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Understanding Edmunds TMV

2952 Views 21 Replies 7 Participants Last post by  VeeDubDriver
It is no secret that I work for Edmunds.com and I refer people to that website all the time. I do it not to make more money for Edmunds, but because Edmunds really does have some of the most valuable consumer information when it comes to purchasing cars. To that end, here is an article explaining TMV and how to use it to your advantage:
Low Down, Low Payments!
How to Use TMV®
By Philip Reed
Last updated: 2002-02-12
My brother called me last weekend to ask for my advice buying a new car. We both got onto the Edmunds.com Web site and began exploring cars — he was in Massachusetts and I was in California, but we were looking at the same screens.
My brother is a frugal New Englander (actually, he's so tight that he squeaks), so I knew that a mixture of reliability and price would dictate his buying decision. Each car we looked at provoked the same question: "What's this baby gonna cost me?"
If he had asked me that question two years ago, I would have said, "Well, the sticker price is such-and-such, and the invoice price is so-and-so, which means that if you haggle for two hours, threaten to walk out, and put on an Oscar-winning performance you can probably get it for thus-and-so."
But that was then — this is now. So I said, "Just check the TMV® price."
"TM — what?" came his response.
It brought me back to earth. Here at Edmunds.com, we're pretty excited about TMV or True Market Value pricing. But there are still people who don't know what it is. Or, more importantly, how to use it.
I told him that TMV is the average price at which a car is sold in a consumer's specific region.
"So you mean I can probably get it for this price?" he asked, quoting TMV for a certain car.
"Basically. Yes."
"How do I do that?"
Bingo, I thought. Here's a great idea for a column. Here at Edmunds, we spend a lot of time saying how great TMV is, but we sometimes forget to explain how to use it.
I know that when I buy cars for Edmunds, I use TMV as an indicator of how desirable a car is and what the supply and demand situation is. If a popular car is in short supply (the Honda S2000, for example) the price shoots up to, and above, sticker price. If a car is readily available (the Honda Accord, for example), you will pay closer to invoice.
The beauty of TMV is that you can see, ahead of time, what you'll pay.
OK, so far, so good. But the fact remains that if you walk onto a car lot, the salesperson will try to sell you the car — almost any car — at sticker. How do you get the salesperson to go for TMV?
I put that question to some of our experts here at Edmunds and got some informative and colorful answers.
An executive at Edmunds.com, with many years experience in the dealership environment, said that the most powerful thing about TMV is that you know, ahead of time, where the negotiation will end. That is the essence of TMV. Being able to get that figure ahead of time is like "getting around third base."
He added that, in the past, "a consumer had to jump from dealer to dealer, playing each against the other to eventually get a feel for where the transaction point was. TMV is that point. The rest of the negotiation (getting from third to home) is really up to the consumer and how comfortable they feel moving the deal to close."
He said there are two approaches for using TMV. Which you use will depend on your personality:
If you don't mind confrontation and you are willing to spend three to four hours negotiating, then "don't disclose the TMV price. Instead, just hammer away (negotiating) in a traditional form to get as good a deal as possible...of course, empowered by the TMV, knowing that it is the exit point for price."

However, if you just want to get a fair deal and cut negotiations to an absolute minimum, then "disclose TMV up front and hold firm. Say, 'I'll just go to XYZ dealer if you won't deal with me.'"
The executive added, "The key is that a consumer who is armed with TMV is empowered on an equal footing with the dealer. It's kind of like going to war knowing where your enemy's positions and ambush sites are, how much ammo they have and the extent of their supply lines."
Our new car pricing manager chimed in with this observation: "TMV does not necessarily reflect the best deal you can possibly get. It reflects the average of the transactions within one region. Variable factors, such as the inventory levels of a specific dealer, or how eager the dealer is to sell, may also affect the purchase price. I would suggest always offering less than the TMV to begin with, hoping to close the deal at or under TMV."
A manager in our data department said he frequently uses TMV to buy cars for himself and to help friends buy cars. Recently, he helped a friend buy a Jeep Grand Cherokee Limited. He had this observation: "I kept advising my buddy on each deal he presented to me that if he paid right around TMV plus tax and license, he was getting a good deal, but any deal he showed me that was for sticker or even remotely close, we both kicked to the curb. Conclusion: If the car is hard to find, pay TMV for sure; if the car is not rare, try to pay below TMV with TMV being the max."
The readers of Edmunds.com have often written to us about the successes they've had using TMV. One reader described negotiations this way: "I had my briefcase with all my Edmunds.com material and when the sales guy inquired what was the most important consideration in my buying a car I replied 'price.' I gave them a price range between $16,000 and $18,000. He said that he could not accommodate me, so I said, 'Fine, thanks for your time. Goodbye.' The sales manager then handed me his business card and on the back of it wrote down a price of $16,888."
Another reader relates: "As a woman, I've particularly hated to car shop, I've often felt intimidated and at a disadvantage. Not this time! I went in with my data and TMV sheets in hand. The first time the salesman said MSRP, I pulled out my sheets and showed him the three columns, informed him about TMV and said 'This is the range we'll be negotiating in.' He checked invoice against my worksheet, every number from Edmunds.com was exactly right. From that point on, he talked in terms of invoice price, however, I bought my car for less than invoice because he needed to make quota and was willing to sacrifice some profit for volume."
Finally, there is this story from a young Edmunds.com reader. He said he studied the advice material and felt motivated to get his Toyota for TMV. "I told my dad, and he said that it was unlikely that would happen. My dad said $15,000 would be a good price since MSRP was $15,561."
After negotiations stalled at one dealership, he called another. We told them, "We know the Edmunds price, and know what we can get the car for.' We offered $14,000, but the dealer rejected this price and came back with the TMV offer from your Web site for $14,312. You saved me $700 at least! $700 is little for most people, but right now it is like a million bucks."
So, from these first-hand stories, you can see that the TMV price is accurate information. How you use that information is up to you. The two main avenues you can take are as follows:
Offer the TMV price to a dealer, knowing it is a price they are likely to accept.

Make an opening offer that is below TMV, but in the ballpark. Negotiate up to TMV.
Finally, I'd like to stress several things that might seem pretty obvious. First of all, make sure you include all the options of the car you are looking at by using Edmunds.com's New Car Calculator (or the Used Car Calculator for used cars). This will total all the options and automatically include the destination fee. Then print out this form and take it with you.
Should you wave the TMV form in the salesperson's face? As our experts said, that all depends you and your personal style.

I hope this was helpful and if you have any questions, please let me know.
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Re: Understanding Edmunds TMV (VeeDubDriver)

Well, I beat TMV by over $700 when leasing my TDI, but by the time I add in Chase Bank's $595 inception fee, it doesn't seem like such a great deal. I got $300 over invoice on a TDI, which is supposed to be a good price, but the start up fees sure take the fun out of it!
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Re: Understanding Edmunds TMV (spongebob_squarepants)

The important thing is that if you pay TMV or lower, you can feel good in the knowledge that you didn't pay too much.
Re: Understanding Edmunds TMV (VeeDubDriver)

quote:[HR][/HR]It is no secret that I work for Edmunds.com[HR][/HR]​
I've found Edmunds.com to be a very valuable tool in buying a car. It's an extremely useful negotiating tool to understand approximately what the dealer is paying for the car. With invoice price, dealer holdback, and published dealer incentives, you can ask the dealer how much profit they want to make on you. That puts the buyer in a fantastic position of power.
A gripe:
I always try to buy cars when they're being sold with big dealer incentive programs. It used to be that Edmunds had a single web page with all the rebate and dealer incentive programs for all cars. I ended up buying a Mountaineer in 1998 because I knew there was a $2000 dealer incentive on it. I doubt I would have even looked at that SUV variant otherwise. As far as I can tell, that page is no longer maintained and you instead have to query a database for a particular model based on zip code. When I bought my GTI last August, there was a dealer incentive going on that Edmunds didn't pick up. Fortunately, I found out about it through other sources. Why has that aspect of the web site declined in quality?
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Re: Understanding Edmunds TMV (GeoffD)

Because most incentives now are regionalized, we had to switch over to a ZIP code based structure. As for gaps in incentive information, we have improved our information greatly in the last six months. If you have questions about specifc makes or models, just send me an e-mail and I can check on it for you.
Re: Understanding Edmunds TMV (VeeDubDriver)

No specific model. At the moment, I'm background shopping for a replacement SUV. I'm in no particular hurry since the unreliable piece of junk Mountaineer I own at the moment is under extended warranty for another 13 months. I expect it'll do a "Blues Brothers car in front of city hall" thing and implode the minute it gets off warranty. If Toyota had a $10,000 dealer incentive on the Land Cruiser, I'd march right down and buy one. That's unlikely to happen in my lifetime so I'll probably settle for some other car. I tend to try to track dealer incentives on cars the way I track sales with the airlines. When there's a big airfare sale, Travelocity sends me an email telling me about the price changes to the list of city pairs I've told them to monitor. I used to glance at the Edmunds dealer rebate and incentive page roughly once a month to see what deals were being offered. That has historically really influenced my purchasing decision since I firmly believe in the 11th Commandment... "Thou shalt not pay retail." I was background shopping for a commuter car last summer when the GTI had a big dealer incentive program. I doubt I would have bought the car without knowing about the program.
Personally, I think people who buy the newest model car that people are fighting over is nuts. I couldn't believe the people waiting 9 months to buy poorly-built Mercedes ML320's in its first model year. Why would I pay a premium for something that's going to get crushed into a coffee table in 5 years after I've racked up some crazy amount of miles on it? I try to buy cars at the end of the model year or when the factory decides they have too much inventory and lowers the cost.
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Re: Understanding Edmunds TMV (GeoffD)

What info and where is it obtained, on what the correct TMV is???

In any automotive supply, when there is a time when a car is in HIGH demand, such as when the cars like PT CRUISER, NEW BEETLE, M3, M5, ZO6 Vette, Z8 and more. Those cars get over Sticker @ certain or all dealers.
Now the smoke settles, and they are not in demand. BUT!!!!! When a car like the NEW PASSAT is hard to get in any configuration or the W8 Model or the GLI and such, EXPECT TO PAY MORE! TMV will not reflect the LIVE market price of a certain car! Cabrio's are out of production and will remain that way, people still want to order silver ones!!!!! YOU WILL NOT SEE THAT CAR AGAIN!!! DEALERS ARE STILL GIVING HUGH DISCOUNTS ON THAT CAR, just to take the customer out of the market, then when they get all fustrated, they come into other dealerships like myself and we can provide another choice at a reasonable price, we are forced to do 2 things, convey to the customer what a good price is, or give away another car @ little profit just to make the deal!
So Don't TELL ME THAT TMV IS 100% accurate, all it is, is another way to tell the consumer that you shouldn't pay more than 200-400 dollars over invoice!

IF KBB or EDMUNDS likes to give another corporations profit away, why dont you start going to MALL's and DEPARTMENT STORES and justify what people should pay for UNDERWEAR!
I am not saying that the consumer doesn't derseve the right to negotiate the selling price that's there for them, but tell them the cost vs. list, NOT what they SHOULD pay!

[Modified by OO-BORA VR6, 10:54 AM 2-15-2002]
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Re: Understanding Edmunds TMV (OO-BORA VR6)

Nothing is 100% accurate, but TMV comes very close. The TMV info comes from a variety of sources, including actual dealers who disclose the transaction price.
TMV does not tell the consumer what to pay. We are telling them what a fair price is. People don't need to be told what to pay for underware. Ten people can walk into Target to buy underwear, or anything else there, and all ten will pay the same price. But, have ten people buy the exact car from a dealer and you will end up with 10 different prices. Does that seem fair?
You can complain all you want about dealer pricing being available, but this is not going to go away and the only reason why companies like Edmunds exist is because consumers feel taken advantage of.
And, lest you think I am against dealers making money, check my response in this thread: http://forums.vwvortex.com/zerothread?id=248056

[Modified by VeeDubDriver, 11:07 AM 2-15-2002]
Re: Understanding Edmunds TMV (VeeDubDriver)

I am not saying that dealers want to make a profit. But when I go to a fancy Bar and they charge $25 for a $4 cigar, no one says nothing. If Everyone paid what people pay for Saturn's then life would be great! We can go back and forth on this topic for YEARS! It HAS been!
The point is that WE WILL make our reasonable profit! With or without EDMUNDS and other Internet based company.
Re: Understanding Edmunds TMV (OO-BORA VR6)

quote:[HR][/HR]I am not saying that dealers want to make a profit. But when I go to a fancy Bar and they charge $25 for a $4 cigar, no one says nothing.[HR][/HR]​
The difference is that I'm paying $21 to sit in the fancy bar. I'm well-aware that I can go down the street and buy the $4 cigar in a cigar store. Are you saying that the dealer sticker I always insist they don't put on the back of any car I buy has value? Are you saying that the quality of the car I buy at one particular dealer is better than the quality of a car at a dealer selling the identical car down the road? Are you saying that I'll get better service from the service department at a dealer if I buy the car there?
Use me as an example. I traded a 1992 Mazda Navajo for a Mercury Mountaineer in 1998. I'd researched completely and knew the wholesale auction price of my very used Navajo. I also knew the invoice, holdback, and dealer incentive promotion numbers on the Mountaineer. I happily allowed the dealer to make a fair profit on both the new car and on the trade. By my calculations, they made $500 on the trade-in and another $700 on the new car. I'm happy. They're at least somewhat happy.
I bought my 2001 GTI last August when the dealer incentives on the model kicked in. Once again, I happily let the dealer make a fair profit on me. By my calculations, they made about $800 on the sale. I also negotiated what I believe was a cost+$200 on my extended warranty so they cleared an even $1000. I'm happy. They're at least somewhat happy.
If your rant is that some idiot customers walk in and expect you to sell them a car at zero profit, I suppose that's a reasonable complaint. If you're complaining that you want your gross profit margin to be invisible to informed consumers, you're dreaming. This is the age of information and that sort of thing is always going to be available. The sales side of the business adds very little value. In a perfect world, you'd be able to buy cars online directly from the manufacturer and completely bypass the ineffient car dealership. Car manufacturers would simply need to operate regional demo centers where potential customers could try out their cars. In most places, it would be more efficent to outsource that function to car rental companies. You could do much the same thing with used cars. Instead of the sleazy used car dealership, you could have regional ebay used car auctions where there's no middleman. Sellers would make more, buyers would pay less. Ebay could provide short-term warranty contracts that are bundled into the buyer's and sellers premiums to protect both buyers and sellers.
There are lots of analogies. Brick and mortar travel agencies are pretty much dead. It's far easier to buy online. Book stores have morphed themselves into coffee shops since it's cheaper to simply buy books online. There's been a huge decrease in the number of brick and mortar bank branches and insurance agencies. It's much more efficient to do these things on-line wherever possible.

[Modified by GeoffD, 7:50 PM 2-15-2002]
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Re: Understanding Edmunds TMV (OO-BORA VR6)

quote:[HR][/HR]The point is that WE WILL make our reasonable profit! With or without EDMUNDS and other Internet based company.[HR][/HR]​
And that is exactly the point of TMV. It does give the dealer a reasonable profit. How do I know? Because part of TMV is the actual transaction price as reported by dealerships. Oh, and for your informaiton, Edmunds has been around for over 30 years. They were in print long before the web.
Re: Understanding Edmunds TMV (VeeDubDriver)

I think Edmund's tries too hard to be the consumer's best friend. Some of the material doesn't sit right with me.
Re: Understanding Edmunds TMV (Double-V)

Edmunds is always open to opinions. What material are you referring to?
Re: Understanding Edmunds TMV (VeeDubDriver)

What position does EDMUNDS have in the FUTURE of the Automotive business??
Re: Understanding Edmunds TMV (OO-BORA VR6)

Company Profile and History
Our Mission Statement
To empower automotive consumers by providing complete, clear, timely, accurate and unbiased information needed to make informed purchase and ownership decisions.
Edmunds.com, Inc. was founded in 1966 for the purpose of publishing new and used automotive pricing guides to assist automobile buyers — and Edmunds.com continues to publish automotive guides today. Edmunds' New Cars & Trucks Prices & Reviews and Edmunds' Used Cars & Trucks Prices and Ratings are each updated twice per year and are available in bookstores throughout the United States and Canada.
In 1994, before the World Wide Web had become mainstream, Edmunds.com's new car pricing data was first posted on the Internet through a "gopher site" that was known as 'The Electronic Newsstand." Edmunds.com was the first company to provide consumer automotive information on the Internet. From this humble beginning Edmunds.com has grown to its current size of over 700,000 pages of information accessed by over 200,000 people a day.
Unlike many of the Internet's other pioneers, Edmunds.com recognized that consumers had a very limited appetite for on-line information for which they had to pay. Accordingly, we have never charged a fee for access by consumers to any of our content.
In early 1995, Edmunds.com launched its Web site, http://www.edmunds.com, the first automotive information Web site. Edmunds.com predates the advent of automobile manufacturer web sites and all other automotive destination sites.
Since then, we have been busy constantly updating our site's look and feel, improving the navigation, and supplementing the original pricing information with vast amounts of other automotive data, vehicle reviews, feature articles and videos. (Click here to see a history of the development of our home page and here to see what makes Edmunds.com different from other automotive Web sites.)
In 1997, we launched Edmunds.com's Town Hall, the world's largest on-line automotive community where thousands of individuals meet to discuss all things automotive.
In January 1998, Edmunds.com became the first automotive Web site to deliver its content to outer space. In response to a request made of NASA for interesting automotive information from Russian cosmonauts aboard the Mir spacecraft, we transferred our Web site content to a CD-ROM and delivered it to NASA, which in turn delivered it to the spacecraft. USA Today reported this event in their January 12, 1998 edition.
In 2000, Edmunds.com became the first source of vehicle information for users of wireless Web-enabled devices. The Edmunds2Go! service delivers prices, summary reviews, our dealer locator service and other information to cell phones and PDAs. Click here for more information about how you can access this service.
One of our proudest achievements was the development of Edmunds.com's suite of True Market Value® (TMV®) pricing tools, which launched in the fall of 2000. These tools consist of the Edmunds.com TMV® New Vehicle Calculator (which provides the estimated average price consumers are currently paying dealers for new vehicles), the Edmunds.com TMV® Used Vehicle Appraiser (which provides the estimated average price consumers are currently paying dealers for used vehicles, the price consumers are getting from dealers for their trade-ins, and the price consumers are paying each other in private party transactions), and the Edmunds.com TMV® Interest Rate Estimator (which provides consumers with both national and local average loan rates currently being offered by lenders for vehicles, as well as our estimate of which "credit tier" consumers will qualify for when applying for financing).
In 2001, we launched Edmunds Data Services (EDS), which develops, owns and licenses the most comprehensive, accurate and timely set of automotive data available from any source. EDS provides the data you see on the Edmunds.com Web site and supplies its data, as well as the other content on our site, to many other companies. Click here for more information about Edmunds Data Services.
Edmunds.com continues to experience unprecedented success and growth, valued by both consumers and the automotive industry for providing useful, free and unbiased information on all aspects of buying, owning and selling cars and trucks. As of the end of 2001, we had approximately 150 employees located at our home office in Santa Monica, California and our sales office in Troy, Michigan.
Edmunds.com is a privately held company whose investors include the Peter Steinlauf family, CNET Networks, Inc., Cox Enterprises, Inc., GE Pension Trust, Rare Medium Group, Inc and Autologic Holdings plc.
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Re: Understanding Edmunds TMV (Double-V)

quote:[HR][/HR]I think Edmund's tries too hard to be the consumer's best friend. Some of the material doesn't sit right with me.[HR][/HR]​
Suit yourself. When I had to buy a gas range, dishwasher, and 'fridge last month, I subscribed to ConsumerReports.org at $3.95 per month. I got what I consider to be valuable information on best models and fairly trustworthy reliability data. I then spent some hours shopping around the internet to find out how much I should be paying for this stuff and negotiated something close to that price at a local full service appliance store. If I'd simply walked in off the street, I would have made some serious buying mistakes and paid too much.
I view cars the same way. Edmunds and ConsumerReports are clearly the two best sources of information on automobiles. The information is available elsewhere on the internet but you need to spend hours with search engines to locate it. They attack the problem from somewhat different points of view so if you merge the two sets of opinions, it really helps make buying decisions. If your buying methodology is to walk up to a dealer and buy a car because you like the looks of it and don't care that you're paying too much for it, suit yourself. As the old saw goes about a fool and his money... I prefer to be informed about things like how much profit the dealer is making on me and the long term reliability trends of the make and model I'm buying.
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Re: Understanding Edmunds TMV (GeoffD)

I can tell you this.. I work at a dealersship and when it comes to VWs... I hate that online consumer crap... There is NO markup on VWs in comparison to other cars and when people walk in the their edmunds printouts i wanna scream.. especially since on a couple cars i looked up, they were way off on invoice.. END RESULT i lose a customer and cant sell a car..There is a such thing as too much knowledge
Re: Understanding Edmunds TMV (~*VdubGiRL*~)

Yeah, those darned informed consumers ruin a good porkin' every time.

You prefer the ignorant ones, what a shocker! http://****************.com/smile/emthdown.gif http://****************.com/smile/emthdown.gif
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Re: Understanding Edmunds TMV (~*VdubGiRL*~)

quote:[HR][/HR]I can tell you this.. I work at a dealersship and when it comes to VWs... I hate that online consumer crap... There is NO markup on VWs in comparison to other cars and when people walk in the their edmunds printouts i wanna scream.. especially since on a couple cars i looked up, they were way off on invoice.. END RESULT i lose a customer and cant sell a car..There is a such thing as too much knowledge[HR][/HR]​
First off, VW's have markups like any other car. Some manufacturers have more, others have less. Second, I would stand behind the information on Edmunds.com. We clearly state that the invoice price listed is not the dealer's actual cost and items such as advertising fees must be taken into account. Knowledge is power, but I admit that it can be abused. Edmunds also does not advocate consumers demanding buying a car without profit to the dealer, that is the purpose of TMV, a fair price for both the consumer and the dealer. You might be surprised how many members of the Edmunds.com senior management come from dealerships and auto manufacturers, so we are well aware of the operating costs of running a dealership.
I am not looking to make this forum into a debate of the merits of Edmunds.com nor am I here try to promote them. I just want to give the consumer answers to questions they may have on here and also to try to educate. Edmunds.com, and other companies such as KBB, Carpoint, Autobytel, CarFax and Carsdirect all provide valuable information that the consumer wants and in fact demands. Otherwise they wouldn't exist.
None of these companies are going anywhere and the sooner car salespeople accept this fact and are open and honest with the consumer, the sooner car dealerships will loose the less-than-favorable reputation that they have worked so hard to foster over the last few decades
One dealership I can give kudos to is Scott VW in the Northeast. If you go to their website (Scottvw.com) you can see that not only do they have their own forum for VW's but they also post the invoice price right next to the MSRP on their webpages. This is a company that realizes that if you can't beat them, you may as well join them. I am sure there are many VW dealers that fellow Vortexers can suggest and I encourage them to do so on here.
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Re: Understanding Edmunds TMV (~*VdubGiRL*~)

I got my Jetta at just over $600 below Edmunds TMV. Not a great deal imo, but, since there are not VW dealerships on every other block like Ford, Chevy etc, I felt I got an acceptable deal. The dealership made money, the salesman got his commission, and I got a fair price. Of course it could have been lower
, but for the few hundred I might have saved, it just wasn't worth it to me to drive 30 - 40 miles one way to another VW dealership.
Maybe it your sales skills that need work if you keep losing customers.
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