Big Jimm

I’m on the “VERGE” of making a 500 deposit on a 460L. I really don’t NEED the L but, I think its looks will be so classy. However, I have a few DEPOSIT questions for those of you who have made 460 deposits:

1. Did you actually write a sales agreement of some kind or did you just get a receipt for 500 toward a new 460?

2. Did your receipt (or agreement) say it was SPECIFICALLY for a 460 or a 460L? Or, did it just say that which ever one of the two you decide on - when the time comes - you can pick then?

3. The dealers all say the deposit is refundable. Does your receipt say that and are there any conditions?

4. The dealers also say that the deposit “assures you a place in line.” But, between us, how are we REALLY going to know how they prioritize their list .. wherein certain people can come in, at the last minute, and get a car ahead of you? (I ask that to my dealer and his answer wasn’t all that specific or reassuring.)

5. Did you put a deposit with more than one dealer?

Thanks for your input.

Big Jimm
So. Fla.

Ex-Lexic

I'm sure every dealer has their own ground rules, but here is how my deposit went:

1) I got a written, computer receipt with my name and address on it, date, amount, etc.

2) I also got another form, without title, but it was a sort of order form. It had date, my name and address, name of the salesman, and indicating 2007 Lexus LS460, and the amount, $500, and the word "refundable." It had my signature and the signature of the salesman.

3) No, the sales order doesn't discuss conditions, except "refundable" says it all. My salesman told me several times that he doesn't want my $500, he wants my $80,000. Course thats talk...

4) I asked the salesman for my position in line when I gave him the check. He said I was 13th. I wrote that on my check (not that that means anything). Of course they could put others ahead of you if they wanted to, I would never know.

5) No, there aren't other dealers close enough to have me play one off the other. Also, ALL the dealers in this part of the country are coordinated out of Atlanta. The Atlanta district does all the ordering for the states around here. I bet they would know what I was up to, but who knows? I would rather establish a good working relationship with one dealer and stick with them. You have to check prices from the others, to negotiate hard, but not to the extent of multiple deposits. (My opinion.)

Good luck! Keep us informed.

exBMWowner

I am very skeptical of giving a deposit to a dealer before they have inventory or even confirmed pricing. Lexus likes to convince owners like us that nobody gets a discount off MSRP on these new models. I went through the same thing in 2004 when I bought the LS430 after they refreshed the model.

The reality is the dealers can only sell these cars at MSRP if buyers are willing to pay that much. By giving a deposit this far in advance, you are sending a clear message that you do not expect a discount and will pay whatever they want you to. Lexus dealers have a very healthy profit margin built in to these cars. The percentage spread is higher than many other luxury cars. When I bought my LS430, the sticker price was $72K and the invoice was only around $61K. I waited 30 days for the "must have first" buyers to take up the first round of inventory, and then I negotiated mine for $67K, still a good margin for the dealer but $5K off the MSRP.

It turned out to be a good thing, since resale LS430s are so abundant in the marketplace that people are dumping them now, often for around $30K.

Think it through carefully. Nobody is going to remember that you were the first to have one of these cars 6 months from now.

Big Jimm

Thanks. That really makes a lot of sense.

I've always believed that "any" advance deposit tilts the advantage toward the dealer .. both monetarily AND psychologically. (Ties you to that dealer and ties you to their price.)

So, I guess that I'll be holding off on any advance deposit.

Big Jimm
So. Fla.

Ex-Lexic

I don't see why a deposit ties you into either the dealer or the price. If it is refundable, it doesn't tie you into the dealer. You can get your money back and walk. And how can it tie you into price when Lexus hasn't announced full prices yet? It can't tie you into into prices that haven't been quantified. Nothing signed says MSRP price. You are always free to negotiate price at any time until you sign a sales order with all prices documented to the penny.

exBMWowner

You are correct, however the act of handing over a deposit before discussing price clearly tips the negotiation in the favor of the dealer. You never want to reveal your level of motivation until after the pricing discussions have been concluded. I always let the dealer know I'm looking at several different models (MB, BMW, etc), as well as several different dealerships once I choose the model. I also assure them that whoever I buy the car from will get all of my service business, which is extremely profitable to them. That creates motivation for the dealer to want my business. Then, I discuss what I need them to do for price to make it work for me.

Lexus dealers want full MSRP, period. The only way to get a significant discount is to not reveal any level of motivation to buy until the deal has been cut, and to be willing to walk away from a deal you don't like.

Ex-Lexic

I agree. In my case, I am close to only ONE dealer; the rest are far away. But I could still BUY from a far away dealer, but from the practical standpoint, I couldn't get SERVICE from the far away dealers, just my close one.

My question is: If I buy from a far away dealer and go to my local dealer for all servicing, the local dealer HAS to do the servicing, doesn't he? Providing a loaner car during servicing too?

dfiorito

I am not sure if the local dealer is obligated to give you a loaner car.

My MB told a guy in the waiting room when I was in for service that he was not entitled to a loaner because he did not purchase from them.

Lexus may be different, but I do not think so.

exBMWowner

Typical sales ploy to scare you from going to another dealer who may be enticing you with a lower price. The argument is ridiculous. What if you move due to a job relocation? Are you supposed to sell your car and buy a new one at the new local dealer just to get good service? Lexus would never have the reputation it has if it allowed dealers to treat customers that way.

Dealers make far more profit from their service business than they do from their car sales. In many cases people buy lower end Toyota cars for $300 over dealer invoice. Clearly they are not covering their overhead costs on $300. They make it back when you come back for service. If they turned you away because you did not allow them to make a small profit on the sale, they would be turning away customers from the most profitable segment of their business.

Big Jimm

VERY well said. In fact a deposit MAY work AGAINST you. Talk about "tipping your hand".. what could be more revealing than giving a deposit? Making a deposit "tells" the dealer you are ANXIOUS and ready to buy. And, you've PROVEN your willingness to wait .. so when the time comes, you probably would be willing to wait a little longer, if necessary. But, the no-deposit, no-commitment guy is there today and might be gone tomorrow!

Why wouldn't the dealer lean toward the guy who hadn't committed to ANYTHING yet, and may walk, if they don't nail him NOW? The "introductory period" is only going to last for a SHORT WHILE. Soon after - as the dealers know - they will, again, be holding their hand out for business. And, it remains to be seen how many buyers are going to break their doors down to buy a 75,000 - 90,000 new model.

I can't blame them .. but, the dealers are using this "huge upcoming introduction" to drain every bit of commitment out of prospects as possible. But, I'm a cheapskate. And some self control here appears to be in my best interest.

Big Jimm
So. Fla.

exBMWowner

You and I think alike Jim. Now if we could only get the rest of the forum readers to take back their deposits and play hard ball, we could ALL get a good price on our new LS460.