Why Have Some Dealerships Stopped Negotiating on Price?

Buying a car at a dealership has changed a lot since the pandemic struck last year. There are many dealerships that are now offering contact-less delivery of vehicles and are even signing the paperwork for them completely online. But one other aspect of the car-buying has changed as well: Negotiating the price.

Now that the buying process has changed, some dealerships are no longer offering to negotiate on a car’s selling price. But why?

“No haggle” dealerships can provide a win-win situation at a cost

While there are still plenty of car dealerships across the nation willing to negotiate a car’s pricing with you, many other dealers are moving over to a “no-haggle” business model. By doing this, it actually benefits not only the customers – who don’t have to stress over negotiating – but also the dealers – who can make more of a profit in the deal, since the price won’t be up for negotiation.

As an added plus, dealers are making it easier for buyers to get the car that they want in a convenient manner by offering to conduct the whole deal online and even delivering the car to the customer’s home.

A customer and a salesperson sit behind plastic COVID-19 barriers in a New Jersey Ford and Kia car dealer
A customer and a salesperson sit behind plastic COVID-19 barriers in a New Jersey Ford and Kia car dealer | Angus Mordant/Bloomberg via Getty Images

Ari Janessian, a YouTuber and the head of Boston Automotive Consulting, thinks that car buyers are going to be paying more of a premium for cars using this business model. “More and more dollars are going be spent in investing in this software so that buyers can do all this stuff [buy a car] online. But at the same time, we’re going to be buying cars at 20% to 30% higher than we were buying them previously,” Janessian said.

According to some car buying statistics, around 18% of car shoppers would buy sooner if the process was completely online, 48% of consumers prefer to handle negotiations online, and 42% of consumers say they would want to handle financing online.

That being said, it’s obvious that one-price business models like Carmax and Carvana, along with an online shopping experience, like Tesla, could be the way of the future for many more traditional car dealers.

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Dealerships are still important

Although the car-shopping process is making a move toward being completely online, we shouldn’t expect dealerships to go extinct any time soon. Thanks to nationwide laws, manufacturers will continue to sell their products via dealership storefronts, however, it’s up to dealerships on how they want to price their inventory.

However, the “no-haggle” policies seem to work in general, especially considering retailers like Carmax have used this method for the past 15 years and continue to successfully do so. So it wouldn’t be too surprising if more dealers move over to this new business model in the coming years.

Fiat Chrysler Automobiles NV 2020 Jeep Gladiator pickup trucks are displayed at a car dealership
The Jeep Gladiator in a lineup at a car dealership. | Daniel Acker/Bloomberg via Getty Images

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How do you know if you’re getting the best deal?

No matter which type of dealership you plan to buy your next car from, you can be sure you’re getting the best deal by doing your research first. Many no-haggle dealers will tend to have a higher price than traditional dealers, so it’s up to you to find out how much more they are charging for the same car and if the price premium is worth not having to negotiate over.

For instance, if you do find a car dealer that doesn’t negotiate, you can always log into Your Auto Advocate and obtain a “Market Price Report” that will display cars of the comparable year, make, and model within a 100-mile radius. By looking up one of these reports, you will know what other dealers have the same car and will be able to get an idea of how much more the no-haggle dealer is selling its car for.

While every dealer across the nation has yet to jump on board with the “no-haggle” business model, many will soon be following suit. But it’s still up to you to ensure that you’re getting the best deal possible