Inside the NEA® Auto Buying Program
You probably don’t know it, but as an NEA member you’re part of a powerful, 3-million-strong car-buying club. Think of the NEA® Auto Buying Program as a giant Costco for car shopping, where the collective buying power of NEA members is funneled to negotiate an average of $3,383 off MSRP. Perhaps better still, that lowered sticker is GUARANTEED as part of a no-negotiation contract with more than 5,000 dealers nationwide. The discounted price quoted to you is what you’ll pay. Period.
Below, we give the nuts and bolts of why the program is real, and works, as well as some extremely important car shopping advice that’s valid regardless of whether you use APA or not.
Why it works
1. Car dealers are in debt. They have to borrow to buy the cars on their lots. The longer they have the cars, the greater the debt and the worse the situation gets. The value of their cars goes down the longer they have them, even as the money they owe gets more onerous, because they can’t afford to acquire newer, sexier models to sell.
2. Today’s customer is smarter. You can go to Edmunds.com (or any number of sites, including the NEA® Auto Buying Program) and quickly learn the difference between what the dealer paid, known as the invoice, and the sticker, or MSRP.
3. That pits dealers against each other. Any customer can quickly locate 3 dealers in her area who have the car she wants and then, digitally, contact them and negotiate the best deal without ever talking to a guy in a plaid suit. A dealer might spend over an hour dueling for a single customer—only to lose the sale.
4. Wiser dealers know that steady sales at a pre-negotiated, no-hassle prices may lead to a lower, per-car profit, but a larger income overall as they can sell more cars, faster. It also creates a powerful feedback loop of superior customer relations with buyers returning for regular maintenance and positive word of mouth.
How it works
You want to buy a new car (used car information follows below). You navigate to the NEA® Auto Buying Program and from there pick any make, any model. As you run through potential options, be sure to understand what you’re seeing, and what’s occurring in the background:
1. The site is searching dealers’ existing inventories. A broader search (up to a 300 mile radius from your zip code) will yield a broader selection, and typically, a lower price. Myles Cohen, a middle school counselor in Connecticut, used the program and saved $3,700 off the sticker of his 2010 Acura MDX, and says he chose a dealer 47 miles away because of the price. Then he switched to a local dealer for service. “It was no problem setting up new car service and they honored all the perks such as the first service free of charge.” Cohen’s experience is hardly unique; dealers make more money on service in the long run than they do selling cars, and are always happy to gain a new customer who will likely maintain a relationship with the dealer after their warranty has ended.
Cohen also remarked that the dealer who sold him the MDX was exceedingly enthusiastic, walked him through every detail of the sale, and never once suggested changing the price.
2. Even if you’re dead set on not loading on the options, look anyway. The NEA® Auto Buying Program has negotiated some superb deals on options, often at huge discounts; you can see these as invoice prices, which means you’re only paying what the dealer paid for the extras, not padding his wallet, too.
3. Note the TrueCar price graph that shows where the price you’d pay falls on the spectrum of what others paid, and how much less than sticker you’re being offered.
4. If you’re not blown away by the price quoted back to you, try an experiment: enter a zip code of another part of the country where the car you want is less popular. Say, a Subaru in Texas if you live in Colorado. A convertible in Wisconsin, if you live in Florida. Remember that regional tastes drive the price of everything, and cars have “hot” and less hot zones. BMW thrives on the coasts, for instance; all-wheel drive is more popular in snowier climes. What you’re aiming for is a very good deal, say $1,000 less than what you’re being quoted locally, plus a dealer willing to ship the car to you for a low enough price to make the extra legwork worthwhile.
Should I buy used?
While the NEA® Auto Buying Program also sells used cars, they’re more hamstrung. The reason is that dealers might advertise the same used car on several sites at once and, by law, whatever price they advertise is the lowest price the car can be listed for on any site. But Charlie Vogelheim, Executive Editor at IntelliChoice, one of the most respected automotive information providers in the United States, suggests a few good strategies for buying a used car.
1. Get the Carfax. The buying program listings throw in this vehicle history report for free, and this document shows you how many past owners the car has had, any accident reports, and major repair records, mileage, etc. Obviously a more gently used car is what you’re after.
2. Look at where the car has lived its life. While the Carfax won’t show if the car was parked outside or garaged, it will give you an idea of where in the country it was driven. In some cases, it may be worth buying a car from Florida or Texas rather than Michigan, simply because corrosion is still a problem with any car that’s had to endure salted and sanded winter roads.
3. Certified-pre-owned cars are, according to Vogelheim, always worth paying attention to. Dealers typically won’t go through the trouble of too much refurbishing if a car’s already in bad shape for its given mileage and don’t want to offer an extended warranty on such a car, so they won’t certify it. So cars that do gain certification are, by default, already the pick of the litter. And in most cases a certified-pre-owned car is eligible for an extended warranty, which is nearly always a smart bet if you can afford it and you intend to keep the car for several more years.