Carsala was started to make the car buying process better – to help car buyers save time, money, and hassle. As a result, Carsala CEO Tyler Elliston is requesting that any past customers send a rating or review to feedback to info@carsala.com. If you were happy with the service, we’d love to know what you liked best about it. If you thought Carsala sucks, we’d love to know how we can improve the service the next time around. We exist for you, the car buyer. Please help us serve you better.
Your rating and/or review of our service is invaluable to us as we continue to build a better way to buy a car.

For non-customers reading the blog, please feel free to ask any questions about the service via email (info@carsala.com), phone (888-855-8258), or chat.

That’s a good question. Who do you trust in the auto space and why?

When I was buying a used car in 2005, the answer was no one. This surprised me at the time; I’m not typically a cynical person and even I felt like if someone was going to “watch my back,” it was going to me. So I labored for days, finding all the cars for sale that met my criteria, calling dealers all over the country, pulling Kelley Blue Book values, etc. etc. etc. I actually took off of work.

Did I get a good deal in the end? Yes. But boy was it painful. I started thinking about how great it would be if there was a company that would do all of that for me – for me, not for dealers or private sellers. Rather, a company that actually had my best interest at heart and was skilled enough to duplicate my good results.

That’s how Carsala started. The vision of Carsala remains focused on being a company that buyers can trust to do everything possible to make the car buying experience affordable (i.e. save money) and enjoyable (i.e. save time). What I didn’t anticipate is how hard it would be to convince others that we are what we say we are. Some simply have quit believing that there is anyone trustworthy associated with car buying. That’s unfortunate, both for their sake and ours.

Who do you trust in the auto space and why?

If you want to be extra-ordinary, do not do “ordinary” things. By definition, following the collective “crowd” makes one ordinary, no?

When I read the word “contrarian,” I think about economic theory or investing. But at Carsala, I’ve observed that our most extraordinary deals are often because of a contrarian perspective – you might associate that with risk-taking (and to an extent, that’s right). Let me explain with an example:

One of the deals we’ve done where dealers reduced prices the least was on a Toyota Prius in the Bay Area.
One of the best deals we’ve ever done where dealers’ prices simply collapsed was also on a Toyota Prius in the Bay Area.

Why the difference?

The deal with not-so-great results came in mid-2008 right as gas prices were peaking. Dealers didn’t need to reduce their prices at all. Customers were going crazy for any car with good gas mileage, especially a popular hybrid. But dealers acted as if the past predicted the future and started buying tons of Toyota Priuses to meet the demand they assumed would continue. And then Christmas came and Santa brought big savings. Gas prices plummeted, people were once again willing to buy less fuel efficient cars, and demand for Priuses dropped. This happened right after dealers had stocked up. Supply of Priuses was simply far greater than demand. And our Prius customers cashed in.  By mid-2009, supply and demand had normalized and the opportunity for that “killer deal” was no longer there.

Lessons

Going against the grain can be a very smart move. When gas prices were high, we had customers buy Chevrolet Tahoes and get killer deals. They were betting that gas prices wouldn’t reach a point so painful they’d regret their purchase. That bet turned out to be a good one.

So ask yourself, “what am I willing to buy or accept that others are not right now?” (heard of any manufacturers doing recalls?) The answer is probably a good place to start looking for a killer deal.

I’m more of a Honda guy, but I’ll defend Toyota in this case.

Fact 1: All cars (even new) have vulnerabilities.
Fact 2: Some manufacturers publicize them and fix them.
Conclusion: Some manufacturers who make cars with vulnerabilities do not publicize them and fix them.

Which kind of manufacturer do you prefer?

Toyota vehicles are consistently rated as some of the safest in their respective classes. This doesn’t change that. I’ll address this more in another post, but buying a car when no one else wants it is a great way to get a good deal. If you were thinking about buying a Sienna, now is a great time to do it if you are like me and think most negativism around Toyota recalls is overreaction.

Are you nervous now to buy a Sienna because of this news? Why? Why not?

Below is a press release we put out awhile back revealing the results of a study we did:

Carsala, the new online service for people who are looking for a used car but hate the traditional buying process, today released results of its Carsala “Used Car Purchasing Survey 2009,” which shows that 73 percent of American used car buyers dislike negotiating with dealers, and a majority rated themselves either as poor or only fair negotiators.

In the wake of the federal government’s “cars-for-clunkers” program, the U.S. new car market collapsed in September to an expected 9.2 million car purchases annually for 2009, compared to yearly sales of 16 million vehicles seen earlier in the decade. On the other hand, a combination of tight supplies of both new and used vehicles and higher demand from a frugal public have pushed average used-car prices to the highest levels in years, industry watchers say.

In addition, at a time when more and more people are turning to used cars to save money, buying a used car still has all the uncertainty and frustrations traditionally associated with this purchase.

The Carsala-sponsored research, conducted earlier this year, indicates that 42 percent of respondents believe dealers sell higher quality used cars than private sellers. But going through the process of buying a used car from a dealer is not an easy experience, often involving many hours of work and requiring visits to numerous dealers.

The study found that majority (52 percent) of survey respondents expected they would need to visit more than three dealers to find a good used car and 43 percent believed it would take them at least nine hours to find and negotiate for the right automobile.

“Clearly, Americans see the value in used cars for financial and other reasons, but do not enjoy the process of buying a used car from a dealer,” said Tyler Elliston, Carsala CEO. “Nearly half of our survey respondents expressed interest in a trusted third party who would work on their behalf with dealers to get a good value for their money. And that is exactly what Carsala was created to do.”

One of the more interesting results of the survey was that although an overwhelming 93 percent thought they got a fair price for their last car purchase, a significant number (more than 20 percent) of respondents either got nothing off the dealer price, didn’t try to negotiate, or didn’t even remember what they paid.

And although price is important, 80 percent of those surveyed think it is more important to get the best value for their money than to get the lowest price.

The Carsala “Used Car Purchasing Survey 2009″ was conducted by a third party, via email, among a total of 461 American consumers (212 female, 249 male).

My question to you is, “do you enjoy negotiating”?

If I had a dollar for every time I was asked that, I would be very, very wealthy.

We can (and do) give many practical tips, but first I want to address the answer at a high level. Let’s first define terms. A “good deal” is best defined as the biggest available difference between a car’s “value” – what it’s worth – and a car’s “price” – what it costs. Let’s look at an example (with fake numbers):

A 2008 Honda Accord with a Base Trim (ex: LX) and no Options (i.e. no leather, navigation, 4×4, etc.)

Value = $15,000
Price = $14,500

A 2008 Honda Accord with a Premium Trim (ex: EX) and Fully Loaded (i.e. has leather, navigation, 4×4, etc.)

Value = $18,000
Price = $16,000

Which is the better “deal”? Though the Accord with the base trim is cheaper, the one with the premium trim is a better deal because the price represents a bigger discount from the value.

Alright, so now to answer the question. The short answer is that you compare the price and value of every car for sale that meets your requirements and the “best deal” is the one with the biggest difference. Sounds simple enough, right? Well, not exactly. There are very few published prices for cars online today. Wait, but I can get hundreds of prices on Autotrader.com and cars.com! True, but the majority of those prices don’t represent the price you could actually pay. Sometimes the price you see online requires you to finance through the dealer (do not do this if it’s required!) or more often, the price online isn’t actually the lowest price the dealer will sell the car to you for. When comparing price and value, which do you want – the advertised asking price or the post-negotiation price? That’s right – the post-negotiation price. This is the reason research alone will never produce the “best deal.” Because research doesn’t get you to post-negotiation prices.

Value is equally hard to discern. Is it Kelley Blue Book, or Edmund’s, or NADA? None of them, unfortunately. They make (valiant) attempts at estimating value, but there simply is no measure out there today dynamic and accurate enough to use for value. However, here’s the good news. Since we’re looking at the discount off the “value,” whether or not the value itself is accurate or not is unimportant, as long as the value is similarly inaccurate for all cars I’m considering. The result is that, for a Honda Civic, the best deal means paying 20% below Kelley Blue Book while on an Acura MDX, the best deal means paying 5% above Kelley Blue Book. Such variation is evidence that a particular measure of value is inaccurate. If a measure of value were accurate, price would equal value on average.

A note on value: unlike cost, value is subjective. Suppose everyone in the world is considering buying one of 2 cars: a 2008 Honda Accord without a sunroof for 19,000 and an identical 2008 Honda Accord with a sunroof for $20,000. Everyone, including you, agrees the one without the sunroof has a value of $20,000. Everyone but you thinks a sunroof is worth $500 (for a total value of $20,500); since you like stargazing from your car on clear nights, the sunroof is worth $1500 to you (for a total value of $21,500). Which car is the best deal you ask? To everyone else, they can get a $1000 discount on the Accord without the sunroof ($20,000 value minus $19,000 price) or a $500 discount on the Accord with the sunroof ($20,500 value minus $20,000 price). Therefore, the best deal for everyone but you is the Accord without the sunroof. You, on the other hand, can get a $1000 discount on the Accord without the sunroof ($20,000 value minus $19,000 price) or a $1500 discount on the Accord with the sunroof ($21,500 value minus $20,000 price). You pick the Accord with the sunroof. Even though you paid more, it was a better deal because of how much you value the sunroof.

So…in conclusion, get as many low, post-negotiation prices as possible and compare them to a consistent baseline like Kelley Blue Book, NADA, or Edmund’s, making value adjustments where you don’t think that baseline adequately adjusts values for super-cool features like a sunroof.

If you’ve made it this far in this post, congratulations. You should have majored in Economics. My wife, who makes fun of me for my “business talk,” would have lost interest long ago.

‘Netted’ Discovered Carsala this morning: http://bit.ly/cUycoK

From BNET:http://bit.ly/axFn9i

A lot of us don’t like buying used cars. The cliché of the sharpie salesman in his cheap suit looking to make a monkey out of easy marks has just enough truth to scare some of us into buying new. Carsala, a Berkeley, California start-up launched in 2008 with $850,000 in seed money, says it will take the hassle out of it for you. And it has companies like CarMax—which sells used cars at a fixed price—squarely in its sights.

“If you consider haggling with used-car salesmen a nightmare, then Carsala…wants to be your comforting glass of warm milk,” wrote the New York Times.

The start-up was backed by Labrador Ventures, Launch Capital, Band of Angels and some individual investors.

Tyler Elliston is Carsala’s CEO, and he commissioned a perhaps self-serving survey that concludes that consumers can save an average of more than 25 percent off CarMax prices by using his national service.

Carsala’s business model is different than CarMax’s. Carsala contracts with professional negotiators who will, over the phone, negotiate the best possible deal for its customers. Carsala’s fee is 20 percent of the difference between what you paid and the car’s price in the Kelley Blue Book used vehicle guide. Part of what Carsala offers is a research service. The customer can choose a local search (most do) or a national one. If the customer chooses the latter, Carsala goes through four million online listings looking for deals, then starts negotiating.

Haggling may be second nature to the average shopper in the souks of the Arab world, but it is not a well-honed skill for many Americans. “As much as people hate negotiating, it can save you a lot of money,” Elliston said. Carsala claims that on average, it saves customers $4,000 off of Kelley Blue Book suggested retail prices (or 20 to 25 percent on the deal).

Women are believed to dislike buying used cars even more than men, and Elliston said, “We see a slight tilt towards women, but not as much as we had thought we’d see.”

According to Elliston, “The results of the study were profound in that not only could car buyers achieve a better sales price by negotiating with non-CarMax dealers, but they could also save money with simple research and comparison.”

The survey concluded that, with research alone, consumers could save nine percent over CarMax’s fixed prices, and with negotiating added in the savings were 25 percent. It said that CarMax’s prices were just .55 percent lower than Kelley Blue Book.

In fairness, CarMax is an experienced car vendor that has sold two million vehicles and appraised five million. It is Fortune 500 company, and has 100 stores around the country. And there are other considerations besides price. Buyers walk away with a five-day money-back guarantee, a 30-day warranty (60 days in Connecticut) and a vehicle history report. Cars go through what CarMax describes as a 125-point inspection.

George Hoffer, a professor of economics specializing in the auto industry at Virginia Commonwealth University (near CarMax’s homebase in Richmond) says that he once believed the company’s prices were too high, but has since come to differentiate “explicit” and “implicit” prices. CarMax’s explicit prices may be higher, he said, but shopping elsewhere involves implicit costs, such as “having to go to a bunch of dealers and haggling with them.” He said the CarMax service appeals most to two groups: high-income people and women.

Trina Lee, a spokeswoman for CarMax, said she had not reviewed the Carsala survey, but offered a statement. “CarMax is proud to offer a low, no-haggle price on every car,” it said. “Our prices are transparent and clearly marked on every car, both online and on the lot. We offer peace of mind, exceptional value and ease of shopping. …CarMax provides a wealth of information to customers both online and in the store and encourages and assists consumers with making a fully informed car buying decision. Used cars are individually unique, are not a commodity, and as such are nearly impossible to compare to one another.”

Many used car dealers are honest and reputable business people.  However, some are simply manipulative liars.  Consequently, there are few considerations when buying a used car as important as the credibility and reputation of the dealer.

Carsala’s technology accesses millions of listings on a daily basis and our professional negotiators have negotiated hundreds of deals.   We’ve worked with some great dealers, while others have earned well-deserved spots on the Carsala blacklist.  Here are a few stories:

The “Clean” Clunker

You Never Want to See This!

Even if a dealer describes a car as “clean” and the price is right (or lower than “right”), be careful!  Carsala had looked at over 200 cars for a very kind woman in her late 40s.  In order to get her the best price possible, we called close to 20 dealers to negotiate the price.  We always ask the dealer about the condition of the car, look at the car’s vehicle history report, and then arrange a mechanic inspection (if instructed by our client).  In this case, the dealer conveniently omitted any indication that the car he was trying to unload for close to Kelley Blue Book retail value was a total clunker: salvage title, odometer rollback, etc.  Though vehicle history checks aren’t 100% foolproof, they are generally a good indicator of car quality.

On another occasion, a dealer offered Carsala a sweetheart deal (so it seemed).  The problem was he only provided a 16 digit VIN in the listing.  That just might be a red flag (read: sarcasm) given that VINs are 17 digits.  Sure enough, the car had been wrecked.  Minor oversight?  Could be.  You be the judge.

The Botox Beater

1 Owner Looks Good; but Look Deeper

There’s no fountain of youth for used cars, despite what the odometer may say.  We were looking for a Hyundai Sonata for a local school teacher.  One deal stood out – it exactly met the client’s requirements, was a great price, and even had a clean CARFAX report (with 1 owner).  Luckily, Carsala’s technology raised a flag that the CARFAX mileage was notably different than the mileage in the listing itself – 30,000 miles.  Not only was this suspect because of the large difference, but also because the listed mileage was such a round number.  Our professional negotiator asked the dealer for written evidence that the car had 30,000 miles and had not been subject to a rollback.  The dealer subsequently acknowledged that the odometer had a “discrepancy” he couldn’t explain.

The Sleezy Saleman
We were negotiating a deal for a graduate student who was willing drive a long distance “if the deal was right.” So we put Carsala’s technology to work, found a number of good opportunities, and our professional negotiators hit the phones.  The #1 deal was just a steal – perfect car, clean CARFAX, etc.  But something didn’t sit right with the negotiator.  Normally, we get the deal in writing from the dealer after the customer selects a car.  In this case, because of the negotiator’s intuition, we opted to request confirmation in writing before presenting it the customer.  When the negotiator called the dealer back, he was informed that the salesman he’d been communicating with had been fired earlier in the day and there was no way they could honor such a low price from a clearly disgruntled former employee.  Virtually anyone without such extensive experience in the auto space may very well have driven 300 miles to buy a car for an imaginary discount.

Carsala can help you lay all these concerns to rest.  Our technology is world-class; our negotiators are even better.  Or if you are a true do-it-yourselfer and don’t want to turn over the whole process to Carsala, stay tuned for product announcements!

Ah, the age old problem: You are looking for a car, but you want it to look good with the minimal amount of effort. I have seen and experienced black car ownership and it can reduce a normal person to a neurotic mess. There are actually 2 ways to go about maintaining the look of your car, and when you use them together you can be assured that your vehicle with always look it’s best.

1. Color. White is hands down the cleanest color choice. There is a reason why a vast majority of the fleet vehicles in service today are white: It is low maintenance. A white car hides dirt, grime, water spots and the like better than any other color with the exception of camouflage. 
Typically the darker the hue of paint, the harder it is to keep clean. The scale rises exponentially between gray and black simply because black acts very much like a mirror. It reflects and magnifies everything including smudges, over spray, fingerprints etc. 
If you are set on a gray color (including the popular silver paints), try to find a lighter gray as it will be less maintenance than a dark gray. Nonmetallic cars are easier to keep clean, especially in dusty conditions as they do not sparkle. A metallic car must be kept very clean to get full benefit from the metal flakes in the paint.

2. Upkeep. Every six months have the exterior of your car detailed. You will be surprised at how much less effort you will have to put into your car’s appearance when you have a pro apply a high quality wax and buff it to a shine. Even if it rains it is not uncommon to not have any water spots on a black car provided it was properly cleaned, waxed and polished prior to the rains. Detailing is expensive but worth the expense if you can afford it.

There are a few products available that will help you keep your car looking factory fresh. 3M makes a clear adhesive coating that is applied over clean paint to guard against rock chips and the like. It must be applied by a professional but it is a lot cheaper to replace than getting the car repainted. American Racing offers wheels that have Teflon baked onto the surface of them which almost eliminates brake dust (which is why the front wheels on some cars are much darker than the rear). Meguiars makes a clear plastic polish that helps take small scratches and light oxidation out of clear plastic (i.e. headlamp lenses)

Naturally, all of these products and services cost money and/or time so it is up to you to decide how clean you want your car to be, once you decide on a color, that is.