Why Does Buying a New Car Still Have to Be So Painful?

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Even in today’s marketplace of increased pricing transparency thanks to the Internet, when businesses talk a lot about building strong, trusting relationships with customers, shopping for a car can be a confusing and torturous experience. Today’s consumers have little reason to believe anything that a car salesman says; to be inside a car dealership and accept any bit of information at face value is to be a sucker. Why is it that consumers are still subjected to the old games played in car dealerships, where phrases like “below invoice” and “our best price” essentially mean nothing. Why is it that even when you get the car you want at the price you want, you still wind up driving off with an awful taste in your mouth, disgusted with the entire process?

For the most part, this has always been the way cars have been sold. The Saturn brand was an exception in that, for a while at least, it had a no-haggle, no-hassle sales policy—one that I and many other consumers appreciated. As I wrote before, with a Saturn:

You knew what you were getting, you knew what you’d pay, and you were happy about both. Why is that such a rare thing?

Now, Saturn and its sales policies are long gone, and what we’re left with are the same old games played by the car dealerships, although now they’re complicated—often to the benefit of consumers, though not always—by the process of getting quotes from multiple dealerships on the Internet.

Freakonomics’ Steven D. Levitt describes his recent frustrations with “The New-Car Mating Dance” while he shopped for a minivan with his family. Here’s the scene as he sat down with a salesman:

He explained to me that the price they were offering was well below invoice, discreetly showing me some pricing documents stamped “confidential,” emphasizing how much money they were going to lose on the car. I replied that he knew as well as I did that the invoice price he was quoting me was not what the dealership paid for the car.

On and on the dance went until Levitt walked out, only to go off to another dealership where the price was $1,300 cheaper. Was that really the best price possible? Who knows? But the experience was certainly unpleasant for both the shopper and the seller. The shopper thinks the sellers are jerks for playing games and not being upfront or straight-up lying, while the sellers think the shopper is a jerk for jerking them around and playing one dealership off another. The result is that everyone feels played. You have to really love new-car smell to not be irritated by the whole situation.

I guess what it comes down to is this statement, offered by Patricia Marx in this week’s New Yorker (subscription necessary):

A friend of mine who has bought a lot of cars sums it up like this: customers are liars, salesmen are bigger liars, and sales managers are the biggest liars of all.

Some basis for building a trusting business relationship, huh?

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