The vagaries of car buying culture

How well trusted are car salespeople? When people go to buy a new car, do they generally expect their experience to be one of respect and transparency? Further to the point, when they find themselves in the finance office, have those expectations been changed by face to face contact? Surveys find the first answer to be second lowest of all professions; the second is likely no in most cases, and I suspect the third is an emphatic yes given what we know about human psychology.

Gloria and I have recently found ourselves somewhat at the mercy of the car-buying culture in trying to replace our decreasingly faithful clunker. Our previous experience with a dealer was in buying a rare used car two provinces away, but that salesman was very easygoing and helpful, resulting in a pain- and worry-free transaction netting me my dream car at significant savings over common prices. This time around has been a revelation even for someone who has spent a lot of time reading about the new car buying process. At first we were turned off by pushy tactics, then pacified by earnestly presented falsehoods, then finally managed to rediscover some of the truth and haggle a deal. In the end, our dignity seems beat up, as if we have played dirty to avoid being “taken.”

In all truth, using falsehoods either plainly stated or merely implied is often par for the course for haggling in other cultures. But that is precisely the point: buying a car brings us into a whole other culture where norms from other areas of life and even business/consumerism are suspended, even if the pretense of fairness and transparency remains. In many areas, you pay whatever price is listed, and savvy consumers shop around to find coupons, discounts, or lower advertised prices—but they don’t concern themselves with what it cost the reseller to acquire the product. Businesses generally don’t work hard to cover up what people paid for their products (or services).

There are many and varied exceptions to such generalizations, but car buying remains a singular game of avoiding deception. MSRP, or advertised retail price, is a stretch goal for salespeople, but one that an unknown portion of the public are happy to pay. Invoice is what the dealer pays, a somewhat secret amount over which they make their cut of the transaction, modified of course by dealer incentives for advertising, financing, cash purchases, or otherwise unsellable products like the ill-fated Pontiac Aztek. Sites and services abound for obtaining these numbers, and advice for haggling down the price—much of it self-contradictory—can be found everywhere you look online. For the second largest expense in our lives, we have ample motivation to save money.

For the dealer’s part, there are strong incentives to earn a distasteful reputation. Greed is the obvious motive, but I think the buying public doesn’t help. If buyers were generally more informed and cautious, then dealers might be less likely to pull the usual trickery, because it would work less often. I think the internet is moving consumers in this direction, but to what extent I cannot tell. The fact remains that not many people will spend several hours arming themselves with knowledge of the car, the dealer, the manufacturer, and the buying process. Judging by our performance when at the dealer, not all informed/prepared buyers will continue trusting their research when confronted with an affable and superficially sincere salesperson. If he or she simply appears to go back and forth, insists $200 is all that can be pared from MSRP, and meets our eyes when delivering the message, we have a powerful influence overriding the rational decisions we made based on reliable information before we arrived. It is for very good reason that dealers insist you come in person to discuss the financial details. For the same reason, many will openly discourage shopping around for a deal. In our case, two sales people presented it as an unethical consumer practice tantamount to stealing.

I can understand that wary shoppers who pit dealerships against each other are not good for the bottom line. Car sales is not generally the cushy cash cow many people think it is. Profit margins are slight for the average car, compared with everything else we buy. Dealerships can make serious money, but the people working the lot and tiny “offices” to make your deal aren’t the ones rolling in your hard-earned money. Informed and confident shoppers are likely not the norm, but wariness is common enough for dealerships to develop many methods of assuring or convincing customers that theirs is the best deal. But for dealers to consistently back up that assertion with evidence would take a large and not easily profiled section of their potential customers to demand that evidence—and be informed enough to know what it constitutes—as a prerequisite to a deal. It would also take a public releasing its irrational desire to get a car “at cost,” which only pushes dealers harder to lie in order to make a living.

The bottom line for buyers? Do a serious amount of homework, be honest and upfront, and work out beforehand a 3-5% profit for the dealer. Any pressure at all to work out financial details in one visit and in ignorance of what other dealers have to offer can be disastrous, as can showing attachment to the vehicle whose keys beckon longingly from across the desk. In our case, letting a dealer play the game was unfair to us, and subsequently cancelling a deal and restarting the negotiation process was less than fair to them, forcing them to spend extra time courting a possible deal with relatively low profit. I have limited sympathy for the people who misled us, but I despise the culture in which they are entangled, and can only hope that increasing buyer education will nudge the car-buying experience closer to transparency for all involved.