For most people, one of the most unpleasant aspects of buying a new car or used car at a dealership is negotiating price with the salesman in the back office. One response to this was the rise of no-haggle retailing in the auto industry, where the price is straightforward and consumers know what they’ll pay before even arriving at the dealership, provided they don’t go for all the extras. It’s called “no-dicker selling” inside the industry, and it’s something that largely disappeared with the rise of Internet sales. Now, dealers are re-embracing the no-dicker sticker philosophy, notes Automotive News.
No-dicker selling means no confusion
Alison Spitzer, vice president of the Spitzer Management auto retail group in Cleveland, Ohio, told Automotive News that the pricing rift Internet auto sales has caused is a stumbling block that can be surmounted.
“Your customers already really know about the car’s price,” said Spitzer. “Why put a price on the Web that you’re just going to have to spend an hour and a half negotiating down from?”
Spitzer and other dealership executives see no-haggle pricing as a way of bringing more consumers to the showroom floor. The concept was something of a novelty when Saturn introduced it to the U.S. auto market in 1990, but now more dealerships are seeing it as good business.
“We want to embrace the Internet as our friend,” said the 32-year-old Spitzer. “What’s valuable to consumers now is their time and how they feel like they were treated.”
No-dicker selling catching on
While the National Automobile Dealers Association doesn’t track no-dicker sticker sales methods among its members, retail consultants like Mark Rikess report that as many as 200 new car dealers among his clients are embracing the no-haggle way. While this is only a small percentage of the 17,000-plus new car dealers in the U.S., some experts believe this is indeed the start of a new evolution.
“I don’t see a lot of people going to a true one-price model. We’ve spent the past 40 years educating consumers that our prices are negotiable,” said Mike Maroone, president of AutoNation Inc., the largest auto retail group in the U.S.
Yet Maroone does believe that concepts like market pricing are a step in the right direction toward being more consumer-friendly.
“It’s a move to a fair price, but with a little margin left in for just a little negotiating,” Maroone says. “We’re still in test mode on it.”
Taking a no-haggle bite out of Apple
The kind of consumer experience Apple stores offer has inspired many auto dealerships. Low pressure is the key.
“Staffers are knowledgeable about the product and they aren’t trying to pressure you,” Rikess said.
Considering that surveys indicate that customers are happier when they enter a showroom already satisfied with the price they’ll pay, no-dicker selling seems like a slam dunk to many progressive new car and used car dealers.
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No-haggling out of a sale
Dealers note that there is a clear pro and con list when it comes to no-dicker selling. In some cases, sales can be lost when customers who expect to be able to haggle encounter resistance from a salesperson because a price has been fixed up front. However, no-haggle also tends to mean a faster sales process, which in turn allows a dealer to conduct more deals per day. According to one dealer interviewed by Automotive News, moving to a no-dicker sticker sales method increased monthly sales from 10 cars to as many as 30 cars.
“Even a new employee can get you in and out of here in two hours,” said one dealer representative.
The no-haggle approach for dealerships diverges from the traditional reward system of high gross on transactions for sales staff. Doug Sprinthall, vehicle operations director of Walser Automotive Group in the Greater Minneapolis-St. Paul area of Minnesota, pointed out that when sales staff are are on salary or paid based on the number of closed deals with some incentives for customer satisfaction, they are not being paid commissions based on transaction grosses. There are opportunities for staff at some no-dicker selling locations to handle financing and insurance themselves, however, with additional compensation opportunities for service plans.