And They Call This Consumer Friendly?
believe the hype, there's a revolution going on in the retail auto business,
making it more "consumer friendly." But when the dust settles, will
the consumer be the winner or the loser?
It is certainly true that
lots of people hate haggling over the price of a new or used car. To solve that
problem, a number of big-money players said, "Let's make buying a car as
easy as buying a TV set or a refrigerator." Attacking the used-car market
first, they're launching chains of "superstores," with acres of cars,
fixed/no-dicker prices, and a no-pressure, no-haggle shopping environment.
But while the consumer is
enjoying the new shopping experience, what's happening to his wallet? The early
answers are in, and apparently revolutions don't come cheap.
CNW Marketing Research,
in Bandon, Oregon, surveyed 2,900 used-vehicle transactions in October. And they
found that customers routinely paid more for used vehicles at dealerships that
don't haggle (including those used-car superstores) than at those that do. Here
are a few examples. Compared to the average transaction price in dealerships
where the price is negotiable, customers in the consumer-friendly, no-haggle
$481 more for a Taurus
$588 more for a Dodge
$646 more for a Camry
$694 more for a Ford F-150 pickup
and a whopping $937 more for a used Chevy Suburban
yourself driving home smiling in that Chevy Suburban, and learning that you'd
just paid $937 more than a neighbor who haggled the price at a Chevy dealership
down the street. Wouldn't that wreck your whole day?
And consider this: Many
of those same big-money players are buying up some of the biggest new-car
dealerships. What's next? No-haggle, new-car superstores? Maybe I'm missing
something, but will someone explain what's in this revolution for car buyers?
You may not like haggling, but are you ready to pay an extra $500 to $1,000 to
avoid it? I'm not.
Unfortunately, there's a growing body of evidence that says, the
more pleasant the shopping experience, the more expensive the car. If you want
the best deal, you've got to make it competitive, shopping dealer against
dealer--even with those car-buying services on the Internet. (They send you to
just one dealer, who has paid them for an exclusive territory. That's not real
competition.) You can do it in person, or on the phone or the fax machine or via
e-mail, but if you don't do it, you'll pay more than you should--maybe a lot
Now if you really want a consumer-friendly idea, let's do a "180"
on this revolution. Let's start haggling over the prices of those TV sets and
refrigerators. That oughta save us some real money.
Founder and CEO
(The following letter was originally published in Automotive
News on January 2, 1995. It is being reprinted with the permission of
Lease Trainer Welcomes Inquiry
is just the latest opinion maker to throw his hat into the truth-in-leasing
arena. No question that it's time for full disclosure of leasing and
responsibilities of both lessee and lessor. Just as it was time in the 1950s for
window stickers followed by truth-in-lending to prevent price and finance
I have been in the lease-training business 15
years. I've seen violations of fair-trade practices and downright theft taught
to manufacturers and dealers by some of the most reputable and largest
lease-training organizations. Customers have been bilked of multimillions.
Sponsors have turned their backs on deceptive sales practices.
Leasing is a customer
satisfaction tool or a price-gouging weapon. If the opinion makers and lawmakers
want to make truth-in-leasing work, they must show the customer the truth in the
alternatives as well.
At the same time, federal regulators must take a hard look at those
lease-training organizations, manufacturers and their unscrupulous dealers who
created, promoted and continue this grand consumer theft. They've given a black
eye to the lease industry. We've had a bad spill that has affected the leasing
environment negatively, and we must clean up the waste before the damage is
President and Chief Executive
Trade Cycles Inc.
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