Share

New research into saving money when buying a new car has landed, and this stuff is not from an organization chasing you to buy a magazine or subscribe to some consumer study – no, this research comes from academics.

Their simple formula for saving money? Find out what the dealer pays, visit two dealerships, bargain, and do your research into price comparisons. Do all that and you're likely to save about $800 (all figures in U.S. pricing), reports a recently published research paper co-authored by Jorge Silva-Risso, an associate professor of marketing at the School of Business Administration at the University of California, Riverside.

And don't fret if bargaining makes you ill. Mr. Silva-Risso and his co-authors, Fiona Scott Morton of Yale University and Florian Zettelmeyer of Northwestern University, also found that a consumer who doesn't like to bargain or do a lot of research can save $230 (U.S.) by doing just two things: finding out what the dealer pays and visiting two dealerships.

"This really shows that even the consumer who doesn't like to bargain can get the price reduced if they are informed," Mr. Silva-Risso says in a release highlighting the research findings. "And, if they are aggressive, and like bargaining, they can save even more.

"My recommendation is that they arm themselves with as much information as possible, and be patient in the negotiations, until they find the car they like at the right price."

Interestingly enough, Mr. Silva-Risso is an alumnus of J.D. Power and Associates, an organization that sells consumer research to car companies. After seven years working in sales incentives, vehicle rebates, promotional interest rates and lease support programs at J.D. Power, we can assume that Silva-Risso moved to UC Riverside to do deeper thinking.

Rarely do academics delve into the nuts and bolts of deal-making, so this study is highly unusual. But the details, while restricted to the U.S. marketplace, are fascinating:

Buyers who have learned the dealer's invoice price save $121 on average.

A consumer saves $109, or about seven per cent of dealer gross margin, when they shop at two dealerships instead of one, and about $600 when they shop at as many as seven dealerships.

Consumers willing to do multiple rounds of bargaining save an average of $302.

Deals of the Week, of course, does much of this legwork for you, highlighting four solid offers with all the pertinent details – at no charge.

This week, Deals has the usual foursome, though one represents something of a mea culpa and an apology. Two weeks ago, we included information on the 2012 Santa Fe that was incorrect. In particular, we pointed to three programs that are offered by a rival auto maker on certain models, but not Hyundai Canada: Cash for Lease, Auto Show Bonus and Canadian Forces Bonus. The quoted lease rate was also incorrect. Below you will find the correct numbers for the Santa Fe and three others.

Note that we're just starting a new month when new sales sweeteners are often introduced and aging ones have just expired. The Santa Fe offers, for example, were slated to end Feb 29 and may or may not continue into March. Deals has indicated dates related to other offers in this week's roundup.

As usual, Deals of the Week obtained pricing information from carcostcanada.com, among other sources. Here are the numbers.

• MSRP: $29,699
• Freight, dealer prep, air conditioning tax: $1,860
• Dealer discount (estimated): $1,000
• Factory discount: $3,500 (Dealer Cash Factory-to-Dealer rebate scheduled to expire Feb 29, 2012)
• Taxable subtotal: $27,059
• Total price with 13 per cent HST: $30,576.67
• Can be combined with 2.99 per cent Smart Finance rates for up to 84 months

• MSRP: $30,810
• Freight, dealer prep and air conditioning tax and Green Levy: $1,735
• Dealer discount (estimated): $1,000
• Taxable subtotal: $31,545
• Total price with 13 per cent HST: $35,645.85
• Factory discount: $1,500 (Non-stackable Cash Discount factory-to-consumer rebate for cash purchases slated officially to end Feb 29)
• Final price: $34,145.85

• MSRP: $28,498
• Freight, dealer prep, AC tax: $1,695
• Dealer discount (estimated): $1,000
• Factory discount: $3,000 (Non-stackable Trading Dollars factory-to-dealer rebate slated officially to expire Feb 29)
• Taxable subtotal: $26,193.00
• Total price with 13 per cent HST: $29,598.09

• MSRP: $26,595
• Freight, dealer prep, AC tax: $1,895
• Dealer discount (estimated): $1,000
• Factory discount: $1,000 (Mazda Retail Cash factory-to-dealer rebate slated officially to expire Feb 29)
• Taxable subtotal: $26,490.00
• Total price with 13% HST: $29,683.70

Pricing information source: carcostcanada.com. Calculations based on Ontario customers. Please note that while the information above is accurate at the time of publication, incentives are given at the discretion of individual dealers, and may be changed or discontinued at any time. Dealer discounts are negotiated with the customer on a case-by-case basis.