No-haggle car dealerships? Good or bad?

Yes, this is how capitalism works. I can do that, if I want to, or i can decide “That’s a reasonable price, and I don’t want to spend my time haggling with dickheads who will be trying to trick me into buying something that I don’t really want.”

Years ago, my uncle was General Manager of a few different car dealerships. He knew the biz.

When his sister-in-law wanted a new car, this uncle called the other dealership and cut the deal. I was driving this aunt to the dealership – check in hand – so she could pick up the car.

We still got shunted over to F&I (Finance & Insurance – the auto biz little shop of horrors) for the endless upsell.

After politely declining everything pushed, and repeatedly mentioning that the deal was cut and the check was written, the F&I person mentioned the $1,000 auto alarm system.

I repeated my polite reply.

The F&I person then turned to my (so far, silent) aunt and said, “Have you ever had a car stolen ?”

“No.”

“Well, maybe this one will be your first.”

Lovely people. Truly nurturing and enriching experience.

[I then phoned my uncle who phoned the GM of that dealership who walked into the room and bailed us out]

Decades ago I wanted to buy a new Toyota Corolla without a trade-in. I had $3,000 cash for a down payment. I visited three dealerships asking for a price quote, explaining that I was price shopping.

The third salesman I spoke with that day quoted me a price and I stood up to leave. He tried to stop me, but I told him the dealership I’d visited before him offered me a better deal and I was going back to buy that car. He was LIVID!!! He was shouting at me about “that’s not how it’s done” and insisting I had to give him the chance to beat the other guy’s quote. I laughed in his face and bought the cheaper car.

Yeah, I thought about taking five minutes to make a speech about how I needed their BEST, FINAL, LAST CHANCE lowest price because I was going to give my business to the dealership with the lowest price, btu I realized that there was no point. Dickering was too deeply ingrained for that 5 minutes of explanation to make any impact.

Yep. In my last purchase I whipped out my CU approval paper and predrawn draft from my jacket pocket after sitting in front of the Finance Guy, and with no change in the price they beat the terms, as it happens with another institution in which I also already had accounts (so Motley’s perks were not lost).

I believe that what has happened is that this is an external service that happens to subcontract to different affinity groups and there has been a consolidation of providers of this service, so the terms may have changed to no longer please USAA.

BTW as someone else mentioned earlier: most of the major “pricing guides” have by now been acquired by sales-interested corporate parents so we can’t be as sure of “knowing what we have”.

Yeah, mentioned it elsewhere, it’s a protectionistic system of mandating that new sales must happen through local franchisees. It is kind of fascinating that it happens – can you imagine if a state tried to make it so Big Box stores had to operate that way, for the sake of protecting local businesses? (Bill Kidd’s Walmart/Sam’s Club; Don Breyer Home Depot; Tri-State Loews/Target/CVS/Costco…)

Okay, so… there’s your answer then? You’re welcome I guess?

How is this different from buying literally anything else? When I go into a clothing store to buy a shirt, the store may be overstocked on a certain shirt, or I might be richer than I look, or I might be obsessed with getting a certain style of collar or a certain sized pocket. There may be similar, lower priced shirts down the street. Why is it necessary to haggle about a car but not about anything else?

Because the potential gross margin on a car is much higher than for a shirt. You can’t squeeze blood out of a turnip (a shirt). A 10% difference in the price of a car is real money, but for a shirt it’s essentially meaningless.

Actually that’s not entirely true. People actually do haggle over things like shirts in very poor countries. Every penny means a lot more to them, and their time is worth less in wages, so it does make sense to haggle over a shirt in (for example) Vietnam. It depends on what’s marginal to the parties involved.

The bottom line is that car dealers use all of the latest tricks and marketing gimmicks to relieve you of as much of your money as they can, just like any other business. The “no-haggle” dealerships are just using another marketing gimmick which plays on the fact that car buying for most people is a stressful undesirable experience. No-haggle isn’t all that great unless the price they are offering is a good one.

One of the most important tips in car buying that few people mentioned is not to wait until your old car is held together with bailing wire and chewing gum before shopping for a new car. Don’t fall in love with a car. Be flexible and do your homework. After that, go into the dealership with financing in hand, and a reasonable price that you will pay for your car minus what the reasonable trade in value is.

Tell the salesperson that you want them to make some money, but not all of it off you today. Offer them about 10% below what your walking out number is. Keep mentioning the “out the door” total price with tax, title and licensing. Shop around, and if you are comfortable with the deal based on your research and after comparison, then take it. If not, don’t be afraid to walk, and really mean it. WRT financing, I always show them my offer and tell them if they can beat it, all the terms, I might go with them.

Others advise to separate the car sale and the trade in, but I have always found that to be more frustrating. They can high-ball the trade in and then give a high car price; a low car price and a low trade in. They will say something like “we gave you such a good deal on your trade in that we can’t do better on the car.” They bounce numbers all over the place, start with nonsense “dealer prep fees” that distract you and then offer to take them off if that means you will buy the car then. They will tell you why your trade in isn’t selling right now and the car you are buying is just flying off the lot.

Never talk payments. Know what your payments will be on a purchase price and your terms and go from there. Tell them up front that you aren’t playing the four square game where they bounce numbers everywhere: you want ONE number and that is the net out the door price. That simplifies things and keeps them (and YOU) focused on the entire package.

Finally, once you’ve agreed on the price and go back to the paperwork room, you are not done. Turn down absolutely everything in there. Anything they are selling, you can buy elsewhere at a much cheaper price.

Of course, five years from now, all of this advice will be outmoded once people figure it out and they will be onto their next marketing trick.

You are giving me advice on how to haggle, which I appreciate, but is not what I;m trying to ask.

I’m asking whether no-haggling buying is ever going to work from the dealer’s POV. I’m asking WHY car-buying is a unique proposition where haggling is standard. I’m asking HOW dealers might be able to make no-haggle work.

Were you not satisfied with the answer that haggling is going to happen whenever the product has a high enough margin to make it worthwhile, and the dealer has the freedom to set their own prices?

If it’s not regulated by an entity with enough clout to make it work, then no-haggle dealerships will be undercut and run out of business by the hagglers.

It could be regulated by dealers being legally required to post their bottom-line prices up front, or de facto regulated by manufacturers running their own dealerships (a la Saturn, RIP). But any dealer who tries to buck market forces on their own is going to get squashed.

The bottom line is that though everybody says they hate haggling, people are going to be cutthroat bargain hunters when it’s time to buy a big-ticket item like a car. If you want to do that, then you accept haggling.

Put it this way: you and your neighbor Bob both bought the same model of car. You’re talking about what price you got. Do you feel comfortable saying “well, I paid 1% more than you did, but I didn’t need to haggle for it.” What’s that number for you? 1%? 5%? 10%? I suspect that for most people, it’s 0%.

I wonder if this phenomenon also takes place in other countries, both where haggling is common and where it’s not. Anyone here who’s bought a car elsewhere?

In the UK haggling is similar to the US (I went with a friend to buy a used Mercedes when I was over there)
In Japan there is negotiation but it is not as high pressure. The customer typically makes the first offer (my cousin lived in Japan for 20 years and reported this). Maybe the stakes are as high, but the atmosphere apparently is quite different.
In Pakistan at the time I was there, to buy a new car, you went into the dealership paid your money (the price they had in the book) and they ordered you the car. No test drive, no sales pressure. The difference in prices between dealerships was zero. They might offer you a free upgrade on floor mats and help getting the car registered. But this was over 30 years ago. The market has developed some since, probably including lots of haggling.

I’d imagine that a law requiring dealerships to make public (i.e., hand out to anyone who asks) details of the last 90 days’ worth of car sales–pricing, financing, extras, etc–would level the playing field and simplify haggling considerably. The part that kills me is my suspicion that dealers make a tiny profit off the majority of sales to hagglers but clean up on those few poor fools who get hornswoggled by salesmen’s doubletalk.

Even the world of used cars you see hagglers vs non-hagglers. I’ve been researching prices, and reading a ton of used car ads. Seen a lot of “Make me a reasonable offer.” or “Price negotiable, or trade for truck, bike, or gaming system.” vs “Firm price! Want it cheaper? Don’t even bother trying.”

One ad in Wisconsin said:

“$7500, Firm.
But if you’re from the Midwest and just have to haggle, it’s $9999 (but you can eventually get me down to $7500).”

One thing I’ve never understood, in my entire life, is how America is a no-haggle culture except in a few specific areas. That pound of oranges at your grocery store is $4.99, and neither you nor anyone else in the building has any power to change that. Same for that $3.99 bottle of aspirin at your pharmacy. There’s no negotiating - the price is the price.

Yet for some reason we’re expected to haggle over cars, furniture, and houses. And I hate it. I haven’t set foot in a furniture store in over a decade, simply because I’d rather have a tooth pulled than play this ferkakte game that the furniture retail industry has somehow concluded that I’m interested in playing. I won’t haggle with a dealer, either. Sticker price it is. Am I a sucker? Probably, but I have no intention of going through this theater.

When I sold my last house I was in no hurry, so I asked my real estate lady to not bother me about “offers”, I wanted $X for the house, period. When she notified me of an offer that was lower than my ask, I replied with a counter that was higher than the original asking price.

She conveyed this to the person, who threw a fit, threatening to take me to court. I eventually sold the house to someone else for my asking price

Could you even argue that lowering the price for oranges to $3.99 for certain buyers is discriminatory?

You could buy a car from a company like Tesla (where they seem to have fixed prices) and furniture from a store like IKEA (likewise).

It seems to me that the no haggle dealership model has mostly been replaced by the no haggle services like another poster mentioned above (TruCar, Costco, etc.). The no haggle dealership model is unsustainable for the various reasons discussed in the thread. But the no haggle services allow the dealers to accommodate the customers that want to haggle and those that don’t.