Does Negotiating Cost Dealers Too Much?

Surveys indicate most car buyers dislike dealership price negotiations, but Gary May isn’t so sure that’s the case.

“A lot of customers still like to negotiate,” says May, who works with dealers as president of Interactive Marketing and Consulting.

Although people often say they disdain the long-standing practice, the reality is they readily partake in it, often initiating it. A takeaway on human nature: Just because you say you don’t like doing something, doesn’t mean you won’t do it.

Hard-bargaining shoppers jump right in. “Some people like to grind dealers,” May says at a recent DrivingSales automotive conference.

So-called 1-price or no-negotiation dealerships have been around for a while. They remain a minority, but their ranks are increasing here and there.

“It seems like today’s marketplace is asking for or prodding the expansion of this process,” says Tony Noland, a veteran dealership consultant and WardsAuto contributor.

In the past, some dealers have tried and given up. This time, it may be different.

“Speaking with dealers who use it, I have not heard a single comment that switching to it has been a mistake,” Noland says, warning that it’s not always a painless transition.

The back and forth of bargaining seems to particularly peeve Millennials, says Sean Stapleton, vice president-sales at VinSolutions, a dealership customer-relationship management provider.

“The new generation of car buyers wants to know what the vehicle is worth,” he says. “They don’t want to negotiate for it.”

Edmunds.com, an online automotive marketplace, recently ran a commercial poking fun at dealership negotiations.

The spot depicted a supermarket cashier trying to get customers to price haggle for a gallon of milk. The ad’s message: You don’t negotiate at grocery stores, why at new-car dealerships?

Edmunds yanked the ad after several dealer clients complained. They didn’t seem like they were defending negotiating as much as they were miffed at a perceived cheap shot from a company that charges them for third-party sales leads and other services.

But Stapleton offers another analogy, recalling a family trip to Mexico where a vendor asked him what he was willing to pay for a piece of merchandise. “My daughter said, ‘Dad, why won’t they just say what it costs?’”

He adds, “How do you gain trust when one day a car is this price for one person, and the next day it’s that price for someone else?”

In the great debate of late on the topic, May says some people fail to see the full picture.

“It’s not just negotiation vs. 1-price,” he says, citing the paramount value of a positive customer experience. “We need to step back and look at what works best.”

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