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Back in the 1990′s “No-haggle pricing” was a concept that Saturn created, here in the US.
When I was younger, and looking at starting a career in auto sales, Saturn was the place. Why? Because potentially, as a new salesman, I didn’t need to have a lot of experience to sell cars. Car buyers looked at the window, saw the price, and signed on the dotted line. I was sure of at least some type of consistency in the markup.
Well, that didn’t work for Saturn or for the parent company, General Motors, as you will read later on in the article. But, in all fairness, “no-haggle pricing was not the primary culprit.
As a consumer, you have to be suspicious about a concept that is so loved by the auto industry.
“No-Haggle Car Pricing”
The sticker price you see on the vehicle is the actual transaction price of the vehicle. The dealer or the seller is not prepared or authorized to negotiate from that price. The caveat being that the sticker price, of the MSRP, needs to be set at something that is very fair and reflects true market demand for that vehicle. So if you’re going to go into a no-haggle dealership, you need to expect and hopefully agree that the MSRP price is close to what is a fair price for the vehicle.
If the vehicle has a lot of add-on fees and additional market adjustment fees added on, then it’s not a no-haggle dealership. If you’re the type of consumer that is fearful of the dealership environment, thinks it’s a hassle and don’t like to negotiate, and just want to get the new car and get out, then a no-haggle environment is probably best for you. Essentially, the MSRP is your pre-agreed transaction price of the vehicle. So you come in, see the price, you like it, that’s what you buy and off you go.
The Dealership: My Way Or The Highway?!
But how “no-haggle” is no-haggle pricing? Does it mean a buyer is guaranteed to pay the same price as the next person who walks through the door? Will no-haggle dealerships refuse to shave a few hundred dollars from the deal rather than lose a sale?
Perhaps the biggest question is whether most consumers really want no-haggle pricing. Buyers may be so conditioned to negotiate a deal that they feel they are leaving money on the table in a no-haggle dealership.
The jury is a long way from a verdict on no-haggle pricing, but there are some things today’s new car shoppers should know.
First, dealers — even the much-heralded Saturn dealers — were not absolutely bound to avoid haggling.
Federal law says that manufacturers can’t dictate pricing to dealers. That’s where the phrase manufacturer’s suggested retail price, or MSRP, comes from.
Saturn
The issue came up over how some dealers handled the debut of the hot-selling Saturn Sky Roadster. With more buyers than vehicles in stock, some dealers jacked up the price above the MSRP and then bargained from there — not exactly a no-haggle attitude.
A representative for Saturn admitted there was little that GM could do to discourage such practices, aside from counseling the offending dealers that their attitude could limit future sales.
Even if a dealership adheres to a one-price-fits-all policy, there are other ways in which a buyer can wind up paying more — or less — than another customer.
The value of a trade-in, the cost of financing and prices for extended warranties can all pad the price of that no-haggle vehicle. So buyers need to keep their eyes on the bottom line and not be dazzled by the low-pressure sales approach over the posted price of the vehicle. Otherwise, they could end up giving away hundreds or even thousands of dollars in other parts of the purchase process.
Who Likes “No-Haggle” Pricing?
Then there’s the issue of whether significant numbers of buyers will ever be comfortable with no-haggle pricing.
After a century of buying new cars through an adversarial process, people are understandably distrustful of deals where they have no apparent leverage.
And don’t forget the ego factor. Many buyers love to boast they “bargained” the dealer down to an incredibly low price, even claiming they bought the car for less than the dealer paid. Of course, no dealer can sell cars at a true loss, but that doesn’t stop the bragging.
The buyers who unquestionably benefit from no-haggle pricing are those who have an abject fear of the car-buying process. Even if those folks give up some extra dollars, no-haggle is probably worth the cost.
Few people actually like the process of haggling for the best price on a new car. In fact, almost two-thirds of car shoppers in a recent survey said they would prefer to pay a single, set price. Only 12 percent of shoppers thought “full sticker price” was fair. After all, nobody pays the manufacturer’s suggested retail price for anything. Not electric razors. Not TV sets. Certainly not cars.This is the way it’s pretty much always been. Cars have been haggled over ever since they started being mass produced around 1910! With various outlets within a short drive of one another, a dealer would be foolish not to consider a customer’s request to shave a few hundred dollars off the price.
In Closing
So, if the “no-haggle” price is written in stone… what about my trade-in? Does that get to be the only subjective part of the transaction?
The bottom line is that “no-haggle” pricing supports no one but the dealership. If the dealership had their way, everyone would always pay the dealer-added sticker price… and then find a way to hustle even more out of the deal somewhere else in the transaction.
Selling cars is a science. A good salesperson is someone who can get you to put your guard down and have you thinking you got a great deal. Car salespeople do not receive residuals on the cars they sell. So, they’re trying to squeeze everything they can out of you…now…today.
Finally, when it comes to Saturn: In US Congressional hearings on December 2, 2008, General Motors announced its intentions to focus on four core brands and either sell, consolidate, or close Saturn. Subsequently, GM stated they will shut down the division and dealers would have to close by October 2010.
3 Comments
I would prefer to shop in a no-haggling environment than having to negotiate with people. I was a sales person before and I know how companies take advantage of the discountable pricing policy. No customer ever gets the best price. Contrary to what you say.
At least no-haggling price is even and fair to everyone, even if it is on the slightly higher side. The company can always decrease it for everyone together.
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There are certainly some pro’s and cons to no haggle pricing. With the traditional haggle dealership the people who pay a higher price are essentially subsidizing those who pay less (one guy pays to much and another guy pays to little based on market conditions) You never really know if your the guy who pays to much. My thought on no haggle is essentially everyone is over paying a little but not alot or the non haggle dealers would kill them….If I remove the whole back and forth, haggle process I can spend a lot less time buying a car and doing things I prefer to be doing. I keep a car for 4-5 years, and paying a few hundred more isnt that much spread out over that time and the time and hassle savings it worth it to me.
If that’s your opinion, “No-Haggle” lots will love you!
As someone who sold cars for many years, I can tell you that you have not been privy to the unyielding, cut-throat, take-no-prisoners methods of training that dealerships impose upon new salespeople.
It is a partnership between the Sales Agent and the Management Team. We are skillfully trained to use to mental and financial strategies to wring every dime out of you we can… and go back and ask for more. We only get one chance… and we tend to stick it to ya!
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