Let's say you've decided to invest in the new car or truck smell. Sure, you can probably get a better deal with a used car, but you've probably decided that the risks of driving a second-hand car or even third-hand are not worth saving some extra cash. You're willing to shell out the extra bucks to get a car fresh off the lot, so here's how to make sure you get what you want without getting ripped off!

[edit] Steps

Do your homework. Get the most recent annual auto issue by Consumer Reports magazine, which is usually put out in April (you can probably find an issue online - see the links below—or at your library; or simply get an online subscription to Consumer Reports to access their information easily...it's worth the price). Alternatively, use a site like SearchAutoReviews.com to browse through free reviews from multiple sources on the web. Research makes and models that fall within your price range.
Get your priorities in order. What's most important to you? Safety? Reliability? Appearance? Performance? Spaciousness? Versatility? Fuel efficiency? Compare cars in terms of how well they satisfy your needs.
Set your sights on 3 models that you'd be happy driving off the lot. Go to the manufacturer websites and configure your vehicle with the options you want. Get the MSRP for each of these cars, and print it out (along with the details of the configuration you want). Also, look to see if there are any manufacturer incentives available for the car you want, such as $1500 cash back or a $500 rebate for recent college grads and/or those in the military.
Find the invoice prices online. The invoice price is what the dealer pays for the car. There are many websites that publish the invoice price for various makes and models. (See the links below for one such site.)
Call up your local dealers and say: "I'm looking for a {year/make/model} with {state your options}. Do you have any of these in stock and if so, how much are you selling it for?" Don't let them convince you to come in for a test drive just yet. Emphasize that you need a quote over the phone.
If possible get it in writing(fax , or e-mail ).Confirm the price before visiting the dealership(IGNORE THIS if you plan to further negotiatiate).
Visit the dealerships with the lowest prices and negotiate up from the invoice cost. Start your bidding at the invoice price minus rebates, plus 1%. You can do this by multiplying the invoice number by 1.01. For example, if a car has an invoice cost of $15,000, and a cash back rebate of $2,000, then $15,000 - $2,000 = $13000 x 1.01 = $13,130.
Negotiate in increments of $150. When the price starts nearing the halfway point between the invoice price and the MSRP, start getting ready to go. Tell the salesperson that you're starting to think you can find a better deal elsewhere. If he/she won't budge, walk out and leave - this is your most powerful weapon as a consumer (but remember.....your goal is to go home with a new car......not to waste your afternoon practicing your belligerence skills).

[edit] Tips

Be nice! Most sales managers tend to give a better deal if you don't act like a jerk.
Another way to get a salesperson to give you the price you want for a car is by pre-qualifying for a loan elsewhere and walking in with a check pre-written for the exact amount that you want to pay for a car they have in stock. Most salespeople will be unable to resist this "take it or leave it" proposal, so long as your price is reasonable (around 3% above the invoice price).
Cars that are in high demand, or are hard to find (or both) will be more difficult to negotiate around.
Bring a friend who lacks interest in the car in order to stop you from paying too much. Or if you're married or with a significant other play good/cop bad cop. And what I mean about that is I always have a reason to leave sooner than the salesperson wants. I will not make a decision the first time in the dealership. I will not let them back me into a corner wanting me to make a decision ASAP. They will always do better if you have to leave and come back later. I don't mean being a jerk, but just firm and know what you want.
Don't forget the Internet department! You can often get a lower price by requesting it through the dealer's website.
Buying at the right time is important. At the end of the year the dealers just want it off their lot. Last December I called about a vehicle and didn't even have to negotiate to get it quoted at invoice.
Don't let them harass you saying things like "you don't haggle with the cashier at the supermarket for a gallon of milk do you?" Respond by saying that you don't have to worry that you are paying more for milk than the person before you did. Also, no-one has ever financed a gallon of milk, and every brand of milk is equal in quality. Don't let them tell you this deal can only be made today. Walk away. I guarantee you can come back later.
They can afford to sell at invoice because of the holdback and dealer fees; that's all the profit they deserve, but don't expect to pay invoice for a high demand- low supply car.
It's better to shop for a car during off-peak hours - weekday evening, for instance.

[edit] Warnings

Don't let a salesperson check your credit report unless you've gotten an offer that you're serious about signing. Frequent inquiries into your credit report can lower your score. Instead, get your credit report yourself (which won't affect your score) and bring it in with you to get an estimated finance rate.
Watch out for the extras many dealer's Finance and Insurance Saleperson try to sell to you. (This is the person you are often sent to after making the initial "deal" with your saleperson. They finish your transaction, and try to sell you additional services and merchandise. They are generally very agressive and persuasive.) Services like rustproofing have a value that is questionable at best, and extended warranties and the like are generally less expensive when purchased separately. Read everything that you have to sign.
If the dealer suggests inflating your earnings in order to get a better interest rate tell them no because you will be liable for fraud and the dealer won't be liable.

[edit] Related wikiHows

[edit] Sources and Citations

Consumer Reports Car Reviews: lots of good free information, plus access to detailed ratings for a fee.
SearchAutoReviews.com - Quick way to retrieve all reviews of the make and model you're researching.
http://www.ebay.com/ - A good place to find an old issue of Consumer Reports.
http://auto.consumerguide.com/ - Get invoice prices and find out about manufacturer incentives here.
http://www.equifax.com/, http://www.experian.com/, and http://www.transunion.com/ - The 3 major credit bureaus from which you can get your credit report.
http://www.dealertricks.com/ Former car dealer tells you what car dealers don't want you to know.