New car: 2008 Lexus LS 460

It took me six months to do it, but I finally made my first (and probably last) splurge after selling the business: a new car.

The whole set of photos is “here”: Some are below….If you don’t see them, log into Flickr and YouTube since they’re only visible to friends/family.


More photos at Flickr.

h2. Videos

The doors close themselves. Once the door is close enough, it’ll finish the job and close itself:

I’m not used to it, so I still slam it shut. The trunk opens and closes itself too:
Accelerating up a steep hill:
It’ll do 0-60 in 5.4 seconds if someone competent is driving it and not going uphill.
There’s no key to put in the ignition, as long as the key fob is inside the car you put your foot on the brake and hit the Start button. Without your foot on the brake, it turns on only the power (or “accessories” as most cars say).Turning it off and back on:

The stereo also has a DVD player in it, so you can watch movies on the nav screen if you’re not driving. If you aredriving, you only hear the audio of the DVD. This is really handy for us waiting in line and riding ferries.

h2. Choosing a car

I dreamed that if I could ever afford to, I’d walk into a BMW dealer and buy a loaded 7-series “just because I could”. It didn’t work out that way, not only did I not buy a BMW, I didn’t get the loaded model and I didn’t walk into a dealer to do it. In fact, I didn’t even want to buy a car, I’m not a car guy and I realize how financially stupid it is to buy a new car as opposed to a used car. But only having one car was making us uncomfortable when one of us has the car and the other needs a car for convenience or, yikes, an emergency — thoughts of the baby getting hurt and one of us home without a car to take her to hospital will make me do things I would normally consider to be unwise, like buying a new car.The wise financial move would be to get a Honda Accord or something equally practical (and boring) to have as a second car. But getting a car we would prefer not to drive compared to the current car that we like would mean it would sit in the garage and rarely be used so when it was needed, it would have a higher likelihood of not running. Case in point: my 1985 BMW, that is way sexier than a new Honda Accord to me, sat in the garage for years because it wasn’t as comfy as our other car, so it always had a dead battery so it couldn’t be driven when we wanted or needed to. So whatever car we got, it had to be something we’d _want_ to drive. That, to me, is a luxury sedan with all the gadgets.After looking at the market for luxury sedans and deciding which cars I liked the looks of, my choices were BMW 5-series or 7-series, Mercedes-Benz E-class or S-class and the Lexus GS or LS. Making a long story short, I decided on the LS 460. I hemmed and hawed for a while about the longer LS 460 L. And I was interested in the hybrid “LS 600h L”:, but not at $115K and not if it doesn’t get any better gas mileage than the non-hybrid (however, it does meet the “Super Ultra Low Emission Vehicle standard”:

h2. How to get the best price on a new car

Rather than go into a dealer to negotiate, I essentially did a reverse-auction with nine Lexus dealers from Seattle to Las Vegas via fax and email. Within 24 hours, I had prices ranging from $65K to $69K on the exact car. After telling each one about the lowest price I could find, they all dropped their price to match it or got very close. The sticker price on the car is $73K and the invoice is $63K, so with little work and not having to deal with a single irritating salesperson, I had the price fairly close to invoice. I think that’s pretty good considering the LS 460 is selling extremely well. The auto industry is in a period of declining sales, down 2% over last year, but Lexus is one of the few makers that had increased sales in 2007, up 4% for 2007. Their increase is due mostly to the LS 460, which was redesigned in 2007 — “sales for the LS are up 79%”: from 2006, only two other Lexus models (the IS and ES) had higher sales in 2007 versus 2006. For other car makers with less positive sales, I’d expect to get a car for invoice or even less using this method.

I imagine I could have negotiated the price from $73K to $71K or maybe $70K at a dealer. I’d give you all the details here for free about how the car dealer industry works and how to get the best possible price yourself, but instead, I highly recommend paying “”: $40 for the info. That’s what I did and I paid $67K, so that $40 saved me $3000-4000 had I walked into a dealer and spent most of a day negotiating. An alternative is to use “CarBargains”:, which is a service that will do the same thing I did and only charge you $190. They say they take two weeks to do it, though, while I did it in a few days. Incidentally, I also tried buying it through Costco. They have an auto program that is similar to CarsDirect or other car brokers and promise to get you a good price. On this car, in just minutes on Costco’s web site and after a quick call to a dealer, I was quoted a price of $69K for a car with a $74K sticker price. CarsDirect, on the other hand, said $72K was the best price for that car. If you want a decent price really quick, Costco’s program seems to be good.

h2. Poor Salespeople?

Car dealers hate people like me. They call us “Internet people” but they don’t mean it as a compliment. Of course, they don’t like people who shops around and tries to get the lowest price, they prefer the person who walks in and pays sticker price or who feels good when they get $1000 off sticker. Dealers whine that they are in the only industry where people negotiate on price and people like me take food off their family’s table (although they don’t see the problem with taking food off my table). But they’re wrong. The car industry is the only industry where the retailer _expects_ you to pay the Manufacturer’s Suggested Retail Price (MSRP) and complain when you don’t want to. When you buy a TV, a coffee maker, a bicycle, a gallon of milk or anything besides a car (and an Apple product), you don’t pay MSRP, you pay a price set by competition between retailers and they don’t complain they aren’t getting MSRP.

Unless they’re the world’s worst or dumbest salesperson, if they agree to your price they are earning a profit, no matter how much they claim they aren’t. In fact, on all cars, dealers make a 2-3% profit when selling a car at invoice, the price they claim they paid the manufacturer to get the car. Plus, they earn bonuses if they hit sales targets, so they earn even more. 2-3% isn’t a great profit margin, but it isn’t losing money. Besides, if the old method of buying a car was not so universally hated and they moved towards a more competitive pricing model like the one I’m advocating, they’d likely sell _more_ cars earning them higher incomes even with small profits.

The salespeople earn a commission, usually 20-25% of the profit on the car. The average salesperson sells 100-120 cars per year. If the average profit on a car is $2,000 (the profit on my purchase was over $5,000 which is low for the Lexus LS but profits are higher on luxury cars), the salesperson earns over $50,000/year, not including bonuses. Unless you earn more than that, I wouldn’t be too concerned about the welfare of your car salesperson.

3 thoughts on “New car: 2008 Lexus LS 460”

  1. Pingback: Year in review

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