Buying a new car ranks right up there with pulling teeth
when it comes to ranking what people like to do. But at some
point, most do (buy a new car, that is).
One of the reasons people don’t like buying a new car is
the confrontational atmosphere that pervades the experience.
It’s you against the dealer: you are trying to get the lowest
price and they are trying the opposite.
As a response to this, some dealers have converted over to
what is called “no hassle” pricing. That is, the price listed
by the dealer, usually less than “list” price, is the price
of the car. You don’t need to haggle and, indeed, it wouldn’t
make any difference if you did. Thus, confrontation is
eliminated and the customer should feel more comfortable
about coming in and buying a car.
The problem is, at least here, it isn’t working (we’ll see
later that a variation on this may, but I’m getting ahead of
myself). A couple of local dealers have tried no hassle
pricing. One got all kinds of government and consumer awards.
It’s now out of business for lack of customers. The other is
barely hanging on while the high pressure dealers are raking
in the money.
Why is this? Don’t people want to buy a car without
spending hours hassling with a salesman or saleswoman? Don’t
people feel demeaned by the whole process and do their best
to avoid talking with sales personnel?
I was reflecting on this situation after having read
“Confessions of a Car Salesman” from Edmunds.com and
decided maybe it’s because we feel lucky.
Think of it this way – many people like to gamble, or at
least many people like to win. Yet many people will
gamble knowing that the “house” has the advantage and that if
they gamble long enough they will lose. But people still
gamble, perhaps because they feel lucky. Or they feel they
have a sure fire system that can beat the odds. Or that they
are just so much smarter than the dealer and will trick him
But, they are wrong. Most people (something like 99.99
percent) who gamble will not win. In fact, gamble long enough
and you will not only lose, but you will lose a lot
(hundreds, if not thousands of dollars).
I think such is the case with buying a car. Most people
would rather gamble by trying to haggle with a professional
who is much better prepared than you and maybe get a lower
price than the no haggle lot. But you are wrong and you will
pay thousands of dollars more because of it. You will not
“get lucky” and win a lower price than the no haggle price.
You will not outsmart the dealer. But there may be a system
that can help raise the odds.
The system is called the Internet. People can now shop for
the car of their dreams while sitting at home. While the laws
in Hawai’i don’t let you actually buy the car over the
Internet (although your state may), you can nonetheless find
the make and model you want displayed with its price. In
addition, you can check places like Edmunds.com and get the
“invoice” price of most makes and models. This gives you
important information. Information you can use, should you
feel lucky and decide to go head-to-head with a sales
professional rather than buying via the Internet. YMMV. Insert disclaimer here.