Should vehicles just have a set price?

[GREENBACK]

I was talkng to a friend the other day that had recently bought a used truck. My friend is very mechanically inclined. While on the lot he inspected the vehicle and came up with a few things that were in need of repair. After test driving it he discovered another problem. He "haggled"one of the best deals I've ever seen for a used vehicle. He told me there wasn't many major repairs needed and he could do them at home but he used this stuff as a bargaining chip. I've done this too but not as well as he did.

I've always wondered about how well people who don't have the skills to work down the price fair with car salesman. As many here know, they have a nice price cushion to work with and are experts at making people think they are getting a great deal when they aren't getting anything of the sort. They also deal differently with people based on what they percieve to be less than knowledgable automotive people.


Though I haggle whenever I can, this seems like an unfair system to me. I often wonder if vehicles shouldn't just have a set price like a lot of other items we purchase. Where is the fairness in one person paying a better price (at a place where the public shops) based on their bargaining skills . I don't think this can or should apply to personal transactions of any kind by the way.

[disneysteve]

I absolutely think new cars should have a fixed price. I've always wondered how the current haggle system developed. There are very few other items that don't have fixed prices. It really makes no sense. I believe Saturn still does fixed pricing.

As for used cars, there are dealers that do fixed pricing on those, like CarMax. Obviously, it is harder to set a price on a used car because there are lots more variables than with a new car.

[GREENBACK]

It's probably fantasy to ever think that used cars will ever have a fixed price system. The difference in price that some people pay for essentially the same vehicles is incredible. I don't know the history of haggling but I wonder if it isn't a carry over from the days of horse trading.

[disneysteve]

Originally Posted by GREENBACK

It's probably fantasy to ever think that used cars will ever have a fixed price system.

It isn't fantasy at all.CarMax already does it (carmax.com) as do numerous other dealerships.

[DebbieL]

I absolutely hate the whole process of trying to haggle a price on a car. I would love to never have to do that. It is odd to me - I don't go into the clothing store and start haggling, or any other store. Maybe this is why it is so uncomfortable to me - I don't live in an area where haggling price is a cultural norm (except for cars, lol).

[segmond]

nothing has a fixed price, not even new items. if the demand exceeds the supply as is common in today's economy, the price is very negotiable. Learn to haggle or keep paying high price. Close mouths don't get fed.

[jIM_Ohio]

Move to a socialist state and the prices might get fixed. In a capitalist society the fact I can talk someone (negotiate) the price of a car down 5-7k is something which benefits me.

The reason for different prices is that dealers are competing against other dealers to sell the same product.

[disneysteve]

Originally Posted by jIM_Ohio

The reason for different prices is that dealers are competing against other dealers to sell the same product.

While it's true that dealers are competing against each other, Jim, that's true of any product at all from a $30,000 car to a $1.50 head of lettuce (that might be $1.25 at the store down the street). Some stores do have price-matching policies and will lower their price to meet that of their competition.

In common practice though, prices are what they are. Since prices are essentially fixed, if I go into store A and see an item I want for price A and then go into store B and price B is lower, I just buy it there. I don't go back to store A and try and bargain with them.

Also, how do you explain Saturn? They DO have fixed pricing even though they are competing against other Saturn dealerships. It hasn't stopped them from selling lots of cars. In fact, it has probably helped by removing the hassle factor.

[Ima saver]

I wish new cars had fixed prices too!

[GREENBACK]

Originally Posted by jIM_Ohio

Move to a socialist state and the prices might get fixed. In a capitalist society the fact I can talk someone (negotiate) the price of a car down 5-7k is something which benefits me.

The reason for different prices is that dealers are competing against other dealers to sell the same product.

I hear what you're saying but They purposely overprice cars knowing that most folks will haggle for a lower price and many won't be very skilled at it. If dealers just put a fair price on the product to begin with it would work well for everyone and the needless haggling game wouldn't be so neccesary.

Negotiating is fine but it can really get redicoulus. When people are paying thousands of dollars difference it seems that things are really out of whack.

I'm not advocating a law to demand this but I think dealers could do better by their customers if they made it easier for everyone that walks into their buisness and just wants a reasonable deal. As it stands no one trusts car dealers because of this stuff and the other shady dealings they engage in.

[jIM_Ohio]

Originally Posted by disneysteve

While it's true that dealers are competing against each other, Jim, that's true of any product at all from a $30,000 car to a $1.50 head of lettuce (that might be $1.25 at the store down the street). Some stores do have price-matching policies and will lower their price to meet that of their competition.

In common practice though, prices are what they are. Since prices are essentially fixed, if I go into store A and see an item I want for price A and then go into store B and price B is lower, I just buy it there. I don't go back to store A and try and bargain with them.

Also, how do you explain Saturn? They DO have fixed pricing even though they are competing against other Saturn dealerships. It hasn't stopped them from selling lots of cars. In fact, it has probably helped by removing the hassle factor.

In the various cities I have lived in, usually only 1 saturn dealer made sense for me to visit- they are not located that close to one another most of the time (DC, Rochester NY, MI, Cincy, C-bus).

Between 2 saturn dealers here in cincy, I would need to drive 40 minutes. In that 40 minutes I would pass 5 ford dealers, 4-5 GM dealers and 3 honda, toyota and nissan dealers (which include the dealers adjacent to saturn).

One reason Honda is more profitable is that it is work for me to go to one dealer, get a price, then I have to drive around 30 miles to get to the other dealer to try and beat it.

For GM that same drive is 20 minutes, maybe 10 depending on which 2 dealers I choose to pit against each other that day.


The price point of a car is 10,000X the cost of that head of lettuce you mentioned. That scale leaves more wiggle room. I also don't need to return to the grocery store to get the lettuce serviced every 3 months or 5000 miles. Not the same "economic market". The poor family needs lettuce just like the rich people do. The poor family may not need a car. The lettuce company probably moves 20,000-50,000 heads of lettuce in a given day within a 30 radius of downtown cincy, where as the car companies might move around 20-50 cars each day in same radius. It's not a good comparison (IMO).

Saturn followed that business model to keep the value in its cars (by not having dealers compete). The same way fast food chains pop up 5 miles from one another, the old big 3 dealers had dealers competing with one another too. Saturn wanted to avoid that by removing competition from itself.

Look for a Porsche dealer. Where is the "next closest one"- that is the model that Saturn is shooting for (but Saturn has more volume, therefore more dealers). Porcshe probably has 1 dealer per city (every 200 mile radius=1 dealer), with exceptions for huge areas like DC and NYC (which might have 2, maybe 3 dealers to serve around 5-10 million people).

[jIM_Ohio]

Originally Posted by GREENBACK

I hear what you're saying but They purposely overprice cars knowing that most folks will haggle for a lower price and many won't be very skilled at it. If dealers just put a fair price on the product to begin with it would work well for everyone and the needless haggling game wouldn't be so neccesary.

Negotiating is fine but it can really get redicoulus. When people are paying thousands of dollars difference it seems that things are really out of whack.

I'm not advocating a law to demand this but I think dealers could do better by their customers if they made it easier for everyone that walks into their buisness and just wants a reasonable deal. As it stands no one trusts car dealers because of this stuff and the other shady dealings they engage in.

Dealers aren't trying to "do good by their customers", they are trying to make money.

Big difference.

[GREENBACK]

I know they aren't neccesarily interested in doing good by their customers but if I wasn't good at price negotiations(as most aren't) and I knew a dealer that gave a very good, fair deal that's where all my purchases would be made. I think a reasonable no haggle price would be quite a draw. As Steve noted, this has worked quite well for Car Max.

[jIM_Ohio]

Originally Posted by GREENBACK

I know they aren't neccesarily interested in doing good by their customers but if I wasn't good at price negotiations(as most aren't) and I knew a dealer that gave a very good, fair deal that's where all my purchases would be made. I think a reasonable no haggle price would be quite a draw. As Steve noted, this has worked quite well for Car Max.

Capitalism and supply/demand at its best.

If that is what the market wanted, (and it would INCREASE sales), that is what the dealers would do.

You want it, but at what price are you willing to pay? Basically you are saying the dealer has to lower their price to a no haggle point (you are not willing to pay more for the car than the price on the sticker now).

What is dealer A sold the model you wanted no haggle.
Then dealer B opened shop 10 miles away and offered same car at a lower price? People go to dealer B- saves them money and the "no haggle" policy cost dealer A money.

It's not in the dealers best interest to do that unless it drove sales thru the roof.

[disneysteve]

Originally Posted by jIM_Ohio

What is dealer A sold the model you wanted no haggle.
Then dealer B opened shop 10 miles away and offered same car at a lower price? People go to dealer B- saves them money and the "no haggle" policy cost dealer A money.

ETA: See my later post below where I clarified my thinking on this point.

You are correct. It would have to be done on the corporate level, not at the dealership level, as has been done by Saturn. Prices would be set by the manufacturer, not the retailer. It would be just like shopping at Best Buy or Target or Home Depot. They put out a weekly flyer that is distributed nationwide with the same prices on the same items no matter which of their locations you walk into. Why couldn't cars be sold the same way?

As for Saturn, perhaps my perspective is skewed. I just checked. There are 15 Saturn dealerships within 50 miles of my home. I have plenty of choices if I wanted to buy a Saturn. I guess that isn't true in other parts of the country. There is no reason for me to shop around, though, since they all charge the same price. I would just go to the nearest location.

[GREENBACK]

Originally Posted by jIM_Ohio

Capitalism and supply/demand at its best.

If that is what the market wanted, (and it would INCREASE sales), that is what the dealers would do.

It's not in the dealers best interest to do that unless it drove sales thru the roof.

This is the point I'm trying to make. How do they know this won't work. I'm not aware of any dealerships even trying this concept in my area. I have to wonder if this idea couldn't be sold through good marketing. I believe they would see a sales increase simply because they have removed the intimidation factor and made themselves look friendlier to prospective buyers. It's a bit of a bold step when none of the competition is doing it but I think it could work.

They would not neccesarily receive as much profit per vehicle but they very well could make it up in volume. I have talked to quite a few people over the years that really don't like walking into a car lot and seeing a price on a vehicle that is basically B.S.. If a set price or a more reasonable negotiating price worked for one or two dealers I think the others would sit up and take notice.

[disneysteve]

Originally Posted by GREENBACK

I believe they would see a sales increase simply because they have removed the intimidation factor and made themselves look friendlier to prospective buyers.

I have talked to quite a few people over the years that really don't like walking into a car lot and seeing a price on a vehicle that is basically B.S.

I agree. Part of the reason I keep my cars as long as I do is because I hate the buying process. If buying a car was relatively hassle-free, I might do it more often. I've actually been thinking about going to CarSense for my next car (they are similar to CarMax with fixed pricing on used cars).

[kork13]

Originally Posted by disneysteve

I agree. Part of the reason I keep my cars as long as I do is because I hate the buying process. If buying a car was relatively hassle-free, I might do it more often. I've actually been thinking about going to CarSense for my next car (they are similar to CarMax with fixed pricing on used cars).

I'll second that.... I bought my car (new) through Costco's car-buying service. They gave me a flat cost of $X, and that was the guaranteed price, no questions asked. To check it out, I went to 2-3 other dealers and went through the hassle of negotiating a price. If they offered a well-better price, I'd go for it then, if not, I'd stick with the Costco pre-negotiated price. It turns out that the Costco price was ~$500 less than most others were willing to even touch (except for one dealership, who after I said "no thanks" followed me to a car with a slightly better price, but at that point they had worn my patience). I loved having the set price available to me, and I expect the next time I buy a car (whenever that is), I'll likely try to get the same type of deal worked out.

[maat55]

Competitors colaberating turns the system into a monopoly. Once they are able to fix the market, they can name their price. There is always those who will compete to keep the others in check.

[disneysteve]

Originally Posted by maat55

Competitors colaberating turns the system into a monopoly. Once they are able to fix the market, they can name their price. There is always those who will compete to keep the others in check.

I want to edit what I said earlier. I'm not saying that there necessarily needs to be a fixed price on a car and that every dealership must charge that exact same price (I think my earlier comments made it sound that way). What I'm saying is that each dealership should have a fixed price. Let them decide what that price would be. Dealership A might price a specific car at $20,499. Dealership B down the road might price the exact same car at $21,050. Dealership C across town might charge $19,999. But all 3 of those prices would be fixed. If you walked into any one of those places, you'd know exactly what the car would cost. So before going shopping, you could make a few phone calls or go online to the dealership websites and find out who had the best price. It would be no different than what we all do today with other big ticket purchases. Buying a new TV? You may check Best Buy, WalMart and Target and go to the one with the best price. What you don't do is walk into WalMart and haggle over the sticker price.