When Do “No Haggle” Car Sales Mean A Better Deal?
Haggling with a salesman can be one of the most taxing experiences for new car buyers. In a recent survey, by Kelley Blue Book, almost two-thirds of new car buyers said they’d rather pay a fixed price. The market has listened, and now some dealerships and manufacturers are moving toward no haggle car sales. But does “no haggle” equal a better deal?
The modern “no haggle” dealership can be traced back to GM and its introduction of the Saturn in 1990. In the Saturn, GM promised a friendly, non-confrontational dealer experience, aimed at new car buyers. They seem to have succeeded. Saturn consistently ranks higher in dealer satisfaction than any other non-luxury brand. Toyota has since followed suit with its Scion brand, introduced in 2003.
But that satisfaction comes at a price. “No haggle,” means exactly that. There is no negotiation on the car’s price and therefore no way to get a better deal. The simple fact is that an educated shopper will pay less at a regular dealership than at a no haggle one. At a no haggle dealership, the car’s total price is set by the manufacturer, including the dealer’s profit. Traditional dealerships, on the other hand, don’t base their profits on a per car basis. Instead, they expect an average of profit over time. This means that if the dealer expected a $1000 profit per car, the salesman could get away with selling a car at that profit, one with no profit, and then one with a $2000 profit. This makes no haggle dealerships a double-edged sword: You won’t be overcharged by $1000, but you won’t be able to save that much either.
The sad reality though, is that for everyone who saves money at a regular dealership, someone is going to pay more. It’s been shown that women, minorities, and young adults typically are the ones to pick up the slack. If you fit into one of these groups, then a no haggle dealership might be your best option.
You should be aware, though, that no car deal is going to be totally negotiation-free. You’ll have to negotiate financing and trade-in value at any dealership, and some no-haggle dealers have been known to force expensive add-on packages on buyers.
If you fear discrimination, or if you don’t mind paying more for straightforward buying experience, then a no haggle dealership might just be for you. But if you’re looking for a good deal, then you’re better off comparing price quotes and heading to an old-fashioned dealership.
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