Video: Car dealers putting brakes on haggling

By Correspondent
NBC News
updated 8/11/2005 7:44:59 PM ET 2005-08-11T23:44:59

Unless you’ve been hiding from the TV this summer, you’ve surely seen the car ads from General Motors, Ford and Chrysler hyping employee pricing discounts for everyone. With that successful promotion ending and lower sticker prices replacing it, what will happen to the longstanding art of the car deal called haggling?

If car-shopping ever made you want to drop, haggling may be going the way of the eight-track player and T-tops.

Joe Deem is buying his new car at Carmax because, he says, “I hate pressure tactics.”

The used-car giant, which advertises “For a great low price without the hassles,” appliesits no-haggle philosophy to new cars as well.

“They don’t want to have games,” explains Carmax’s Kevin Cox, “and play games and gimmicks, and tie up their whole day, and guess what the price is.”

General Motors and Ford are dropping sticker prices on dozens of 2006 to closer to what they’ll actually sell for.

Mark Frost is the general manager of a Chevrolet dealership. "For the hagglers out there, the arm-wrestling will be on nickels and dimes instead of hundreds of dollars," says Frost.

And that, say some industry-watchers, could prove risky for the Big Three, especially following employee pricing discounts— one of the most successful sales promotions Motor City ever rolled out.

“These value prices are in fact just a sneaky way to raise prices more than they have had under the employee discount.  And that’s clearly going to backfire,” says Austan Goolsbee of the University of Chicago Graduate School of Business.

A media blitz turned this into a blockbuster summer for struggling American automakers. July sales for General Motors were up 20 percent. Chrysler’s were up 27 percent. And Ford, claiming it sold more F-series pickups last month than any vehicle since the 1920s Model-T, says it’s sales were up 29 percent.

Meanwhile, 15 years of no-haggling hasn’t turned GM’s Saturn brand into a rising star. It’s turned a profit just once.

The big-money question is whether Detroit can still sell as many vehicles by taking away the thrill many buyers have that they’ve haggled their way to the best possible price and beat the system.

It's a system where talk isn’t cheap, but may be the only way buyers can really prove how low a dealer will go.

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