offer additional services, including car valet and maintenance.
For those services, Auto Mall Network charges a flat fee of $350 for new cars and $799 for used cars, which includes vehicle identification number history and comprehensive inspection by mechanics before clients take possession. For cars imported from the U.S., $1,500 covers co-ordination to get the car across the border.
“The flat structure is what we feel is a fair value for our service. We don't charge a percentage of the car cost because then our compensation goes up the higher the price, which would be a conflict of interest,” Baliwalla says.
Because brokers don't operate a car lot, they buy vehicles as needed instead of stocking up on cars and carrying a heavy debt-load for inventory. With low overhead, brokers can offer competitive pricing. As well, brokers keep track of dealer incentives and rebates, and because brokers have access to the same new cars, dealers have compelling reasons to put only their best prices upfront.
Shaw started by researching cars online and gave her shopping list and price range to a broker. “I went online and looked at manufacturers' suggested retail prices,” she says. “Shopping on the web definitely influenced my decision this time.”
In helping the broker to match her criteria, Shaw first completed an online form. “I told them what some dealerships offered and I'm feeling that with hidden costs there's room to move,” says Ms. Shaw, who says the entire transaction was done via e-mail. Next, the broker consulted with her to decide where he should look. For new cars he'll phone local dealers. Or he'll log-on to Adesa, an auto auction website, to learn the prices at which dealers are buying cars across Canada. The broker gets a history of cars sold in the past 45 days.
Then, he identified cars that match Shaw's list with price quotes from multiple dealers. “For new cars, an auto broker can put you into a vehicle in as little as a few hours. You can go to the dealership to pick it up in a day, if it's in stock. Used cars take a few days to few weeks,” says Baliwalla.
