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And They Call This Consumer Friendly?

If you 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 stores paid:

$481 more for a Taurus
$588 more for a Dodge Caravan
$646 more for a Camry
$694 more for a Ford F-150 pickup
and a whopping $937 more for a used Chevy Suburban

Now imagine 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 more.
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
Fighting Chance

(posted 4/7/98

(The following letter was originally published in Automotive News on January 2, 1995. It is being reprinted with the permission of Mr. Zydenbos.)

Lease Trainer Welcomes Inquiry

Ralph Nader 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 gouging.
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 irreversible.

President and Chief Executive Officer
Trade Cycles Inc.
Greenwood, Minnesota

(posted 1/30/98)

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