"One-price" poses many questions

Spurred by the early success of Saturn, the industry's "one-price" movement has spent the past 10 years proclaiming that negotiating would go the way of the 12-month warranty.

While not a fan of the negotiation process, I have always viewed the "one-price" claims with caution. It seems a simplistic solution to a complex problem. Lately, a new trend is emerging that adds to these concerns.

First my original concerns:

Research has long shown that the majority of customers don't like to negotiate. True enough. But a deeper knowledge of customers would reveal that most of the customers who dislike the process still plan on negotiating the price of their next vehicle.

Why? The industry has spent years teaching customers that without negotiating, they will pay too much. Almost perversely, many customers feel that the more time spent and the harder the negotiation, the better the deal.

Presumably the solution to this Catch-22 is to convince consumers that a "one-price" also can be a fair price. This will involve building an element of trust and confidence; in other words, a retail brand (and a key piece of the Saturn formula).

Faced with the market's reluctance to embrace fixed prices, many one-price dealers have adopted "fudges."

Trade-in values may be negotiated, F&I terms are flexible, even new-car prices may vary based on color, length of time in inventory, popularity of options, etc. In other words, negotiation in all but name.

It's not going too far to state that dealers who have adopted the strategy have been successful in spite of, not because of, "one-price."

Which brings us to something new. "One-price" apostles love to point out that this industry is one of the few where a purchase involves negotiating. This is likely to change, but not in the way that you might expect.

There is a strong probability that consumer perceptions about pricing in general are about to change. Once again, blame the Internet. The friction-free nature of pricing and product information over the Internet is resulting in tremendous downward pressure on margins.

Catering to these empowered consumers, auction sites such as eBay and Onsale have turned many people into "bidders" who wouldn't dream of paying "retail."

Priceline.com allows consumers to enter a price and see if anyone is willing to sell. AtCost just announced the sale of computers at cost. (Their business model is based on revenue from advertising.)

As pricing becomes "negotiable" over the Internet, traditional retailers may be forced to join in to remain competitive. Perhaps we are moving from an era of fixed prices to that of "real-time" pricing where everything is subject to change.

For years "one-price" has been an answer looking for a question. Perhaps soon, it will be an answer to nothing at all.

Auto analyst Jeremy Anwyl heads Marketec Systems Inc. in Santa Ana, CA