A while back (I’m too lazy to look it up), Web made a comment about how people complain about car dealers without any real appreciation for how small their profits can be.

He may be right about that, though I think that to some degree the dealers bring it on themselves. Not on a personal basis, but by the model that they work through. The negotiation set-up invites the sort of animosity that occurs. If you trust a salesperson, you are likely to get rolled over. Since determining that we were going to be buying a new(-to-us) car, I’ve had to do all manner of research in two different areas. Having to research different makes and models is unavoidable (and kind to fun, to be honest).

What I find most aggravating is having to research for the sake of getting the best deal that I can. I’m likely going to have to pay entities to find out exactly how much I should be paying for the car. Then I’m going to have to find out what tricks they will use to get me to pay more. Then I’m likely going to have to go to one dealer after another to try to get that deal. All along the way, I’m going to have to put on my best poker face to avoid giving them the impression that I am actually excited to buy the car, that I really want a particular make and model and color. Because if I let them know what I really want, I lose my bargaining chip. I’d end up having to get a color or something I don’t want just because it would be a harder sell for them. Or I pay more for one color car over another even though (with the exception of black paint and white) they all cost about the same.

The price-opacity is stressful and maddening. They know how much they’re willing to sell the car for (more-or-less), but I don’t know how much I should be willing to pay for a car (without help).

When it comes to used cars, this state of affairs is less avoidable. Since every car is a unique combination of year, mileage, and wear-and-tear, everybody is just winging it. Not so for new cars.

There are some no-haggle dealerships around, but they seem to be priced near where the regular dealerships are. I may end up going that route anyway just to save myself the hassle. But of course, I would do so knowing that somebody, somewhere paid less because they did more research or had a better poker face.

One of the things I find interesting is that two of the badges I know 0f with the most loyal following are Saturns (well, a soon to be former badge I guess) and Scions. Both are cars the fill (or filled) a particular niche, but I also think that part of it is that it’s much easier to buy a new one and come out of the dealership feeling a lot better about your purchase.

Category: Market, Road

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3 Responses to Price Determined By Negotiating Skill

  1. john says:

    The really bad “model” is the relationship between the dealerships and the automaker. When you read about the incentive structure and the margins there, you understand why car salesmen have to be such assholes (perfect price discriminators) to make a living.

  2. trumwill says:

    The salesmen can blame the boss, the boss can blame the maker, and on and on. The model is the problem.

  3. kirk says:

    There are all sorts of car-buying tips available on the net. Also, I would suggest going to a couple of different dealers, just to see what’s the best price. You could probably get a bit of a bidding war going on.

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