Busting The Negotiation Myth

This blog post was written by Matt Weinberg, Senior VP of Customer Experience for Drive Motors, the leading e-commerce platform for Auto dealers. It is reposted here with permission. _________

Consumers hate the established car-buying experience. We’ve said it before. It’s a well-known fact throughout the automotive industry. Car dealers understand this. And yet, many dealers believe that customers want to come into the showroom and negotiate a deal. The truth? They don’t. 

While most consumers do negotiate, they don’t actually want to. Negotiating is a top source of frustration for customers. They’d prefer to completely avoid it. The reason they negotiate is that they suspect dealers aren’t offering a competitive price up front. Customers feel like they have to negotiate because it’s the only way to get a fair price.

In today’s economy, people value (and often expect) transparency. It’s the number one differentiator between dealerships, which means dealers that offer it have a leg up on the competition. So why do many still resist it?

Many dealers worry that offering transparency, especially when it comes to pricing, will hurt their profitability. Luckily, this is a myth. Transparency actually improves profitability. Dealers that show realistic pricing online actually increase PVR by $785.

Whether you offer transparent pricing or not, customers can find it online. It’s no wonder dealers that only show MSRP online are losing customers. But dealers that offer artificially low internet prices, only to increase them once a customer is in the showroom, are driving customers away, too.

Offering price transparency isn’t the same as offering the absolute lowest price. “Low price and transparent or fair price are the same in the consumer’s mind,” according to a Cox Automotive study. Dealers that embrace transparency actually earn more profits.

By being open and honest with customers when it comes to pricing, dealers can increase profitability, earn new customers, and build loyalty and trust with customers and staff alike.