Many Want to Negotiate Car Deal — But There’s a Catch
Consider all the information and power the new-car shopper has at their fingertips (or within the reach of a thumb swipe): volumes of vehicle research, tools to see the prices others are paying for their desired ride, car-buying advice and so much more.
However, in a “somewhat surprising” twist to findings from DealerRaler and J.D. Power, many of these shoppers still prefer the salesperson at the dealership to act as a negotiator.
That said, consumers who try their hand at negotiating may end up being less satisifed with the overall car-buying process — meaning there is an opportunity for dealers to gain some ground with these shoppers.
J.D. Power and DealerRater explore more about that below; but first, here are the overall results of the 2015 PowerRater Consumer Pulse provided by the two companies.
What Do They Want Salesperson to Be?
Respondents in this survey were asked whether being a negotiator, educator or facilitator is the most important role a salesperson plays in the new-car purchase process.
Forty-six percent said negotiator, 42 percent said educator and 12 percent said facilitator, according to the report.
“Given that people so often turn to the Internet and smartphone apps to research vehicles — and can even see what others have paid for a similarly spec’d vehicle — the results of our analysis were somewhat surprising; but it’s clear that consumers still want salespeople to be part of the overall purchase process,” said Gary Tucker, chief executive officer of DealerRater.
So, what exactly does being a “negotiator” entail?
Citing a survey this spring of more than 8,000 consumers who had posted a review on DealerRater.com shortly after buying a new car, the analysis said when a salesperson is a negotiator, his or her role is to “to assist buyers in arriving at a mutually acceptable deal.”
Included in that process is reaching a consensus on the price of both the new-car purchase and, if the shopper has one, the vehicle to be traded in.
Breakdown of Negotiator Preferences
Of course, this preference for the negotiator salesperson is not homogenous across the board.
For example, mass-market car buyers (at 47 percent) were moderately more likely to prefer a negotiator than luxury car buyers (43 percent), according to the report.
The negotiator role was preferred more often by buyers of cars from brands like Nissan and Kia (both at 53 percent). Conversely, Subaru (35 percent) and Audi (40 percent) buyers didn’t feel the same way — they were among the least likely to prefer this route.
Likewise, there are some generational differences, as well.
“Among the generations, Gen Y buyers negotiate the vehicle price 72 percent of the time, while Pre-Boomers negotiate only 61 percent of the time. Gen X negotiates 66 percent of the time and Boomers 64 percent of the time,” said Chris Sutton, vice president, U.S. automotive retail practice at J.D. Power.
J.D. Power defines Pre-Boomers as those born before 1946, with Boomers born between 1946 and 1964. Gen X goes from 1965 to 1976, with Gen Y from 1977 to 1994.
“In an increasingly digital world where everything’s at our fingertips, savvier consumers are armed with a lot more information to bring into a negotiation than was readily available in past generations,” Sutton added.
Why You May Want to Examine Negotiation Approach
The J.D. Power 2014 U.S. Sales Satisfaction Index Study said that about two-thirds of new-car buyers claim to have done some horse-trading with the dealership to sweeten the deal.
Interestingly enough, 45 percent said getting the best deal required “a moderate amount of effort.”
Granted, there can be a negative connotation around negotiating these days, but that J.D. Power SSI study mentioned a few pluses for the new-car shopper who negotiates.*
— More than half (55 percent) said they got a better price
— Almost a third (32 percent) said their trade-in value was higher
— Also, nearly a third (31 percent) said they were given another purchasing incentives (i.e. preferred interest rate, free service, additional vehicle feature)
*Note: Consumers were allowed to choose more than one response for this question in the SSI
Here’s an interesting twist, though: new-car shoppers who tried to negotiate for a better deal reported a lower satisfaction with the overall buying experience (793 out of 1,000) versus those who chose not to (844).
What does that mean for dealers?
“Dealers would do well to examine their approach to customer negotiations to close this satisfaction gap to avoid misconceptions and frustrations with in-store interactions, as well preserve loyalty and advocacy for the product being sold, person selling the product, the place where the consumer buys the product and its overall price,” said Tucker.
“Employee review pages are a great example of how we've seen dealers achieve this,” he added. “By making connections and establishing trust with the salesperson before going into the store, anxiety is lessened and the overall sales process goes faster and smoother.”