Haggling over the price of a new car is on its way out as new business practices and business models become the norm.Maia Grecco/The Globe and Mail
The art of the deal? It’s dying. There are fewer opportunities to negotiate or haggle in day-to-day transactions because companies want it that way and, apparently, so do we.
Go into an Apple store and try haggling over the price of a new computer. You’d be wasting your breath. Or try negotiating with Amazon.ca at the checkout page. You can shout at the screen all you want, but it’s not going to get any cheaper.
Some car companies and dealerships have put an end to the age-old tradition of haggling over the price of a car. Once practically a rite of passage, the wheeling-and-dealing to slowly grind down the price of that sweet machine on the dealer forecourt is no longer something most customers appreciate – if you believe the auto industry.
If you’re shopping for a Tesla or a Genesis (Hyundai’s luxury brand) there is no deal to be made. There’s no haggling over monthly payments, no trying to get them to throw in metallic paint or winter floor mats for nothing; the price is the price.
Christopher Pfaff, chief executive officer of Woodbridge, Ont.-based Pfaff Automotive Partners, is putting an end to haggling in his business by gradually rolling out a non-negotiable “best price first” sales process at all 17 of the company’s dealerships in Canada, which represent 13 brands. So far, 14 of the dealerships are on board.
“We end up wasting all this time negotiating to the final dollar on price, which is, inevitably, pretty similar all the time,” Pfaff said in an interview. “So we said, you know, letʼs save all that time and hassle, and maybe that antagonistic relationship, and just give you the best market price on this car.”
Initially, some customers thought the dealership’s new “best price first” policy was just a clever negotiation tactic.
If you are a person for whom haggling is an art form, nay, a God-given right, then you’re not going to be happy about this.Matt Bubbers/The Globe and Mail
“We’ve had customers, who – obviously, they’ve been buying cars a certain way for many years – but they’ll leave and go back to their cars and wait for us to chase them down, and we don’t,” Pfaff said.
To try it out, I called Pfaff Subaru and within a minute or two had a final price on a loaded orange Crosstrek for $34,624.30, including tax. I balked at the $0.30, but it was non-negotiable. Similarly, within an hour of clicking the “Get Our Best Price” button on Pfaff’s Volkswagen dealership site, an e-mail landed in my inbox with a written offer to lease a 2019 Golf R over 36 months for $574.71 a month, taxes included. (For comparison, I got a quote from another VW dealership on an identical car; it was $9 a month less, but there was more back and forth about negotiating and talking to the manager.)
If you are a person for whom haggling is an art form, nay, a God-given right, then you’re not going to be happy about this. Members of an online BMW forum, Bimmerpost, were predominantly against Pfaff’s new policy. “Negotiating is part of buying a car. … My favourite part, to be honest. As such, I guess I wonʼt be buying from Pfaff,” wrote one user. Another user posted a story about walking out of a Pfaff dealership after hearing about the no-negotiation policy.
In response, Pfaff said, “I appreciate some people like to haggle, and they can still do it. … But, you know, weʼre not for them.”
“We did a lot of research with Environics ourselves, and a lot of our manufacturers have done research, too: hence Tesla, hence Genesis – because this is what consumers, most of them, want,” he said. Since instituting the policy almost a year ago, consumer satisfaction and market share is up, he added.
Since the Genesis brand launched a few years ago, there hasn’t been any wiggle room on price. “The majority of consumers have reacted positively in the absence of haggling,” said Eric Marshall, senior manager of sales at Genesis Canada. “At first, some people who were accustomed to the traditional way of purchasing a vehicle were skeptical, but after comparing our sales model to the competition, many came back to us.”
No-haggle pricing puts everyone on an even playing field. (File Photo).Courtesy of manufacturer
According to Deloitte’s 2018 global automotive consumer survey, “the top three things consumers dislike about the purchase process include the amount of paperwork, haggling, and the lack of available stock.”
Among millennials, 63 per cent rated a recent dealership experience as negative because of “slow processes, unfair and inconsistent prices, lengthy negotiations, lack of transparency and pushy salespeople,” according to a study by the dealership consulting firm CDK Global.
Haggling may put some people at a disadvantage, too. An analysis of 64,000 dealership customer reviews by CDK Global found that, “regardless of other differences, a vast amount of women shared the same concern – being a woman is a disadvantage at the dealership.” Similarly, if you don’t speak the same language as a salesperson, or if that language isn’t your first, you may also feel that puts you at a disadvantage when it comes time to negotiate.
No-haggle pricing puts everyone on an even playing field. Plus, it means – in theory, anyway – more emphasis on providing good service and more time for the fun part of car shopping, such as test drives.
From the dealership’s perspective, it’s good for business. Streamlining the process means sales happen faster. “For salespeople, yes, their productivity goes way up,” Pfaff said. New salespeople, who used to take six months to a year to find their groove, now find it within the first month, he said.
Online shopping has changed the retail business, and not just for cars. With sites such as Autotrader and Unhaggle at their disposal, car shoppers can come into the dealership with a pretty good idea of what a fair price is on a particular car. You can even buy a car completely online, without ever setting foot in a dealership. If you don’t like it, return it for free, just like you would with impulsively purchased clothes that looked good online when you were surfing the internet at 1 a.m., but in the cold light of day look butt-ugly.
No-haggle pricing is not a new idea, of course. Since open markets with mom-and-pop vendors were replaced by strip malls and big-box stores, and then those were pushed into bankruptcy by online platforms such as Amazon, there’s gradually been less and less opportunity for consumers to negotiate better prices with sellers.
When you take out your credit card, there’s often not even a person to haggle with any more; it’s a website or a self-checkout terminal. The closest most people get to haggling is trying to game the algorithm to get a discount coupon.
If there comes a times when haggling truly is a thing of the past, just remember it will be because so many of us voted with our wallets and said this is what we wanted.
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Matt Bubbers