News reports suggest that in the near future, electronic chips on every item in a store will allow consumers to be charged for purchases automatically by simply walking out through the door.1 No checkout clerks will ask the shoppers if they found everything they were looking for; no checkout robots will ask if the customers would prefer to hear their oddly inflected voices speak in English or Spanish; nothing tangible will mark the exchange of value. This invisible transaction will be the latest evolutionary step away from the complex face-to-face negotiation between buyer and seller that once marked almost every retail transaction, one that uniquely survives in the purchase of an automobile.
Would-be buyers who walk into automobile dealerships in the 21st century enter a time warp. They are transported back to the early 19th century , to an era before goods were sold to all shoppers at the same posted price and before dissatisfied customers could return their purchases. They are confronted by sales personnel who are masters of the ancient arts of flattery, high pressure, misdirection, misrepresentation, and patience. They are willing to sit for hours haggling over the cost of everything from the basic car itself, to the moonroof, the floor mats, the interest rate on the car loan, and the trade-in value of the owner’s current vehicle—to name just a few of the price points open to negotiation.
It makes no difference if the customer is interested in a new or a used car; the process is roughly the same. In the worst (and fairly common) case, the shopper is met at the curb by a “greeter” who tries to determine if he or she is a “looker” or a serious buyer. Buyers are then turned over to a more experienced salesman who finds a car the buyer wants and opens a period of painful and protracted price negotiation, retreating often to an office in the back to check offers and counteroffers with his manager. Eventually the sales manager himself will appear to continue the dickering over price, and, if the customer is unyielding, the sales manager is sometimes replaced by his manager. In the meantime, the buyer has had to work with the dealer’s used-car appraiser to determine the trade-in value of his or her current car. Once the price of the new and used cars are agreed to, the customer is turned over one more time to the business manager who not only negotiates finance and insurance charges, but also tries to sell dealer-installed add-ons such as fabric protection and rust proofing.2
As bad as this system may seem, historically things were even worse. Prior to 1958, the buyer often had no idea what the dealer\u27s standard asking price was, because there was no established way to represent the price of cars on the lot. The requirement that all new cars carry a sticker listing the manufacturer\u27s suggested retail price (MSRP) created a common starting point for price negotiations, but no more than that. The advent of the Internet has armed some buyers with more accurate information about dealer costs, but that has only made the negotiations fiercer, forcing dealers to give better prices to informed buyers and then trying to make up the loss of profit by keeping up the costs to others. With the isolated exception of General Motors Saturn division, dealers adjust the prices of their vehicles to the local market, charging additional markup on highly sought after cars and cutting the price of slow-selling ones. And even on a Saturn lot, where sticker prices are stuck to, negotiation can take place on ancillary products and services, and will always occur on the trade-in allowance for the customer\u27s current car
