There are few things like the heart-pounding excitement of a deal won by good old-fashioned haggling. But when it comes to buying a new car, it seems that winning may often be more apparent than real.
So the tips from that negotiations skills course may not always work: "Make a negotiator happy - haggle . . . if they mention 'big sums', remember they may not be nuts, you may just be naïve . . . in conceding, be more like Scrooge than St Francis."
But, as you test-drive the car of your dreams, one thing is sure: "If you are impressed with the props, then you have made your first concession".
Of course haggling is a great pretence on both sides, as everyone understands the list price is just a starting point. "The costs of building a car are so low compared to the list price, no car manufacturer would be willing to show the factory gate prices," says one distributor. "They can sometimes be embarrassingly low."
Car makers sell to distributors who add their margin. Distributors typically do well, and no fewer than five feature in the listing of Ireland's Top 150 companies. Like every business they treat their margins as a secret wrapped in a mystery, hidden in an enigma.
Still, it's estimated by those within the industry that they can earn gross margins of 12-17 per cent. Only time will tell if the removal of Block Exemption will have any impact here.
The distributor's margin gives him a profit and covers the costs of staff, marketing and ensuring there are enough cars available for customers. Sometimes distributors may use it to absorb part of the Vehicle Registration Tax (VRT). MG Rover will do this for the first few months with its new City Rover, and Lexus and Ford did it on models over 1,900 cc after last December's Budget.
Distributors sell to the dealer network. The dealer's margin varies according to the model, but is thought to range between 7-12 per cent of the list price.
So, in theory, this is potentially your maximum discount. In reality of course, you'd be lucky to get half of it by way of discount, as the dealer also has to cover his costs and take a profit.
"Dealerships are not without their risks and some have gone out of business," notes one distributor. "They have to be very efficient with good sales staff making sales and appraising second-hands properly. You have to give them a lot of credit for what they do. There are not many businesses managing the process of taking in a second-hand car and passing it on. You could have up to €1 million worth of used cars sitting on the forecourt."
When it comes to discount, fleet buyers do best. "Some of the dealerships give up to 9 or 10 per cent to the trade on volume marques, and up to 7 per cent on luxury marques," claims one dealer.
For everyone else, the size of the discount varies with several factors such as the car, the waiting list, how you structure the deal, the time of the year, the location of the dealership and your haggling skills. "You'd be surprised at the number of people who come in and don't even ask for a discount," says one car salesman.
Discounts as a percentage of the list price tend to be higher on smaller and medium-sized cars where there's a lot of competition, maybe a lot of cars on the forecourt, and higher volumes are sold. This is necessary as a dealer may be making very little on a small car.
Luxury cars are sold in tiny volumes, have lower discounts relative to the list price and generally involve a waiting period. Still, one financial analyst observed that it was practically unknown for luxury marque dealerships here to go to the wall. Such is the margin than even selling one luxury car is a good day's work. So dealers try to get the best of both worlds and sell cars across all segments.
"The Mercedes S 280 is effectively built to order, so the discount might only be 2-3 per cent whereas it could be nearly twice this with the Audi A4 and VW Passat," says one dealer.
Dealers like straight cash deals. Otherwise, they have to factor the costs of servicing and warranty into the price of the trade-in, so customers may do better selling their old cars privately.
The end of the month or the end of the line generally brings more generosity from sales people as they try to shift stock to meet targets and get additional margin bonuses from distributors. A new model means very good deals on the older version with the distributor sometimes taking the cost of extras to move stock.
Otherwise going wild on the options' list increases the specification and pushes up the price but the discount tends to remain unchanged.
Good shoppers obviously compare the list price and the discount from dealership to dealership. Fiat uniquely quotes an "on-the-road" price, which dealers cannot adjust with delivery charges so everyone works from the same list price.
Dermot Jewel of the Consumers' Association is a little pessimistic, however: "Shopping around doesn't seem to achieve significant price reductions. Dealers are keen to hold margin. It's not in the price that you seem to get the deal and sometimes when it comes to leaving with a full tank of petrol, talk about cut to the bone."
Sales staff do not need an expensive business course to tell him that: "Price crumblers bankrupt their business. . . buyers always challenge prices and invariably have 'better offers' from the competition. . . if he's selling squeeze him, if he's buying, say 'no'".
But of course unless you're a diplomat or buying for permanent export, the dealer's discount is only a tiny fraction of the list price. VAT and VRT at shocking rates on private cars are the great non-negotiable.
In fact once a car has been built, VRT tends to be the single largest increment, so the government is a huge beneficiary of new car sales. Jewel argues that there is not a good realisation by consumers of how much of the list price is actually made up of tax. In 2002, €756.3 million was collected in VRT on over 156,000 new cars; that's just €145 million lower than the turnover of the Republic's largest motor distributor.
Still you have to negotiate what you can. Leaving with only the floor-mats as goodwill is a wasted opportunity, though it seems that generosity is rarely contagious and very little is free.