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Hard Bargaining Still Pays
(MONEY Magazine) – The recent news that Korean automaker Daewoo will sell cars directly to consumers for a fixed price over the Internet this year is just the latest evidence that no-haggle car buying is catching on. Yet while many car shoppers hate to dicker, new research has found that doing so generally saves you money in the end. Daewoo is joining a small but steadily growing segment of the market. About 5% of dealerships are no-haggle operations, according to J.D. Power & Associates. Plus, superstore chains such as AutoNation USA and CarMax sell new and used cars for a fixed price. Even Ford and General Motors are taking over select dealerships and installing no-dicker pricing. Ford has already done so in Tulsa and San Diego and has plans for Oklahoma City, Rochester, N.Y. and Salt Lake City. In Daewoo's California pilot project--which will become national if successful--the car maker has eliminated the middleman entirely. Instead, consumers can order a car at www.daewoous.com. (Because Daewoo owns all of its dealerships, the car maker is exempt from state franchise laws that normally require the buyer to visit the showroom to finalize the purchase.) With no-haggle selling, you encounter one firm sticker price and a sales staff typically trained to let you browse without pressure to buy. That more civilized approach, however, can carry a high price. In a recent survey of dealerships in 21 major cities, CNW Marketing/Research found that new-car transaction prices at no-dicker outlets were 5% higher on average than those at haggling competitors down the road. On a $20,000 car, that means $1,000 for the privilege of not negotiating. --JERRY EDGERTON |
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