In the past month alone, we’ve featured no fewer than six stories about dealers and the challenges consumers face in getting a fair price for their car. But what led us to the era of mighty merchants and crazy profit?
NPR’s Planet Money I decided to take a look at the rise of so-called “theft”, and the impact it can have on buyers, automakers and local politics. Unfortunately, the problem is historically acute thanks to the global pandemic.
With charged supply lines high inflationThis has always been a bad time for buyers. But the idea of ”theft” has been with us for more than the past two years. In fact, studies have found that the sales model espoused by agents, called “price discrimination” (ie charging different amounts to different people based on their willingness to pay), contains all kinds of unsavory qualities.
As the name suggests, the form is bad for those people we tend to think of as an object discrimination against him. Studies show that people of color, women, and the elderly, especially older women, tend to pay more at dealerships.
model too Incentivizes suspicious practices, such as hidden fees, expensive add-ons, and questionable advertising practices. And while there have been some attempts to curb this behaviour, there are decades of political protections that allow “theft” to continue.
As NPR points out, the thing that makes agents valuable — their size, reach, and manpower — also makes them effective political lobbies. As agents increasingly conglomerate, they have become more effective in lobbying local, state, and even federal governments.
This is beyond some countries Prevent direct-to-consumer marketing strategies, such as those built by Tesla and Rivian, out of business. This is a force that although the Federal Trade Commission tries to dismantle some of the laws protecting franchises, it is often thwarted. However, the FTC is trying, and earlier this summer it proposed new rules to prevent graft and fraud.
“With auto prices soaring, the FTC seeks to eliminate scams and traps that make it difficult or impossible to compare shopping or leave consumers saddled with thousands of dollars in unwanted garbage fees,” the FTC wrote at the time.
It’s not just the FTC that wants to prevent these selling strategies. Automakers also want to prevent bulky tags, gimmicks and traps. We recently reported on a study that found that A quarter of car buyers refuse to return to the dealership After they have been uploaded to MSRP.
Meanwhile, boom-selling tactics and outright lies may damage consumer perception even worse. And when clients have a bad agency experience, they tend to avoid the brand altogether. Since dealerships are independent franchisees, there is only so much that automakers can do. Brands like Ford, however, are trying to prevent these practices, With penalties imposed on merchants who engage in it.
For consumers, meanwhile, the solution to bad dealer experiences is, unfortunately, a lot of work and lower expectations. Michelle Krebs, Cox Automotive’s automotive researcher, said consumers have to do a lot of research, and accept that they may not get their first choice of color, vehicle or brand, and may have to look to dealerships in other cities in order to get a good deal from a dealership. .