Why Do We Haggle Over Cars and Virtually Nothing Else?

buying a car

A car salesman tries to make a sale at Santa Rosa Chevrolet December 12, 2008 in Santa Rosa, California | Justin Sullivan/Getty Images

In many cultures even today, everything is haggled. Milk, spices, fabric, meats — daily essentials that Americans purchase with a single swipe over a barcode scanner. As a result, those who live in those cultures are brought up from a young age to master the art of negotiating. Americans? Not so much.

By and large, Americans have no need to haggle over anything, especially daily consumables. We accept the price offered for a gallon of milk, a pound of carrots, or a loaf of bread. If a dozen eggs are priced well beyond what we believe to be a reasonable sum, we find them elsewhere for less. We don’t bring them to the cashier to demand that they lower the price or we’re walking. At least, you shouldn’t; if you are, you should probably stop.

There are two notable exceptions to haggling in America: cars and homes, the two largest purchases that the vast majority of us will ever make. But because of our underexposure to negotiating on pricing throughout childhood, buying that first car or first home — often well into one’s 20s or 30s — can be daunting. And you know what? It should be. The people you’re negotiating with do this on a daily basis. It’s how they make a living, so you’re damned right they’ll be good at it.

“Buyers end up feeling cheated by dealers who have the upper hand. They simply don’t have the data and information to feel confident negotiating, and most people negotiate for a vehicle once every few years, while the dealer may negotiate 10 vehicles every single day — and practice makes perfect,” Peter Levy, the founder of the site Carjojo.com told Autos Cheat Sheet.

For real estate, however, we have an advantage — unless you’re going at it alone (which let’s be honest, is not recommended), chances are you’ve enlisted the help of a realtor — a trained professional on your payroll who will help negotiate on your behalf. But for cars, buyers are often on their own in a world they don’t understand, conferring with a professional who is trained and practiced in extracting as much money as possible from your bank account.

carjojo

Carjojo will actually get between you and the dealer — on your behalf | Carjojo via Facebook

Negotiating on a car is nothing new. In fact, the dealer system that opens the door for that kind of haggling is so ingrained in American tradition that sales models that skirt that strategy are having trouble finding legal footing in many states. “The reason cars are negotiated can be traced back to the early 1900s and the start of the franchised new-car dealer system, followed by 100-plus years of tradition,” Levy said.

Carjojo offers to car buyers what realtors offer to home shoppers: experts trained in effective negotiation to help the under-informed (or simply haggle-averse) buyers secure a vehicle for a better price. “Whenever there are identical products that are sold via negotiation, some people will pay more than average and some will pay less,” Levy told us in a statement. “In fact, 50% of all new car buyers pay more than the median price! Effective negotiation can save a buyer thousands of dollars, money very few people would knowingly leave on the table,” he added.

There are numerous sites like TrueCar, Kelley Blue Book, Edmunds, or iSeeCars.com that can help equip buyers with the knowledge of what to anticipate before heading into a dealer, but even then, it’s easy to be swept up in a salesman’s smooth patter. And none of those sites will actually take their services to the sales floor on your behalf.

“We’re the first company to reveal information and data on almost every single individual new car currently for sale in the United States, such as like the length of time a car’s been on a dealer’s lot, how ‘bloated’ is the dealer’s inventory, or the sales patterns at that car’s dealership,” Levy said. “We use that information to calculate the lowest price a dealership will most likely accept for any car it’s selling. People can either take all that information and negotiate the price themselves, or Carjojo will do it for them.”

buying a car

Chuck Garner looks at a special sale price tag for a brand new Cadillac Escalade Hybrid on December 4, 2008 in San Francisco, California | Justin Sullivan/Getty Images

To answer the question in our title, the truth is that dealer systems were actually intended to prevent price-gouging by forcing local lots to compete with one another. It’s impossible to say whether they’ve achieved the goal of lowering prices for consumers (they will vehemently swear that they do) or if their presence as a middleman negates any benefit that the free-market strategy offers.

Regardless of what camp you fall into (dealers are helpful or are the absolute devil), the system we’re left with can be boiled down to this: Americans are largely trusted to make one of the largest purchases of their lives with virtually zero experience in negotiating the system. “Our approach means we’ll almost always get buyers a price that’s at least $1,000 less than other new-car buying web sites, and far below that ‘median’ price,” Levy concluded. With that kind of negotiating power, it kind of makes you wonder just how much further they can go.

So unless you’re a born negotiator with years of experience (in which case, we’re supremely jealous), you probably don’t have the chops to go toe-to-toe with a professional. And unless you’re excited to start now (again, supremely jealous), a little help through this stressful experience is probably much appreciated. For buyers who feel intimidated by dealers, or don’t just don’t have it in them to go through the whole process, Carjojo may be your new best friend once it’s time to buy a new car.