The other night, I found myself in a high-rent, commercial neighborhood in suburbia, where most of the buildings were medical offices and car dealers and luxury retailers. Since Mrs. TBP was at the movies with her girlfriend, I decided to pop into a few places to see a what cars on my short list might replace what’s coming off lease in the Spring.

At the Audi dealership, I looked at the A7/S7. At Infiniti, I looked at the G37 convertible and the M37/56.

Perhaps it had to do with the tony neighborhood (Great Neck and Manhasset), but I came away with the distinct feeling in both locales that this was merely an exercise in trying to separate me from as much of my money per month as possible.

It was a few specific things and lots of general sense. Perhaps my prior experiences have colored my expectations.

But what wasn’t an option was walking into a dealer, seeing prices like in a restaurant or department store, and placing an order.

Which raises the question: Why is buying a car so frustrating? Why is what is likely to be the 2nd biggest purchase for most American families so fraught with pitfalls and danger and financial risks and annoyances?

Why does car buying suck?

Discuss.

Category: Consumer Spending

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

104 Responses to “Why is Buying a Car in the USA Such an Ordeal?”

  1. huxrules says:

    I think that stealerships have actual laws that prevent the manufacturers for selling directly to the customer. It results in a very scuzzy opportunity for these leaches. The manufacturers actually despise their dealer network because of this – the purchasing of their product usually leaves a bat taste in their customers mouth and there is nothing they can do about it.

    I recently leased a Focus (just a focus!) and the whole experience put me off of Ford for awhile. The dealer made every effort to make me uncomfortable and to “hide” the deal. Just silly. Next time I’ll save up and just order and pay for a car in full.

  2. DiggidyDan says:

    The financing side draws the weasels. If cars were cheap enough to just pay for like other normal purchases for most buyers, then the finance aspect of it would be out the window and no-hassle shopping like you are looking for would be possible. It’s the same way with the bankers. . . finance allows the weasels to swindle more than their fair share from others (whether it’s unsuspecting rubes or those who know they’re getting hosed but don’t have a choice in the matter). So it draws certain personality types and morally bereft individuals to the business. Alas, the nature of the business leads to the game playing/wheeling and dealing dishonest types trying to run the show.

    You can’t even go into a dealership and say I want to pay with a cashier’s check because they would charge you a higher price or fees if you didn’t finance. I have bought my last 2 vehicles slightly used from independent sellers using KBB values to find a happy medium on price because of my distaste in the whole process.

  3. Tom K says:

    Any kind of complex, high-value purchase – including cars but also homes, RVs and things like insurance and annuities – is likely to be painful for a consumer. We’re an an information disadvantage and we’re out of our comfort zone. Studies have shown that when consumers are uncomfortable, they spend less time contemplating purchase decisions and just “get it over with.” There isn’t a lot of benefit to a car dealer to making it more fun to buy a car – we won’t end up buying more often, or spending more.

    That said, I think a car company _does_ have an interest in making it better to buy and own their cars, so if the current dealer system can be removed, there’s a hope. I could see someone like Tesla going with a “no pressure / no haggle” approach to selling vehicles. But for dealers, they make their margin, and they comp their salespeople, off the margin they are able to secure via haggling.

    If you don’t like buying a car this way, go to CarMax and buy a recent year used vehicle. I did this and it was far, far more pleasant than a BMW purchase I did the same year. And when I later sold that car back to CarMax because I didn’t need two vehicles any more, it was also a pleasant transaction.

  4. snapwizard says:

    The reason is probably the compensation structure. The rep gets paid on the profit margin. Hence the attempt to sell expensive financing, extended warranty, unnecessary accessories, service contracts, etc.

    Tesla is doing the right thing here by disrupting the whole dealer model. Its opening its own showrooms just like Apple stores. It even won the suit brought by auto-dealers.

  5. jnkowens says:

    As a USAA member I have used their car buying service for my last several car purchases and it has been wonderful. They take my requirements, negotiate with local dealers, send me the best offers, and i go to the dealership of my choice and close the deal. Never had a problem or a bait and switch attempt. To DiggidyDan’s point, it helps if your paying cash. My concession is to not feel the need to play their game and negotiate a steal. I respect their need to make a modest profit and pay it willingly. It’s the best way i know of to make a crappy process bearable.

  6. PriceHub says:

    Big information disadvantage to the consumer – there is no price transparency – car dealers control all of the information. The only way to to get a true sense of whether you got ripped off or not is to ask someone you know what they paid for a car and compare notes. Looking at dealer-biased sites like KBB and NADA don’t help much since folks only trust these sites to a certain degree.

  7. flocktard says:

    It’s these franchise rules which prevent the sale of an automobile being like any other form of normal retail. You don’t go through this nonsense when you buy a suit or a TV. (Imagine if Amazon sold cars.) But the racket is protected, just as McCarran-Ferguson prevents any kind of real competition in the health insurance industry. These are the last of the protected industries.

  8. louis says:

    “purchase for most American families so fraught with pitfalls and danger and financial risks and annoyances?”

    And we know what the first thing is now, thank’s to those cheeseburger eating idiots at the bond desk.

    Just like # 1 the vast majority of the industry are alcoholics and meth users. Thats the creepy feeling your sensing.

  9. seth1066 says:

    I’ve been in the wholesale automobile industry since 1973. There is an axiom in the retail automobile business, “Who lies the most?” Answer: The customer. The customer, generally, has absolutely no fidelity towards the salesperson that waits on them. The salesperson, of course, knows this and is hell bent for leather to close anything breathing that walks in the door, then and there. Otherwise, the possibility exists that Mr. Customer will end up buying from the competition. The entire sales system is geared toward this possibility and its prevention.

    This selling is at least partially caused by the dealer’s own short comings, which in turn are partially driven by the fickleness of the customer. Before a flame war erupts, please note, I’m leaving out the other, well known, facet of gouging for profit and other questionable tactics.

    Where did the public’s general negativity of dealers originate? Read Chapter 7 of Steinbeck’s “The Grapes of Wrath.”

    Barry, I’m not sure what you mean by “placing an order.” If it’s ordering a specific model, color and options, then waiting to have it built and delivered to the selling dealer, I would think that’s still possible. However, many high end stores receive their inventory on an allocated basis and they take what they can get from the manufacturer. And they would rather sell one of those “in inventory” units, that there paying interest on, today.

  10. subscriptionblocker says:

    It’s terrifying. And it’s affecting behavior (along with all the other uncertainties).

    Over thirty years we’ve gone from “buying and financing from the dealer”, to “buying from dealer with prearranged bank financing”, to “buying with cash” (because the banks can no longer be trusted either).

    Does this affect demand? You bet.

    At one time, I routinely considered allowing adequate margin for the company to stay in business…these days we stand ready to abuse in any way possible. Don’t believe we’ve really changed. Dealerships became predatory cockroaches. Purchase is now a death match. Equal opposite reaction to their abuse.

    All auto stealerships are slavers working for the banks. The banks are always in there somewhere.

  11. donna says:

    We use our credit union car buying service. Tell them what we want with what options and they find us the best price. Easy peasy. One more reason to use credit unions!

  12. capitalistic says:

    It’s very simple: the profit is in the side dishes, not the main course. Comparable to cellphone voice/data plans

  13. CSF says:

    If you’re paying cash, tell them you want to negotiate the final price, except for state tax and title. They can include whatever fees they like in the sales contract, but you’re only interested in the bottom line. I did this a few weeks ago. We agreed on the price, and that’s what I paid. Period.

  14. ellsworth says:

    I agree. I just bought a new Jeep a few months ago. Sales guy was pure snake oil…entire dealership was full of them. Walked in, told them I would make it their easiest sale of the year if we could cut through the crap. I knew the car I wanted and the price I was willing to pay…I didn’t want any extras.

    I then had to waste 2 hours with the sales guy until he finally gave me the deal I asked for in the beginning…in which he still made a fair profit.

    Car sales teams are an impediment to selling cars. Their sales approach and negotiations tactics are soooo 1980s…as are their cheap suits and greasy hair dos.

  15. ConscienceofaConservative says:

    I sympathize and have had many a similar story. The last time I approached it a little differently, I’m not sure if can be replicated but I sure hope so. I walked into the corporate owned BMW dealer on Manhattan’s west side. Told them I wanted a very specific car with none of the expensive frills and said I could wait and offered a fair price considerably below ask, but not that close to what the trade bulletins said the dealer cost was. They took the price, there was no haggle or “handling” and 6 weeks later I drove out with a car. My take away is you need to be very clear what you want, you are not desperate and that its not an emotional purchase.

  16. callotal says:

    The law #1 cites is the McCann Act IIRC. The car dealers (and beer distributors) lobby legislatures hard to keep the state laws that mandate the customer – middleman – factory set-up for cars and booze. Where the Tea Party and supposed free market GOPers?

    A big problem for the import lux brands is that each dealership gets a set allocation of vehicles. Therefore it’s in the dealers best interest to gouge, er revenue maximize….especially this time of year.

    This is the worst time to buy a car as seasonal demand is high. Bonus checks get cashed, people use tax refunds as car down payments, and it’s the beginning of the year—car dealers engage in tax loss selling just like funds.

    Costco’s or Truecar.com’s car buying is the best. You generally pay a few hundred more than the dealers’ rock bottom price (to cover the finder’s fee that Costco/Truecar gets), but you save hours of haggling and smug condescension from the dealer.

  17. callotal says:

    ps, if buying German, check out the European delivery option from BMW/Audi/Merc.

    The best experience ever!!

  18. Frilton Miedman says:

    Next new wave for destructive technology & the demise of brick n’ mortar – online car sales.

    I see big ticket items sold on Amazon I never thought I’d see – Why not cars?

  19. bythepark says:

    Barry,

    I have three words for you:

    “Costco Auto Program”

    http://www.costcoauto.com/enterzipcode.aspx

    They work from a spreadsheet.

    There is no negotiating.

    If you want more, you pay more.

    If you want less, you pay less.

    Sane and simple.

    —alan
    Vancouver-WA

  20. Jon G says:

    Barry, you asked people to write why car buying sucks, and most people seem to have written replies sharing their own car buying stories, and how well they did on the deal, using their time-honored techniques. While I can’t dismiss the tales of haggling prowess here, I’m drawn back to your many postings on how we think we know more than we do, and act accordingly, usually to poor results. If everyone who says they paid “$500 over invoice”, or something like that, there would be no automobile industry, or at the very least it wouldn’t look they way it does today.

  21. A says:

    Perhaps the car buying experience would be more enjoyable, if the industry’s salespeople chose not to emulate the ethics and behavior of Wall Street.

    Insult to injury? Cars are depreciating assets.

  22. davebarnes says:

    ” stealerships have actual laws that prevent the manufacturers for selling directly to the customer.”
    That is an excellent starting position.

    Price opacity is to the benefit of the SELLER.

    Trade-ins make it worse.

    The buyer has to be a prick. Most “Americans” hate that.

  23. DSS10 says:

    If you think buying a car is a financial daterape then try to buy a house…

    As to the car purchasing experience, I give them an hour of trying to sell then I write an “out the door” price on a business card and tell the sales person that you will buy the car that day if they get any promotions from the manufacture. With out fail they call in about 5days and meet my price. Nothing is worth buying if you can’t walk away….

  24. formerlawyer says:

    Never having had occasion to visit, didn’t Saturn Dealers (a separate division of General Motors for union purposes) have something similar to what you mention? How did that work out generally? I seem to recall in the last few years they had changed from the one-ticket pricing model back to the standard dealer’s behaviour but I may be wrong.

    ~~~

    BR: I think the cars, not the pricing policy, were the problem

  25. YouthInAsia says:

    The last time I bought a car from a stealership (a used one actually) the Jr Salesmans first question when we sat at the deal making table was “What do you want your payment to be?” I replied $0 per month, which got a very slight chuckle and a “What I mean is, what would you be comfortable with payment-wise each month?” I told the guy that I’d be getting my own financing and was only interested in negotiating the lowest price possible. He went to get a Sr Sales guy and after 10 minutes of waiting while I watched those assholes yammer on about whatever it was they were talking about, I got up and walked the hell out.

  26. bprociuk says:

    This may not work for everyone but for my last purchase I tried something different. My reasoning was that if I could get the dealers to bid against each other then I might be reasonably sure that I would get the best price.

    First get the names and email addresses of the New Car Managers of five (or more) local dealerships who sell the car you’re interested in. Email all of them the exact specifications of what you need. Tell them that you are only willing to discuss via email and that your request is going out to other dealers. When you get replies, elimianate the ones that are ‘out to lunch’ then email back the others telling them that another dealer has quoted a better price (do not tell them the price unless your sure it’s very good) and would they be willing to reconsider their offer. Eliminate those who will not budge. When you’re down to two dealers, you can now play one against the other and you can give names to show that you have in fact a bonified price from someone they may know.

    It may not be perfect but at least you know that you got the best price from the dealer group who competed against each other to sell you a car.

  27. Hedgy says:

    BMW Certified Pre-owned has been a great way to go. Buy with low miles, the CPO warranty extends out to 6yr or 100k mi and covers most everything. Dealer treats you like a king. Don’t pay more than KBB for the car. I have done this serveral times and I have no complaints.

  28. danmcd0913 says:

    BR check out a company called CarMax. They are a specialty retailer founded on the concept of trying to make this exact process not suck. They spun off of Circuit City in 2002. At the time they had 40 stores and are currently approaching 110 and growing steadily. I worked for the company for almost 8 years and wouldn’t go anywhere else to buy a car. They’ve also proven a pretty solid investment over the last 10 years. Ticker = KMX. Sorry for pimpin’ stocks but having spent 8 years of my life at the company the blog post kind of called out to me.

  29. FranklinVirtues says:

    Barry,
    I believe TomK above explains the benefits and trade-offs of a pricing complexity vs price simplicity policy.
    My guess for the reason is that for the dealer, the price discrimination benefit using the complexity and opaqueness of car prices (information asymmetry) outweights the cost of a less pleasant customer experiences.

    I think the posts above that mention specific tactics for getting a better deal or specific dealers that suck are largely beside the point. The complex dealer pricing strategy is the norm for the US and across the world.

  30. Tim says:

    GREAT comments. I’ve always bought two year old cars coming off lease with less than 25k miles. 40%+ savings off new, and the dealer morons usuallycave on price cliffs.

  31. bear_in_mind says:

    Reflecting on America’s recent history (i.e. two major financial crises in 30 years), it’s pretty evident that high-dollar transactions have great potential to foster some of the worst human conduct. Left to our own untrammeled urges, homo sapiens are envious, greedy, cheating bastards!

    But hey, let’s deregulate until proven otherwise…

    Several others have rightly noted that information asymmetry, along with our status-driven, hunter-gatherer tendencies are frequently employed to hijack our i-rational minds with emotion, all in the service of motivating us to act against our best interests.

    You don’t think it’s an accident that auto showrooms are like a fishbowl, do you? In walks Joe Consumer, a man of superior taste, status and means, assuredly perusing this powerful new artfully-crafted machine… and who subconsciously doesn’t want to appear on this lighted stage as frugal, cheap or timid. No, a real man gets what he’s after, closes-the-deal, drives home a winner.

    They do it because they succeed; and they succeed because it takes a lot of work, not only in educating oneself on the financial, technical and practical pros-and-cons of the decision, but in the self-awareness to comprehend and manage your emotions in the process.

    The best alternative I’ve found is (seriously, folks): Costco @ http://www.costcoauto.com

    I’ve bought several new vehicles from Costco over the years and it was far-and-away the easiest approach to auto purchasing.

    In Northern California, they have relationships with dealerships from all the major brands, including the two manufacturers and four models you cited.

    You have to use their website to submit your zip code and the brand/model you’re seeking; then they refer you to a specific dealership nearest you with whom they have a contract.

    While you may find some challenges with availability of particular models or trim level, you can see online what a given vehicle will cost from the luxury of your home. And working with their selected dealers has been pretty doggone straightforward. Usually there’s 1-2 specific sales persons in a participating dealership who are trained by Costco. If you want to check inventory, arrange a test drive or purchase, contact the rep and arrange a convenient time to meet. No fuss, minimal douchieness.

  32. btbrown says:

    Try your SCION dealer, no haggling there.

  33. MikeG says:

    Renting a car, albeit a much lower-stakes transaction, sucks for many of the same reasons.
    Secret extra charges slipped in, scaremongering about insurance, relentless pressure to sell overprices additional equipment and features I don’t want. Many times I have ended up with a much fatter bill for mandatory charges than the price on my reservation — imagine if a hotel tried to pull this crap. The whole experience leaves me unsettled and unhappy.

  34. perogy says:

    Buying a car sucks because car dealers are predators without conscience. After reading Remar Sutton’s book, “Don’t Get Taken Every Time,” I never buy new and I always pay cash. And, I keep my cars for a long time just to avoid talking to car salesmen. I have owned only 4 cars in 48 years of driving because buying a car is more unpleasant than multiple root canals. Sutton’s book provides an excellent inside view of how car dealers operate. The next time I need to buy a car, I intend to use Costco or USAA.

  35. Rich in NJ says:

    I call 6 to 8 dealers of each make/model I am interested in and get the best lease price . I then ask them to email it to me, and then take the quote (options/total up front due at signing) to the dealer that is closest to my house and ask them to match. It works for me.

  36. bobmitchell says:

    You went to a LOAN store, you thought you were at a CAR store. The confusion is normal.

    Honestly, the same can be said of the “auto” industry as a whole. The car is a second thought.

  37. econimonium says:

    I just bought my 5th BMW Barry. I’ve used the same dealer for all transactions and the same sales guy for the last 4. He’s amazing and the dealership is also top-notch and the service department is also the best I’ve ever dealt with. Having said that, it’s all about the interaction and relationship I think. It’s a historic thing…Americans aren’t used to haggling and a car purchase is one of the very few areas where that’s customary in the US. Now, however, most of the opacity has been removed with the internet, if you know how and where to look. But I agree with others: browsing in showrooms is for suckers. You really have to know what you want, and go in prepared. The hassle will be minimized and you’ll get a good deal. I just went in and said “I want to order this” and they did, gave me the price that was fair, and even hooked me up for an additional credit and practically free financing (I could make more on treasuries now). If you go into a dealer and say “here’s what I want…” the entire transaction proceeds differently. Unless, of course, it’s a Ferrari :)

  38. I have bought an Audi at the dealership you probably went to, and am very good friends with the former finance manager. As she puts it: when you go in there, come armed to the gills (mixed metaphor?) with every bit of info you have and make sure they know what options are off the table right up front. I never lease, and make sure they know I am not interested in doing so from the get-go. When financing, I have the loan pre-approved from a third party and force them to beat it (if they will). I also wait (invariably) until the new model buzz has died down and incentives are being offered–the last three cars I bought were all purchased in March or April. Much easier to deal when quotas need to be filled.

    The impulse buyer is the one who gets screwed.

  39. carguy says:

    Hi there. I’m a third generation new car dealer who’s family owned and operated store is on our 60th year in business. None of our sales consultants wear gold chains, or an inordinate amount of hair gel. We are upfront and honest with our customers because we want them to return. We want their kids to see us, their neighbors, friends and relatives. What sense would it make for us to anger our customers to the point they wouldn’t return? We are advocates for our customers to the manufacturers, who in many cases wash their hands of an issue that we resolve on our own dime. We employ folks in our community and give our time and money to many charities.

    If you have a terrible experience at a particular store, give another one a try. You may find one like ours that just wants to earn your business honestly and with integrity.

  40. nofoulsontheplayground says:

    Barry,

    Since 2002 when it has been time to purchase a car I’ve researched online to see what I want, visit a nearby showroom to test drive, give the place a chance to quote me, then e-mail every dealer within 200-miles of me to get price quotes on my specific make, model, color, package, etc. Typically it is ordered, not on the lot.

    I pick the best quote (I tell them they have one chance only and then order it and then have it delivered to my front door.)

    When I saw the Ferarri truck deliver a car to a neighbor’s house on Christmas Eve about 15-years, I thought that was the coolest thing I’d ever seen. Now it’s no big deal to have a luxury car dropped at my door.

    You can do a bit of arbitrage with certain brands on a national scale if you wish. There are certain brands that are popular in the Northeast, for example, that they can’t give away in other places, like Texas. You could save a few grand even after the transportation costs on some makes and models. This can also be done with leased vehicles.

    Good luck!

  41. nofoulsontheplayground says:

    Barry,

    When auto shopping it’s usually a good idea to get a list of the current national days of supply for the model you are looking for. Sometimes there are cars that have a national 3-day supply on hand at the dealers, and it literally means they are being sold (pre-sold, actually) off the lot after they are unloaded and prepped. If the car you want has only a 3-day supply nationally, often your only chance at a lower price is possibly through an arbitrage play that may need to go 500 miles or more.

    Knowing the supply on hand goes a long way when getting the absolute best deal.

  42. rekesk says:

    nofoulsontheplayground has the right tactic if you are buying a new car. You generally want to know what you budget is, then get an idea of what a fair price will be, and then let the dealers trip over you to get the best deal.

    There have been some excellent points in this discussion and I just want to add a few:
    - Truecar.com is an excellent tool for knowing what price ranges should work for you.
    - edmunds.com has an excellent “true cost to own” estimator as well as good guide for what a used car price should be (CPO vs. non CPO)
    - some dealers will sell you a car below invoice, mostly in the case of a high volume car because there are corporate incentives doled out to dealers that move more models.
    - New cars, if you own them until they die, and you get an extended warranty will make for an excellent use of your money. You do have to be wise about not inflicting damage and driving gently.
    - Used CPO cars can make for excellent steals. I got my car this way, and with the warranty that it came with, I was able to get $2000 in repairs done on the dealers watch. In any other used car purchase (non-CPO) that would have come out of my pocket.
    - Consumer Reports really pointed out years ago the best advice for owning a car: follow the maint. schedule in the owners manual, drive it gently and keep it for a long time. Also they said buy a car that would be able to adapt to a changing lifestyle to prolong your ownership of it.
    - For me personally, I am a gearhead and spend time on auto forums, so I find out from other mechanically inclined people about potential problem spots and easy fixes, to recommended replacement parts/improvements to improve ownership and reduce costs.

  43. RW says:

    Asymmetric information, asymmetric expertise: Disadvantage buyer.

    Unlike the entire universe of financial instruments — stocks, bonds and all their secondary and tertiary derivatives — at least an automobile is tangible: Good thing for Wall Street that most folks don’t think about that sort of thing too much.

  44. rekesk says:

    I guess I should add that I do everything I can to research the product and know exactly what I want so that the only thing the salesman has to do is provide me with the right number on a piece of paper. For me I research the product extensively and simply work to get a reasonable price.

  45. Booleanlogic says:

    Try truecar.com. When my scumbag local dealer had a hissy fit, I knew I was on to something good. Beat CostCo auto. I did the entire transaction via email and then drove 90 miles to pick the car up. I drive that far to buy shoes. The sales agent later showed me a picture of him standing with the national brand CEO getting best of the year award. I think he deserved it. Car warranties are good where ever.

  46. tsokol1 says:

    Buying a car sucks simply because buyers often shop until they get a price that’s not real. In effect, a lot of car buyers screw themselves. They shop until they hear what they want — a price below an actual selling price. then all the shenanigans begin.

    As an ex car sales person and sales manager, I learned very early that most folks do not trust car sales people. They always think we are screwing them — it’s always, “what’s your best price” — then they go elsewhere and save $25.00. So, for $25.00 on a $35,000.00 purchase they end up being sold all sorts of stuff – and the final price is higher than the price I would give them.

    Everyone seems to think there’s some sort of “magic”, that we make thousands on every car. They seem to ignore all the dealerships that go out of business every year.

    I was very fortunate to have a loyal following, so I would sell about 15 – 18 cars a month just on return business. After a while, folks would come into my office and say, “it’s time for another one”.

    The best way to buy a car is to build a relationship with the sales person — don’t leave your brain on the curb. It’s a business, no different from any other. As such we have to make a profit to keep the doors open.

    There are so many services that educate buyers. Consumer Reports will give you a full rundown on dealer costs (strange how many folks don’t even believe that). As far as leases go — frequently the advertised lease deals from the manufacturer will feature either a reduced money factor (interest rate), or a higher residual. Both make the lease less expensive. Sometimes they will have both a lower rate and a higher residual. Those deals are usually very good.

    Just be realistic.

  47. readerOfTeaLeaves says:

    Wow, this post surprised me.
    If they treated B.R. that badly, they’ve got a lousy business model.

    Back in the day, after being asked nothing more enlightening than “what color” of car I wanted at a Ford dealership, I smoldered off the lot and haven’t been back since.

    Being female, and short, seems to really trigger the idiot neurons of some male car salesmen.

    My business went to the smart sales guy at the Volvo dealership, who actually could answer questions about the engine, mileage, the dealership’s service dept, and anything else I wanted to know. That dealership made beau coup money off me through the years and knew their customers weren’t interested in wasting time.

    I’d buy from them again, except that I’m fed up with oil companies.
    I plan to start looking at hybrid and electric engines in coming months. I’m going to start by checking out Teslas, as I’m on their email list and have really been favorably impressed with their approach and info. It will at least give me a start point.

    My spouse does research online. Then he calls ahead for an appointment, specifies what he wants, and goes for a test drive. He keeps his car in immaculate condition, and really likes his VW dealership’s service dept. they ALWAYS do follow-up phone calls to monitor the customer satisfaction, which I take as a good sign. The owners are third generation, and seem to run a good, stable business.

    I’ve assumed part of my unpleasant car shopping was related to being female, but if those salesmen are trying to bs BR, maybe they are simplya pack of fools.

    I don’t yetis p

  48. GeorgeBurnsWasRight says:

    Most of the guys I know are all convinced they’re above-average negotiators. Statistics say half of them are wrong.

  49. jhawkins90 says:

    First comment for me, saw the post and I had to make a wordpress.

    The reason is because the dealership is doing everything it can to grab the “producer surplus” and it happens to be very good at this because it controls the entire situation. You come to them, and the more grueling the experience, the more likely you won’t want to do it again and just get the whole thing over with and take whatever they throw at you.

    A game theory professor of mine that I’m very fond off posted this video of how to take back some consumer surplus by gaining power at the negotiating table. I’ve reproduced below. Makes the whole process SO MUCH easier.

    http://bigthink.com/ideas/41819

  50. farfetched says:

    Many have covered it.
    Buy newer used with a factory warranty. Research the fair price on Edmunds. Get the carfax reports.
    If you are financing get approved from your local bank or credit union. If possible pay cash.
    Make an offer ‘out the door’.

    Be willing to walk away. There are literally millions of cars.
    Both of our last cars were below Edmunds and Blue book/NADA.

    Our truck we made an offer, the salesman declined our offer, we walked out and got in our car to leave and there was a knock on our window. “I thought about it, I’ll take your price, it’s been sitting here for X months”. We knew it, my wife had her eye on it on-line. We got it ‘out the door’ at $4000 below Edmunds fair price (he got it as a repo) and it has been an awesome vehicle. We also bought a Honda with 11,000 miles on it from a Audi dealer where the Honda was a trade in and an orphan on a lot with $100K cars. We researched it and since we were driving 2 hours to the dealer, we made an ‘out the door’ offer over the phone, which he accepted. They actually lost some $$ on that deal but it beat dealing with the auction and we got a killer price. Of course they have to try selling the after market warranty etc etc but if you keep your head and are willing to walk you will do fine. It did take some time as they had a showroom full of people shopping for Barry’s car. My wife is the one with the killer instinct. She is ready to walk if they play the game.

  51. gstream says:

    At least you can call/email other dealerships and get a quote.

    Have you tried calling dentists to get a quote on specific procedures? By specific I mean, specific codes that Medicaid will pay a strict X amount on.

    This car dealer business is just a crummy reality of life. The lack of transparency in healthcare pricing is a crime against humanity and capitalism.

  52. bonalibro says:

    First of all, never lease. You’re going to pay for the car twice over before the lease is up. But they know you don’t care because the lease is tax deductible. A good Japanese made car should last you ten to twenty years. Invest the savings each month and you’ll be a millionaire.

    Years ago I read that the cost differential between a Chevy and a Caddy was $300, but the price differential was $3,000. That was back in the 1970s. Imagine what it must be today.

    Don’t do dealer financing, they’ll collect their excess profit on points.
    Don’t buy the paint protection. It’s a $25 wax job for a few hundred dollars in excess profit.
    Realize that every option has a 1000% mark up. Negotiate it way down.

    The auto business exists for one reason – to turn you upside down and shake your pockets out. Always has, always will.

  53. Jojo says:

    If you look in the sales section of Craigslist job ads, the daily list is littered with ads for car salespeople! The turnover is huge in the car business, which alone should tell you that their standard sales model is broken.

    But really, most commissioned salespeople will try hard to maximize the value of what they sell so they can make a higher payout. They do this by adding in services,options, taking finance cuts, etc. And it’s not just the car business.

    Think you’re getting raked by car dealers? How about Wall Street transactions? How do you think firms are able to pay millions/billions in bonuses? Where do you think all that spare money comes from? Someone is paying a lot more than they should!

  54. Taylor says:

    For all readers of Remar Sutton’s Dont’ Get Taken Every Time, here is a little exercise for you: Spot the comments that were posted here by Killer Monsoon.

    People should read Sutton’s book, it’s quite a revelation. Back when the internets for all was a new concept, auto dealers were out there, posting as customers on discussion fora, using cookies to keep track of their customers’ on-line browsing…..

  55. Lukey says:

    I have never had this problem. In the old days all you needed to do was buy an Edmund’s guide (and now, of course, all this info is on the web) to get the dealer “invoice” prices on cars and options. Then, through a little bit of reading, you learn about the “hold back” incentive that allows the dealer to sell the car below invoice and still make a profit. I haven’t paid more than invoice for a new car for decades (though I have had a few screaming matches with salesmen who tried to deny that there was any such thing as a “hold back”). A lease makes it a little more tricky but I just did one of those on a new Grand Cherokee and it was just a math exercise that involved taking the “low” lease rate on a vehicle in their advertisement and extrapolating that to the one I actually wanted. It also helps if you are willing to take an end of model year vehicle in late summer – early fall rather than the latest newest model. That way you get extra leverage because they really want to move those cars.

    Maybe it’s different in New York but I have bought in PA and Texas and it worked the same in both of those states.

  56. Moss says:

    My experience show that each step is very much transactional. You have the salesmen, the finance guy, a potential trade-in. Each person is trying to get something. I was amazed at what they now offer warranties on. Rims for example.

    Always be willing to walk, doing so at least once is recommended. Never act or say anything that exhibits excitement over the car. Try to close the deal right before month end. I just bought a used car with low mileage from a dealer of a different manufacturer. They do not like carrying other guys stuff too long. Walked away twice. Not many people would be willing to do what I did, and that is what they are hoping for.

  57. mathman says:

    Two things. Before you go to actually buy what you’re looking for, do some research – see what dealers in the tri-state area are selling it for (you’ll be surprised how much the price varies). Once you find the lowest price, take it to the nearest dealer to you and haggle – they’d sooner make the sale than not and will “work with you.”

    i once bought a spectacular 4 wheel drive Nissan truck (that i kept for 15 years). Across the street from this dealership was a Toyota dealership. By the time my wife got done with the Nissan salesman and his manager – the guy put down his pen, looked at her and asked “How much do you want to pay for the truck?” We got it for 5 grand less than the sticker price because nobody was buying at the time (recession) and Nissan was providing “incentives” to the dealerships to sell at whatever they could get. They weren’t losing money on any deal they made.

    Secondly, i knew an accountant (who did car dealerships among his many clients) who got the absolute best price on whatever car he was buying because he knew what it cost them, what kind of overhead they had, etc. and could back them down to his price using this information and the fact that so few people were actually buying cars (he always bought during their worst months for sales).

  58. Lukey says:

    Right – you definitely have to be ready to haggle (and stick to your guns)! I once helped my mom buy a new Audi A6 and we spent six hours at the dealership by the time we were done. When the deal was finally sealed the salesman turned to me and said “I want to take you with me the next time I buy a car!”

  59. SEG says:

    You should not pay over invoice. How much below invoice is the unknown. Even the dealers do not know the true price of the car when they sell it. They get extra cash for number of cars sold, how many premium packages they sell, etc.

    Used and last years models are easy to negotiate because they are generally significantly over priced.

    Even with cash they try to screw you. If it is not a cash deal they try to screw you more on the loan or lease.

  60. leeward says:

    consider the regulation that is unable to see innovations in process. The dealer industry fights for the regulation to survive with lobbying. WO the reg., menu pricing would be tried the right way eventually along with others better at capturing demand. But angry dealers would argue how eventually you’d see the foreigns dumping inventory and Congress would say we’ve got to protect the jobs of these wonderful sellers doing us all a service. One price and one color really was a good segmented approach to selling a lot of cars. How can market regulation not be demanded to stay with the changing times? Influential interests.

  61. BennyProfane says:

    Oh, dear lord, I just have to chime in here, since I just bought a car. Awful, awful experience, dealing with the sleaziest people I encounter in the world. I really want to be nice, or even normal, but I’m constantly acting like an ass to even the good sales people because I don’t trust a soul within 500 feet of a dealer. Awful culture. Twice I negotiated for cars that didn’t even exist. No kidding.

    That said, I may have found an easier way. Certified Pre Owned. About 20% off new pricing, low mileage, practically new car warranty, and, the car is what it is. It’s right there, and no bait and switch can occur. Try it. Worked for me.

  62. danm says:

    Why?

    1. It’s a subisdized/protected industry… look at how banks treat their cleints. LOL!
    2. Our way of life depends on the car
    3. We have been brainwashed into thinking that a car is an extension of our body and reflects what kind of person we are.

    Here in Canada, most luxury cars are probably 30-50% more epxensive than in the US… Canadians complain about this discrepancy but they still buy them using their new found home equity because it shows how rich and special they are!

    Since I can’t stand anything car related, I choose cars that will get me from A to B without breaking down for as long as possible, those that thieves don’t really like, those with los insurance costs and those that have me spending as little time as possible at the garage.

    When I walk into the dealership, I specifically ask for the car that would need to be custom built and shipped in 6 months… of course, they want to sell me the ones on the lot… and they start adding stuff for free until I get it fully loaded. It’s still a pain, but I get some fun out of it!

  63. danm says:

    Ohh… forgot the most important one:

    4. If so many men did not love cars so much, we would not have to endure this special form of torture.

  64. cgercke says:

    Looked at another way, why is it that any product has a stated price? This is certainly not the case in a market town in West Africa. Accepting stated prices is a convenience that well-off consumers are willing to pay for when purchasing items that are relatively inexpensive. For the largest purchases, homes or cars, the price of this convenience is too high for both buyers and sellers.

  65. find this..

    bobmitchell Says:
    January 9th, 2013 at 11:12 pm

    You went to a LOAN store, you thought you were at a CAR store. The confusion is normal.

    Honestly, the same can be said of the “auto” industry as a whole. The car is a second thought.
    ~~~

    to be very insightful.

    the ‘Big 3′ (‘Car’ companies, in general) are not, contrary to popular opinion, in the Car business..

  66. Jim67545 says:

    I hate going to the dentist. Although my dentist does his utmost to make the experience as pleasant as possible I dread going, hate the experience and can’t wait to flee. People have grown accustomed to hate the car buying experience and fear that they are somehow being abused – even if they don’t know how. It is an attitude issue.

    Car dealers are for-profit enterprises. Surprise!! Usually they make not much on the sale of the car. Maybe a couple hundred and maybe another few hundred on holdback and other dealer incentives from the manufacturer. They make their money on nearly worthless dealer pack (items the dealer installs such as special paint coatings, engraved serial numbers, etc.), warrantees and various insurances, and, in some states, on the financing. On a $30k car the salesperson/finance guy who hit it out of the park might be wiling to make $500 on the car but score $3,000 on the rest. So, while price is important and manufacturer options not an issue (if you want them), everything else is more important. Often buyers drive their hard bargain on the purchase price, then relax and get taken to the cleaners on everything else.

    The idea that the dealer is working for the bank is nuts. Multiple lenders compete to offer financing. The dealer directs the transaction not the lender. What you have to watch is that the “best” financing the dealer offers may be “best” for them (pay them the highest commission) and not “best” at all for you. Know what your bank or credit union would charge.

    Bought a new foreign car recently by emailing all dealers within 250 miles. Most dealers have someone responsible for “email” sales. I don’t know if my salesman had greasy hair or not. Never met him. Knew exactly what I wanted and got a deal $2k under anyone else and they ate the cost of shipping it to my door. Financed through the dealer. I got a good rate, no prepayment penalty, no origination fee, etc. What do I care if the lender paid the dealer a “reserve” to get my loan?

    Bottom line, you are dealing with a situation with a lot of deciding (models, colors, options, finance, warrantees, etc.) to do. Man it up. Yes, car dealers and everyone else involved is trying to make some money on you. Hey, it’s called capitalism. You think Walmart is different?

  67. wannabe says:

    Finding the invoice price for a car is not hard with a little searching (I always use Edmunds).

    seth1066: “I’m not sure what you mean by “placing an order.” If it’s ordering a specific model, color and options, then waiting to have it built and delivered to the selling dealer, I would think that’s still possible. ”

    I did just that with a Subaru WRX back in 2002. The factory boost gauge option always came with the silly wing standard so I was obliged to special order. I ran my own internet auction. Researched exactly what I wanted and mass emailed the specs to all of the internet sales addresses of my local dealers. one responded with a price I could see paying, went in wrote a contract for the car at around 500 over invoice. Got my car a few months later, made them remove the dealer sticker before driving away.

    Of course buying a new car is a rip off no matter how good a deal you get. My next car was a 2006 Mitsubishi Evolution. Bought it in 2008 for 10K less than new. It still runs like a charm. I think most people don’t get emotionally involved with their cars the way I do, it’s not wise financially.

  68. Chad says:

    I’m currently in this process and I will be using my credit union’s buying service, which, in turn, will get me a 1% rate. The price is highly competitive based on my research and the loan rate is awesome. All I do is show up and pick up the vehicle. No haggling over price or finance issues. I’m sure they will still probably try and sell me “undercoating” and other such non-sense, but at least the main part will be taken care of.

  69. EMichael says:

    What I find most humorous about many of these comments is how great the “one price, no negotiation, credit union price, USAA negotiated, Carmax, etc., ” car deals are. Humorously, those prices are always, always higher than what an imbecile could negotiate.

    C’mon people, it is 2013. Every single dealer in the US has a webpage. You go on it, choose your car and ask for the best price from a couple, three dealers. None of them will go back on a price they have offered. From that point on if you cannot figure out the best financing option, you probably shouldn’t be allowed to buy a car, let alone a house.

    There are certainly sleazy car people. Just like there are sleazy doctors, plumbers, landscapers, hedge fund managers, bank CEOs, etc. If you are unfortunate to run into one, learn your lesson and do not go back.

    And while we are on the subject of sleazy, when you traded in your last car did you mention the transmission seems to snip every now and then, or that clicking sound you hear from the engine?

  70. Bokolis says:

    BR,
    You are fighting a battle on their (tony) turf. They see you once every three years, so it’s their only chance to bleed you. Since this was a dry run, the lesson was that you have to go in there as hyper-prepared as you do for all your other endeavors. I suspect that most people don’t because they are embarrassed to do so.

    With leasing, you have 5 factors to be negotiated, whereas with buying you have two. I realize that buying means that you keep the vehicle longer** and have to eventually hassle with getting rid of the vehicle, but I always assume a 6-year residual value of zero…anything I get for the car is a bonus.

    ** – Build another bay in the garage- you can have two cars and Mrs. BP can have one- and, stagger it so that you get a new car every three years just the same. It’s like having multiple cell phones so that you don’t have to wait two years for the upgrade except, unlike the second phone, you won’t just use it for the girlfriends, so you don’t have to hide the second car from your wife…maybe that’s just me.

  71. WFTA says:

    Guess I’ve been lucky on my last two (actually the late wife’s last two; I’m the hand-me-down driver:) both Toyotas and both for cash–Price LeBlank in Baton Rouge and Don McGill in Houston.

    Maybe we should legislate that weapons be as difficult to buy as automobiles.

  72. Slash says:

    One reason is, in many places, car sellers have laws that forbid things like internet sales. So you have to go to a dealership. They want you in the that place, unable to escape, so they can try to rook you into paying more than you have to.

    And of course, because salespeople are assholes. They don’t care about wasting your time. Having bought 4 or 5 cars now, the experience is, at best, unpleasant. Actually, a pelvic exam is more enjoyable than buying a car.

  73. freitagfan says:

    Last time I purchased new – the dealer had an internet sales office (one lady) and you told them what you wanted and they quoted you a firm non-negotiable price. We contacted several different dealers, they all had roughly the same price and we went with the best price (adjusting for distance). Easy stuff. We walked away from the sale happy.

    It’s funny that someone thinks credit unions give poor pricing and then suggests using their internet sales office. What do they think the credit unions are doing? Mind boggling.

  74. rd says:

    I have walked away from car purchases before because the dealership was just getting very annoying.

    However, my last two purchases were actually very good. We were shopping at the highest volume dealership in the area. I had done my research before going, knew what I wanted and how much I was willing to pay based on the best online info I could find. Their first offer was slightly less than what I had researched a fair price to be, so we haggled for a couple of minutes and then were done. Their financing terms were as good or better than I could get at my bank, and they didn’t even bring up rust-proofing, detailing etc. Once we were done with test driving etc, the rest of the transaction took about 30 minutes. Picking up the car took about 30 minutes, mainly going through the details of how it operates.

    So we went back to the same place and the same salesman when my son needed to buy a car. Similar experience with the price negotiation. Their first offer on the financing was too high, so when I questioned that and suggested that we go look for our own financing, they came back within a couple of minutes with a very fair financing package that was 4% lower. My son had never bought anything like a car before, so it was an eye opening experience for him. I am sure it would have cost him an extra $2k or more if he had simply walked in alone.

    On the whole, good dealerships can get repeat customers and do a high volume if they are fair and responsive. However, you as the customer have to go in with knowledge of what you want, what is a fair price, and what financing terms are acceptable. This is the private sector – they are not out to protect you!

    BTW – buying a house is usually even worse than buying a car because the sellers have a very emotional response to price and other things about their house. At least it is just business for car salesmen.

  75. EMichael says:

    C’mon freit.

    You see no difference between a credit union or buying service deal for a price from credit unions(who, btw get a kickback from the dealer) and a negotiated price with the dealer? I’ll give you on of the main reasons why they are different, though there are several others.

    Credit union negotiates a certain price over invoice every month. Dealer is happy to take that price. Two weeks into the month, the manufacturer changes the dealer incentive on some cars, effectively lowering the price. Credit unions do not respond to those price changes, and they can be pretty substantial.

    25 years ago(the last time I worked in a dealership), the manufacturer came out with such an incentive in the middle of the month. Sell 30 y models this month, and receive $500 per sale for that y model retroactive to the beginning of the month. In effect, the 30th sale meant $15k increased profit.

    Think the people negotiating a y model purchase after than announcement got a far better price than the credit union buyers?

  76. wally says:

    I’ve had bad experience buying cars, but also some really good ones. Best was a used-car guy at an Infiniti dealer in Minneapolis. I bought at least 3 from him – really good cars and really good prices (I still have 2 of them). Just a straight-up, no BS guy.
    Of course he retired a few years ago.

  77. ES says:

    Basically we need to be able to buy cars online, that is what most people want.
    Or at least have them with price tags on the lot so you know what the expectation is.
    But there are laws that dont’ allow that. Who would’ve thought.
    We only buy used now from Carmax.
    Dealing with sales people is a nuisance and you have to realize that someone is paying for that salesperson’s time.
    Most likely it is you. Only you would rather just research options on the internet instead of relying on opinion of someone with a conflict of interest.

  78. retrogrouch says:

    My dad used to call three dealerships, and say this is the model I want, these are the features. Give me the best price you can, I’m calling 2 others, the best price out the door gets my check. Bam done.

  79. Gus S says:

    Try the Costco Auto program. I used it in the past, its prices are predetermined at dealer cost + 4% (traditionally). Most dealerships get a bonus from car companies if they sell more than a predetermined quota (usually 30 cars per month) with each car over the quota level providing an additional $1000 in profit. This is why you should wait until the end of the month to make your purchase and gain “wiggle room” in dealing with car dealerships.

    Best of all is that there is no BS back and forth with salespersons and the manager, you walk in price is predetermined at lower price than you’ll normally see and the dealership is happy as the additional car sales help him get to his bonus level much faster than other dealerships with the same brands. The only downside is that COST only works with one dealership in an area, so you might be traveling 20+ miles to buy your car.

    If you really want to get sick is look at GPI which is publicly traded high end car dealerships. They actually don’t make as much as you would think on the car sale, but service is usually double the price of a local independent mechanic.

    Below is the Costco link for the auto program.

    http://www.costcoauto.com/enterzipcode.aspx?gotourl=%2fdefault.aspx

  80. willid3 says:

    some suggestions on how to avoid the sharks (my wife and used to car the retail sales folks sharks. because when you stepped on the lot they would act like them).

    best suggestion find the fleet sales department (not the internet sales folks or retail). they generally sell to business, but aren’t restricted to them (if they are, you are definitely in the wrong dealer).

    the other is the way cars are priced by manufactures. many have maybe $300-400 in profit for the dealer. if that. that leads to lots of add ons to make up the lower prices. not true of all cars, but a lot of them are that way.

    while we are sort of lucky here in DFW, as we have a car show on weekends and the host wont even put any dealer on unless he knows them. and he has fired dealers from the show on air when they get a little bit sneaky. and he wont do any other markets cause he can’t really know the dealers there (he tried once to add Houston to his show, just didnt work out though)

    and oddly enough we actually have a lot more information on cars than almost any other product. that sticker is a lot of a price leveler than any thing else (used to be before it was mandated, that you had no idea what the price was going into the dealer). but now at least you have that (and thats light years better than what you can find out about house, health care, finance, or a lot of other purchases).

    we have found a really good dealer (Chevy house) that is usually in the top 2 of Chevy sales every year). they dont haggle, they even show the invoice as a starting point. and cut back from there. no haggling at all. and we have bought 3 cars from them, and probably will buy more since we have been treated so well every time. we even got fed lunch once when we dropped by to get our tags.

  81. jdavis says:

    I know a bit about automotive retail, as I have car dealer clients. Here’s the problem with the average consumer’s complaint. The margin for a car dealership is in the neighborhood of 4%, but many are around 2%. The people that don’t like to haggle should know that most dealers would love to have fixed price selling, but there is always another dealer out there that will price lower. While it’s true that there can be a good deal of profit in finance and insurance, that is true of anything that requires bank financing. People need to remember that invoices are readily available online. While there is some dealer profit from invoice, it’s generally quite small. Do you know how much a retailer paid for the tv you bought? Or, a coat? For that matter, do you know how many hours an attorney really works on your case? Buying a car can be a pain in the ass, but I would dispute the notion that it’s any less transparent than any other transaction.

  82. hue says:

    Not that I have some special love for car guys (and gals) but those middlemen jobs provide a living. Cut them out and what will they do, sell mortgages, work for car makers, or textile manufacturers or better yet Walmart, low wages and no bennies, but hey the prices at Walmart are low low low …
    You can order you new car online, built to spec by robots for a low price, then avoid running over beggars

  83. willid3 says:

    and oddly enough i used to work for a manufacturer. and when i went shopping at one of our dealerships. i wasn’t treated any better than BR was. and at the time i could have called a company manager and probably have complained, but it wasn’t worth my time as the company was out sourcing my department at the time. but now I will never every by from that company. partly that dealer visit and partly because of being shipped off to another company.

  84. jdavis says:

    Very true hue. There are great number of people that fall in to the middlemen category. For me, the most important thing is that a car dealer, as any other retailer, deliver a good customer experience. While there are no doubt many that don’t, I’m happy to report that the dealers I’ve worked with get it right.

  85. Jojo says:

    @jdavis said : I know a bit about automotive retail, as I have car dealer clients. Here’s the problem with the average consumer’s complaint. The margin for a car dealership is in the neighborhood of 4%, but many are around 2%….
    ———-
    Yeah, seems no one in business ever makes any margin. Everyone is living on the edge of going out of business. This is the excuse used in the supermarket industry, the retail industry, you say the auto industry and who knows what other industries. Whew. I find it difficult to believe that anyone is staying in business with 2-4% real margins.

  86. “…save the ‘middleman’, else ‘we’ll’ all be ‘beggars…”

    dude, or dudette,

    brush up on some Bastiat..

    http://search.yippy.com/search?query=Bastiat+save+the+candlemaker&tb=sitesearch-all&v%3Aproject=clusty

    as a ‘Bonus’, stay away from WMT-agitprop..

    “…Best Buy, Toys R Us, and several supermarket chains have filed legal complaints against Walmart’s advertising practices, saying that in some cases, the prices being compared in the “Walmart Challenge” commercials weren’t active during the same weeks the commercials were filmed. Example: A store has an item that regularly sells for $3.99, but the week the Walmart challenge was done, it may have been on sale for $1.99. Walmart has been accused of using the higher, previous-week’s price in their challenges to stack the challenge in its favor.

    This is something we’ve known for a long time – as far back as last summer, I took the Walmart Challenge with a receipt I got at Meijer. Walmart compared my receipt to their prices and said I would have saved 65% by buying the same groceries at Walmart… but when I did the math, I paid 20% LESS at Meijer over Walmart’s prices — without even taking into account any coupons. Something wasn’t adding up…”
    http://www.jillcataldo.com/walmart_challenge_challenged

  87. uzer says:

    It ain’t just cars, Barry.

    I see the automotive business model as a general business model being practiced by all sorts of industry sectors. The MO seems to be to obfuscate, confuse, befuddle, lie by commission/omission, and/or commit outright fraud.

    For an off the wall example, I once stood in a large store in front of an enormous sections of paper towels. I tried to comparison shop but I realized there was little basis on which to compare the price of one package against another. Sheets? Square feet? Rolls? Ply? I thought if I could weigh each package to obtain a cost per ounce, that *might* give a decent comparison basis.

    But wtf? These are PAPER TOWELS. Why are they so hard to compare?

  88. willid3 says:

    well there are some finance types, who seem to be able to make up for the others not having much of a markup! but they too tend to make the companies markups a little lower, usually by having a large bonus

  89. willid3 says:

    and a little known thing. i was a captive finance arm of a car company, and we were in deep trouble (company should have been bankrupt and would have been if we were in any other country). and many starting the sales all the non essential ‘divisions’. trouble was the finance arm was the only one making money. so they couldn’t sell that off. which brings to some bone head decisions at GM and Chrysler. in both, the finance arm was adding more profits than it costing to have it. but both sold them off. in the end was one of those we need cash now deals, so no matter that it was a money maker, they had to do the deal.

  90. J. Francis says:

    I think the above comments from Tom K, and PriceHub are dead on about the problems we little upright monkeys have with big ticket purchases. Consumers tend to be at a huge info disadvantage vis-a-vis middlemen and big corporations in general and combine that the appalling innumeracy of the average American and…..you get what is a very inefficient and miserable experience because it takes advantage of our foibles. Unfortunately like most human institutions the car-buying process has a ton of inertia going for it despite its’ obvious crappiness.

    What I would add to that is from the cultural side: the role that an auto-centric culture plays, both from the status end (cars are the biggest signifier of wealth/status/manliness) and the need side (it’s really friggin’ hard to make it in the USA–outside of Manhattan, SF proper, –without a car). Ergo a car purchase has a bit more desperation/societal judgement imbued in it from the start, which further tilts the playing field against you. I’ve definitely had the following sensations or picked them up watching my brother buy a new truck recently:

    ‘Are you going to walk away from that magical machine–god it drove great, that engine, wow!–, probably the most tangible symbol of the Pursuit of Happiness just because it’s only $1200 off your asking price? You want to wait two months? You won’t have it for 4th of July, and jeesh, the old ’98 Honda sure doesn’t scream success right now compared to cousin Greg with his new Beemer. Miranda made that comment the other night about ‘the embarassment on wheels’ for the upteenth time……. what kind of man waits so long for a good car? what kind of procrastinator are you? Americans solve problems, they don’t wait for months!! Screw it, I already got him down $800, I did a good job negotiating!

  91. Carl C says:

    Whether or not GM and Ford want to switch to a new sales model, they don’t always have the legal right to do so. In most cases, when an owner buys a franchise, he has bought a long-term, exclusive right to sell that brand in a certain geography. That contract often gives pricing control to the dealer, not the manufacturer.

    With their local monopoly in hand, what incentive would a dealership have to change pricing models? Why should they care if you enjoy the experience? (Sure, some people will drive a long way to find a better experience. But, like gas station pricing, a lot of people won’t even attempt to find a better deal.)

  92. AnonymousPoster says:

    Didn’t Saturn try to upend this model once by having no-haggle prices on their cars? I think Ford also tried, but abandoned the idea after they decided that customers preferred to bargain.

  93. Jojo says:

    If you have a smartphone, you can run an app like Shopsavvy or Amazon PriceCheck to scan a barcode in a store and see what deals are available locally and online.

    Wouldn’t that be great for a car business? You have a car with all the options incorporated into some sort of barcode. Just scan or enter the correct numbers and immediately see all the available inventory and pricing in some zipcode radius.

    Let’s retire car salespeople!

  94. DuchessGateau says:

    My boyfriend faxed the dealer an offer with accurate pricing, and they took it. No discussion. I was so impressed! They didn’t try to haggle via fax. He had ordered a $25 report from Consumer Reports for the particular make and model, which listed the price of each option he wanted. His fax detailed the price of each option, and tacked on $1,000 profit for the dealer. That was the recommendation of CR a few years ago. Knowing exactly how much each option costs eliminates the crazy haggling over options.

  95. kurtwestphal says:

    used KBB to price all options, test drove car a couple of times, always announced not buying today, drove all different mfgr cars over the same circuit. when i finally decided on the Audi, went to sales mgr, bought car in 23 minutes. can recommend contacts in Cali if you’re buying out here.. ;)

  96. bsmi021 says:

    There is a simple answer to the question, but a simple answer to the problem! The answer is we allowed it to be, this is the same as why is Washington so horrible we allowed it. All the people of the land have been pushed around by the power elite for so long that all we complain about today is our fault. But the bigger issue I have is why can we not mount any type of push back that matters??

  97. CurrencySpider says:

    Barry, stay away from Northern Blvd and Great Neck/Manhasset…. You should know better.

  98. idaman says:

    Barry, I used a car broker in Sausalito to by my Tiguan. $500, fully refundable, no negotiations, even after the fee, usually a better deal then u can get from the dealer. It’s hard to place a value on not having to deal with the dealer. U only need to know exactly what u want to buy.

    Cartelligent. Ask for Benji. Nice guy.

  99. mle detroit says:

    Before you follow all this excellent advice about email “auctions” for the car you want, how about convenient one-stop window shopping first (it’s what DH and I do when in the market).

    Come on out to Detroit. The Auto Show opens to the public on January 19. You can probably see it all in one day, with a lunch break at the Rattlesnake on the river or Coach Insignia (via the PeopleMover) at the top of the RenCen. And the attractive people-models can recite details without the pressure — a win all around.