How are cars sold outside the US? Is it a negotiation, fixed price... what?

Factual Questions
21

I guess it’s possible that, in the current tight credit market, dealers might prefer cash, and be willing to give a discount for it. But i sold new cars for a year in Australia in the early 1990s, and having cash got the buyer no consideration at all. In fact, we made more money if we could get the buyer to finance through GMAC. I lost count of the number of buyers who would ask “What sort of discount for cash?” and whose jaw would drop when we made clear that having cash was pretty much irrelevant.

Just about all of this was true when i was selling cars, and was the main reason i got out. One thing i never did, though, was to put something in the contract that the buyer had not explicitly agreed to.

This also was pretty much true in Australia. Our used car division made much more for the business, per sale, than the new car division did. And that was in the age before internet comparison shopping and invoice research.

One aspect of car sales that gets very short shrift in movies and such is business or fleet sales. When i was selling cars, about half of my customers were companies (some small, some quite large) that purchased vehicles for their sales staff, their executives, etc., etc. Selling to these guys was generally a low-profit, low-maintenance situation. They would call me and ask for a quote on a particular type of vehicle, and would call two other dealers as well. All three of us would fax the quote to the company’s purchasing officer, and the lowest price would get the business. As i said, not a very high-margin deal, but also one that cost the salesperson very little in terms of time and stress.*

Because that’s the other side of car buying. I’m perfectly happy to admit that it’s a sleazy, dishonest industry in many ways, and i’m very happy that i got out of it after only a year. But the fact is that customers are just as prone to lying and exaggeration as salespeople are, and i soon lost track of the number of times a “buyer” fed me bullshit about his trade-in, his credit, his budget, or any one of a dozen other things. Part of this, of course, is the industry’s fault; it has developed such a reputation for dishonesty that people come in ready for the worst, and ready to be dishonest themselves. But the fact is that plenty of regular people will do and say anything to get what they want, and this doesn’t just include car salespeople.

  • It’s worth noting that some dealers split the sales department into personal and fleet/business sections, but ours did not, and every salesperson in our dealership had both retail and business customers.
22

US dealers don’t keep many older cars on their lots any more. The main reason I’ve heard is that banks simply won’t give loans for cars more than 5 or 7 years old. And the reason for that has to do with depreciation — a 7-year-old car is still going to have a fairly high price, but if the buyer defaults on the loan after a couple years the value of the car will have plummeted and bank will recoup only a small fraction of the loan when they repossess the car and auction it off, and they still have to chase after the debtor for the balance.

So if you want an inexpensive used car you pretty much have to deal with a private individual, and pay cash. Even then you might not find a price you like on the car you want. I’ve noticed that, in my area, there are an awful lot of people with a really inflated idea about what their old pickup truck is worth. Seriously, I’ve seen beat-up 30-year-old pickups with “$3500 OBO” shoe-polished on the windows.

23

I bought a car two years ago here in Panama. I haggled the price down a few hundred dollars by telling the dealer what I had been offered as a price for a similar model of a different brand.

24

Fleet sales is probably what kept the big 3 US companies alive in recent years. That and big SUVs. Once the oil prices went up big SUVs sales tanked and that’s why they are bankrupt now.

25

Behind an RV probably most commonly, but more generally, behind another a vehicle. Thanks for responding. I didn’t mean to hijack Balthisar’s hijack, but I was curious what name an American towbar might have in SA if “towbar” was already taken.

Here ends the hijack, at least as far as I’m concerned.

26

Didn’t mean to hijack, either. It just seemed weird that towbar meant something else, when our version is very obviously a “bar” of some type! :stuck_out_tongue:

27

I had an Indian parent assume that our stated class fee was negotiable, and when I insisted it wasn’t, tried to refuse to deal with me, and tried to call only my partner-boss. He did not pay the owed balance beyond his deposit, and I had to kick out his daughter finally, as sad as it was. She cried.

But he wouldn’t pay the money he had signed a contract for.

28

Me, for one. Why should one person pay less than another simply because he has better bargaining skills? :confused:

29

Yeah, this is just wrong. Look up the Economist’s bribery index, and it is crystal clear that countries have different ways of doing business. Business practices have nothing to do with humans all being the same way down deep.

30

If you go in and will pay cash (or have private financing) and no trade-in, the deal is fairly straightforward. If everyone did this, the cars would basically be no-haggle.

But people don’t do this. To get the car out-the-door, customers have to believe they are getting what they want. Sometimes this means that you give a great deal on the new car, but a bum deal on the trade-in and/or financing. You have several moving targets and customers often get in their minds that they are sticking to their guns on one or two of those targets… while the third one screws them over. Dealers get a bad reputation for this game because they take advantage.

I’m with you, though. I’d much rather have straight pricing.

31

Oh, I misunderstood the OP to be saying that haggling was widespread in the US, and asking how common it was elsewhere. But aversion to haggling is also widespread, and car dealers and other retailers in the UK do sometimes promote the fact that they don’t haggle.

32

Trading is still voluntary where you live, no? If you feel you get more utility from the good than the cash in your pocket (or the financing you’ve arranged), then why should it matter what someone else has paid. (Of course I understand buyer’s remorse. On the other hand, why should you enjoy the lower prices that I’ve done the work of negotiating?)

33

Why would this not be true of everything else? And yet people prefer not having to haggle about how much to pay for a burger or a gallon of gas. The haggling is that the vendor sets a price and you can take it or leave it and try somewhere else. Most people do not enjoy the haggling and, in fact, it is a system slanted against the elderly and those who are generally less capable. It is not surprising to me that car salesmen have a reputation on par with scum.

Watch the movie Fargo.

34

People don’t bargain over hamburger sandwiches or gasoline because the transaction costs would eat up any advantage negotiated. Nevertheless, taking or leaving the seller’s initial offer is itself a negotiating strategy; it is only a poor strategy if you don’t mind haggling. If a person finds dickering as objectionable as you say, it is perfectly sensible that they pay more for the privilege of avoiding it.

If however your proposition is everyone should get the most cutthroat price having done very little work to obtain it, well, that really is too ridiculous to maintain seriously.

Finally, I understand that in this day and age of crybabies, anyone who has the temerity to charge for goods or services provided is regarded as scum (car salesmen, lawyers, record companies); call them whatever you like, but I find politeness is a far more effective negotiation approach.

35

Americans don’t tend to bargain for items like plasma TVs, designer suits, jewelry, or computers. Nobody here has suggested that manufacturers and retailers of those items should not be allowed to make a profit, I think what we’re saying is that most consumers appreciate that salesmen generally set a fixed price for that item that allows them to get a fair profit while every customer gets a fair deal. The advantage for the salesman is that each customer walks away with the satisfaction that they got as good a price as anyone else.

There was an article on edmunds.com the other day about the impact of consumers comparing car prices on the Internet. Basically, the thrust is that dealers are having to focus more on volume of sales at smaller margins, rather than counting on some consumers paying substantially more than others.

What a shocker for the auto sales industry: they are finding they have to run their business like Best Buy, Brooks Brothers, and Tiffany’s!

36

Because it is simply not fair for us to pay different prices merely because one is smoother talker than the other.

Why is fairness such a difficult concept for some people?

It is equally unfair whether I’m the one who paid more, or whether I’m the one who paid less. Either way, the system stinks. Set a fair price, offer decent service, and I’ll decide whether to buy from this store or that store. Why can’t I enter a car store and get a straight answer to “How much does this one cost?” How come his answer is always either “How much do you want to spend?” or “What do I have to do to close the deal?”

37

When Daewoo (then still owned by the Daewoo Group, instead of GM) arrived in the UK, they centered a massive ad campaign around no-haggle pricing- you went to your local Daewoo dealer, picked the car you wanted, paid the price on the sticker and left.

It didn’t catch on.

38

Because, as your mother must have tried to tell you growing up, “life isn’t fair.” Are you a socialist, too? Why not? That would be fair.

39

Is your point that businesses such as Best Buy, Gucci, and Macys, which sell consumers products at fixed prices, are run by socialists?

40

And this is exactly why I bought my last car at CarMax, where they have set prices, the salesperson gets the same commission no matter the price of the car, and the contract was an understandable single page. I know some people love haggling, but I’ve always walked out of the dealership wondering if I got screwed over.