For most drivers, negotiating the sales price of a car is the most dreaded part of the entire car buying experience. Recognizing this fact, a number of dealers – most notably Saturn – have begun offering what they call “no haggle” pricing. This means that you pay the price on the sticker – period. You can’t get a better deal by being a better negotiator and you don’t have to wonder if someone else paid less for the same car. This can be a very attractive selling point, but it’s still up to you to make sure you’re getting a good deal on the car.
In this country, just about the only times we negotiate over price is when we’re buying cars. In other countries, every price is negotiable – from cars to groceries. Perhaps it’s cultural or perhaps it’s our limited experience with negotiation that makes us uncomfortable. However, it’s important to recognize that freeing you from the negotiation process is a way to lower your resistance to making a purchase.
When you’re at a “no negotiation” dealership, the “sticker” price is usually set around the Manufacturer’s Suggested Retail Price, or MSRP. Notice those words carefully. This is a suggested retail price, not an absolute purchase price. Some no-negotiation dealerships sell their cars at MSRP, some at a stated amount below the MSRP or at a stated amount above invoice. Consider whether the MSRP or the alternative no-negotiation price represents a good and fair price based on the car and market demand for the car, and whether the dealer has added on any additional fees above and beyond the no-negotiation price.
To know the answer to the first question, you’ll need to do your homework before you go shopping. Remember that the “invoice price” isn’t necessarily what the dealer paid for the car – dealers often receive rebates and incentives, just as retail buyers do. Different dealers may arrive at their no-negotiation prices differently, so it may pay to check out more than one dealer.
Secondly, if the dealership is adding additional fees above the no-negotiation price, they’re really not a no-negotiation dealer. The MSRP is designed to include all the “cost of doing business” fees and the price of the car together, while still allowing for profit.
But don’t think that just because the dealership has a no-negotiation price that they have no other ways of getting additional profit from you. Secure your own financing so that you can make sure you aren’t paying an interest rate that’s higher than it should be. Make sure the value of your trade in isn’t less than it should be or, better yet, sell your car yourself and use that money as part of your down payment. Avoid purchasing unnecessary extended warranties, insurance policies or after market add-ons. All of these are just additional ways to get money out of your pocket and into the coffer of the dealership.
In addition, you may be surprised to find out that no-negotiation pricing isn’t only available on new cars, but on used cars as well. Carmax and Autonation are two dealerships known for their no-negotiation pricing on used cars.
Finally, choosing a no-negotiation dealer won’t relieve you of your obligation to do a little research before you make a car purchase, but it may make at least one part of the process go more smoothly.
