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Comment by atwebb | Hacker News Reader

This seems like a "thin article"...of course a dealer is going to be more expensive, why do people hate some businesses for making money? Did you know Uber charges you more than it costs to drive?

I've recently bought 2 cars (first time through dealers), in all my calculations, over the life of the car, new or CPO came out significantly cheaper not even factoring in the nicer experience than trying to buy a Craigslist car or going to gravel lot dealers. I can't believe I just defended car dealers either, but, man, this article came across as terrible.

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A lot of the dealership hate stems from the fact that negotiation is expected, so their first offer is always high, even above MSRP, and if you're meek and mild you're very likely to pay more than you need to. Even still, with the amount of information out there, margin are being squeezed and you're almost never going to find thousands in markup on any vehicle, especially brand new models, so a dealer offers MSRP (e.g. $30k), you counter with $25k, but since the dealer breaks even at $29,400 they stop answering your emails.

Transparency has helped but not as much as it could.

It's the same with private sellers, everyone wants the best price for them. Private sellers/buyers are terrible most of the time and act just like the stereotypical dealer, misrepresenting, not being communicative or transparent, dodging questions, etc. The main reason (I think) private party sales are lower is because very few people are comfortable doing a >$15k transaction without some sort of licensing and business reputation so there has to be a really good incentive to get a car from a non-dealer/franchise.

And this is hardly unique to cars. Yes, I'm going to pay more buying a used camera lens from B&H photo rather than off ebay. It's essentially a risk premium. (With autos, a dealer also provides some services related to paperwork and, potentially, financing/trade-in.)

Yeah. I can't say I typically love the dealer experience but, with a new car especially if you can keep the financing and trade-in transactions independent, you pretty much know dealer cost and what the car is typically going for in your area, so negotiations are pretty straightforward. They can still be a bit of a hassle because the typical dealer wants you come in so they can try to upsell you and obfuscate the transaction. Just keep bringing the conversation back to the out-the-door selling price.

With used, it's more complicated although transparency with things like Carfax help there as well. (As of course does certified preowned even though, of course, you'll pay something for that.)

I might be biases (OP) but I would argue that this is a thin article; I tried to be balanced in providing the benefits and the drawbacks of buying at a dealer. I also made sure to provide sources where I could to keep the data accurate.

In my experience, NEW will never (or almost never) come out cheaper than used, there is too much depreciation in the first 2 years. CPOs are generally good values if you negotiate for it. Best value is a 2-4 year car with moderate miles in a model that has high reliability scores, private party of course.

How'd you do your calculations + assumptions?

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