Amid ongoing speculation about whether haggling will eventually cease to be part of buying a car, we’ve spent some time recently reflecting on why it’s so painful.
We know that many customers don’t like to haggle – in fact around three-quarters of younger car buyers in the UK are put off from price negotiation as it makes them feel uncomfortable, and negotiation is an area that around a third of buyers worry about in advance of their visit to a dealership.
It’s a headache for those selling, too – it’s difficult to make profit forecasts when the selling price is uncertain.
It’s easy to understand why fixed pricing is becoming more popular – and in an age when we’re used to being able to compare prices of everything online, customers reasonably expect cars to be no different.
Additionally, in some countries, the increased popularity of PCP and hire purchase arrangement have also been credited with reducing the amount of price negotiation that takes place – in the UK, for example, more than half of people buying a car pay the retail price.
But what about other customers? Some may look forward to haggling, yet a greater number will expect it to be part of the buying process.
Yet even these customers – and the dealers they’re negotiating with – often find the process to be arduous.
But why should this be? After all, we’re all adults with – in theory – clear positions and objectives:
- The customer wants a car and knows what they’d be happy to pay for it
- The sales staff are in the business of selling cars and know what they’d be happy to sell them for.
Yet our extensive experience in training sales executives and coaching managers continually reveals practices that introduce barriers to straightforward, even rewarding, negotiations. These include:
- Key people (e.g. managers) are often not visible to customers
- The sales consultant is reduced to a messenger, running back and forth between customer and sales manager.
These common practices remove transparency (which is precisely the appeal of negotiation-free purchasing) and erode trust – including among customers who like to haggle.
There are simple steps that can be taken, including:
- Giving the sales consultant clear boundaries
- At the stage that a manager needs to be involved, s/he should be dealing face-to-face with the customer.
Of course, negotiation is part of a much bigger value equation – a fact yet to be appreciated by some, as demonstrated by a fear of services such as Carwow.
Carwow means pricing ‘discussions’ take place between dealers – a much more comfortable prospect for many customers.
We’ve heard of sales managers at dealerships telling their sales consultants to ‘not bother’ with customers who come in with a quote that they cannot match. This should be seen as an opportunity – someone’s just walked into your dealership and they’re interested in buying a car!
Now’s the time to demonstrate your expertise, show the value you’d add, and build trust. Is the car they’re interested in is really right for them? Has anyone else taken time to fully understand their needs and desires?
If, as a dealership, you can only compete on price, you should question the validity of your business and the value you offer to your customers.