You're walking around the car lot, zeroing in on a model you like, when you notice a "No-Haggle" sign next to the price tag. Initially, you feel a wave of relief because you hate to negotiate. But then you remember the old saw: "Never pay retail."
Continue Reading Below
Does no-haggle really mean no negotiating — or is it just a way to deflect pushback from buyers? And how do you know if the no-haggle price is a fair price?
Haggling for a car is as American as apple pie — and a stress point for many buyers. Responding to customer angst , various car sellers, such as now-defunct Saturn, have experimented with fixed pricing. But even as many car shoppers like the simplicity of no-haggle shopping, others still want to mix it up with a salesperson. Here's a brief guide to when -- and when not -- to dicker over the sticker.
NO-HAGGLE PRICING COMES AND GOES
No-haggle pricing goes in and out of fashion, according to Doug Overturf, owner of Overturf Volkswagen Audi Kia in Kennewick, Washington. Overturf, who started selling cars as a teenager on his father's Edsel lot, says he feels many people actually want to negotiate: "It's human nature to want to get something extra, to get a better deal than their neighbor."
Saturn's no-haggle policy was popular with many buyers, but the company died in 2009, partly because its cars lagged behind the competition. Toyota's Scion models, sold at no-haggle prices, were meant to appeal to millennials weaned on internet transparency (Toyota announced in February that it would end the Scion brand). And now Tesla is upending the business by letting customers pre-order its luxury electric cars at fixed prices.
Continue Reading Below
Perhaps counterintuitively, an Autotrader.com survey found that 56 percent of all car buyers — including millennials and women — actually want to negotiate to buy a car because they "do not yet trust flat-rate pricing, and they feel that they have to negotiate to get a fair price."
CAR PRICING: 'A SEA OF CONFUSION'
When car shopping, consumers are barraged by a multitude of factors: sticker price, invoice price, sales price, internet price and a host of incentives they may not even qualify for. Basically, automotive pricing is "a sea of confusion," says Jim Dykstra, a former car dealer who created the subscription car buying site Vinadvisor.net, which pulls in all the figures — even taxes and fees — and totals them, similar to a TurboTax presentation.
"If a consumer decides to buy Google stock, they can instantly find an easily understood market price," Dykstra says. But car buying is different: "New and used cars also have a market price, but those prices are difficult to find or confirm."
Used-car superstore CarMax Inc., with 165 stores in 38 states, has made fixed pricing a cornerstone of its strategy. The Richmond, Virginia-based company not only offers no-haggle sale prices for used cars but will also appraise your trade-in and give you a written quote that is good for seven days.
"This industry has historically taken advantage of the consumer's lack of knowledge," says Cliff Wood, CarMax executive vice president and chief operating officer. "I have no doubt that CarMax's no-haggle consumer offer has contributed to our growth and popularity with customers."
Even Overturf, whose dealerships use what he calls "flexible" pricing, allows that if all brands went to no-haggle pricing, it would improve trust in the industry: "Then the sales guys could concentrate on features and benefits rather than grinding on price," he says.
TIPS FOR THE CAR BUYER
Circling back to the shopper on the car lot, here are a few tips get a good deal and get that all-important peace of mind.
Are no-haggle prices really non-negotiable? Negotiating at a corporate outlet, such as CarMax, where no-haggle is a clearly stated company policy, is probably futile. But at independent used-car lots that display handwritten "no-haggle" signs, it could be worth a try.
Are no-haggle prices a good deal? It depends. Always consult online car buying guides and accurately enter all the information for any car you're considering. If the no-haggle price matches the "dealer retail" price listed in, for example, KBB.com, seriously consider taking the deal.
What if the no-haggle price is higher than the true market price? Remember that price isn't the only reason to buy at a certain car lot. So if the price is higher, but the car comes with an included warranty or a return policy, it might justify paying a slightly higher price. And remember, a fast and stress-free sales experience is worth a lot.
This article was provided to The Associated Press by the personal finance website NerdWallet. Email staff writer Philip Reed: email@example.com. Twitter: @AutoReed.
NerdWallet: Negotiating basics: Buying a car https://nerd.me/3-nerdwallet-autos
NerdWallet: Car loan calculator https://nerd.me/4-nerdwallet-autos
Autotrader study: Consumers want big changes to the car buying process