Aeroflot001
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Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 7:32 pm

This is something that has always interested me, especially in the US where I believe we have some of the worlds cheapest car prices (correct me if I am wrong). Why aren't cars sold in such a way, why is haggling allowed? Don't get me wrong I enjoy the fact that I can spend a few hours in a dealer and take a couple grand off my car but why does this happen? Why doesn't the car market work in such a way that a Corolla sells for $19,000 and that's how much it's going to cost, no if and's or but's. If you aren't from the US explain how things work in your country.

Thanks everyone.
 
LAXintl
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 8:59 pm

All new cars do have a manufacturer's suggested retail price (MSRP) which is the sticker price, but like any other consumer product the merchants are free to price the product as they wish and compete for business.

Remember dealer receives the product, a car in this case at varying net prices from the manufacturers and have headroom to play. Its really the same as most other businesses whether groceries, clothing, or electronics where a given product can have varying sale pricing at the end depending on how the merchant wants to price it depending on competition.
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IMissPiedmont
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 9:19 pm

Quoting LAXintl (Reply 1):
but like any other consumer product the merchants are free to price the product as they wish and compete for business.

Checked out prices on Apple products recently?  
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Pyrex
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 10:06 pm

Quoting iMissPiedmont (Reply 2):

Checked out prices on Apple products recently?

Merchants are free to price the products however they want - that has been established in case law many times, usually against the intention of someone like Apple. The fact that they don't, because they know Apple fanboys will buy anything with an Apple logo on it regardless of price and do not shop for value, is a reflection of the product and customer base, not of laws governing retail.
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srbmod
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 10:32 pm

Even if a manufacturer said that all of their dealers had to sell a vehicle at a set price, they would throw in all sorts of enticements to get people to buy that car from their dealer and not one of the other dealers in town that sell that brand. The competition would shift away from the price of the car to what sort of goods and services can we throw at the customer. This is what happened back in the days when the US airline industry was regulated, as they all had to charge the same fares on the routes airlines flew so airlines competed on service and amenities.

The way the system is right now, some dealers can order vehicles in large enough quantities to get better pricing which gives them the ability to sell the car at a lower price over a smaller dealership. There's a reason why in many markets there are dominant dealership groups and very few small guys left, that's because the small guys couldn't stay in business trying to match the prices the big dealerships could offer.
 
flymia
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 10:33 pm

Thankfully it's not sold at a fixed price and it would make no sense for a dealer or car companies to want dealers to sell at a fix price. That is how they get business. Sometimes with more exclusive cars or cars just on the market dealers can get away with selling cars over MSRP.
This is how all consumer items work, gas, food, drinks, chairs, electronics, toothpicks. The retailer can change the price even if they don't make any money. Resturants will often have lower prices the first few months open just to get people in the door and plan on losing money for a bit.
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Dreadnought
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 10:52 pm

The dealers are privately owned, and it is entirely up to them whether they are willing to take a hit on their margins in order to get a sale - at least in the US.

That's not the case everywhere. Some 25 years ago I went shopping in Switzerland for a new Stereo. It was a high-end system - basically the top end amplifier, cd-player, cassette player and radio unit that Technics offered at the time. I shopped around at least a dozen stores, and nobody would go any lower than 10% off of MSRP - it was apparently some sort of agreement with the Swiss distributor. Finally I found a shop which gave me a stunning 30% off, and that's where I bought it.

6 months later, I found out that the shop I bought the stereo had been blacklisted. Other Matsushita (Panasonic, Technics, JVC etc) retailers had found out that he was undercutting their mutually agreed margins, protested to the distributor, and the distributor cut him off. Such collusion would be illegal in the US.
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Braybuddy
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RE: Why Aren't New Cars Sold At Fixed Prices?

Sun Sep 08, 2013 11:31 pm

Manufacturers also set the price to suit the market, so there is very often room for large discounts. Even though we import all cars sold in the country, prices have mysteriously dropped considerably since the economic collapse five years ago, and that is without any change in import taxes or any significant change in the exchange rate. Prices for the average family car have dropped by up to 25 per cent, which says a lot about manufacturers' prices.
 
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Aesma
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 12:10 am

I can't stand haggling so this would really annoy me if I was in the market for a new car (which I don't expect to be in a long time).

It's the same here, with the exception of Romanian brand Dacia (owned by Renault and sold in their dealerships). Dacias are so cheap and get so high a demand that you can't get any discount or freebies, it's take it of leave it.
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Viscount724
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 12:24 am

Quoting Aeroflot001 (Thread starter):
Why aren't cars sold in such a way, why is haggling allowed?

It's illegal for manufacturers to set the retail price in the U.S. and many other countries. All they can do is set a recommended retail price. The retailers (car dealers) set the final price and it's up to them how much to mark up the wholesale price they pay the manufacturer. That sometimes includes selling for more than the recommended retail price for models with strong demand but limited supply.
 
planeguy727
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 12:37 am

Saturn used the fixed price approach in the US. They, however, did make adjustments to trade in values and various other incentives. The latter was a reaction to the public not taking well to fixed pricing (too many years of "negotiating").

Personally I favor the fixed price approach for everything. Much of the rest of the world seems to disagree with me on this point.
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BMI727
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 1:09 am

Quoting Aeroflot001 (Thread starter):
Why aren't cars sold in such a way, why is haggling allowed?

That's just the way it's been done. Saturn was all about fixed price, but there products were mostly subpar so it didn't matter much.

Quoting LAXintl (Reply 1):
All new cars do have a manufacturer's suggested retail price (MSRP) which is the sticker price, but like any other consumer product the merchants are free to price the product as they wish and compete for business.

Within limits. Sometimes franchise agreements with the manufacturers will restrict this. I've heard McLaren will not allow their dealers to add Ferrari-style markups to the prices.
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Goldenshield
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 9:09 am

What about, say, CarMax? They have that 'no haggle' price on their vehicles.
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srbmod
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 9:39 am

Quoting Goldenshield (Reply 12):
What about, say, CarMax? They have that 'no haggle' price on their vehicles.

They can buy cars (new and used, as some locations do sell new vehicles) in such volume that they get a better price on them than what the majority of dealers can and as a result, can sell them cheaper. You're not as likely to find the same vehicle elsewhere any cheaper than what CarMax sells them at, so there's no need to haggle (not to mention their sales staff doesn't work on commission). Some dealers will match CarMax, especially if the nearest CarMax also sells new vehicles, but they take a hit in the wallet as a result.
 
Kiwirob
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 10:31 am

Quoting flymia (Reply 5):
Thankfully it's not sold at a fixed price and it would make no sense for a dealer or car companies to want dealers to sell at a fix price.

Actually it does, if all cars were sold at the same price it would have a positive influence on the resale value of the car. Stewep discounting kills resale, that's a fact. Some car companies in some countries have fixed prices, Honda have it in NZ and the UK, I think they also have the same policy in the US (or they did) Dacia is fixed in the UK, as is Mazda, in the US Mazda had no haggle pricing. In Norway the premium brands don't discountat all, the sticker pårice is the sticker price, hence the reason why resale values are much higher in Norway for premium brands.
 
JoePatroni707
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 11:32 am

Quoting Goldenshield (Reply 12):
What about, say, CarMax? They have that 'no haggle' price on their vehicles.

CarMax price on used cars is too high. If your willing to negotiate you can do better.

Some times on high demand cars dealers add a "market adjustment" sticker on top of the MSPR. I was checking out the Golf R last week at Serramonte VW, and they had a $5,000 over sticker. Down the street at the Ford they have a whopping $25,000 over sticker on the Mustang Shelby GT. Personally I dont care what kind of car it is, or how high the demand to pay over sticker is just stupid. As soon as you drive it off the lot you throw that money plus a lot more out the window.
 
smittyone
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RE: Why Aren't New Cars Sold At Fixed Prices?

Mon Sep 09, 2013 11:58 am

I don't mind the fact that car dealers set their own prices, but it does seem 'off' that the price you get for a particular car depends on how much of dick you are willing to be in the showroom.

I am notoriously poor at negotiating but fortunately my wife is the Black Widow. She simply tells them what she wants to pay, take it or leave it. And she wins!!

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