Monday, July 7, 2014

Shopping for New Car: How I Spent July 4th and 5th















Bargaining Between 
Sophisticated Negotiators

I've decided to replace my 2005 Nissan Murano with a newer model, used car.  I applied all the rules of interest-based and distributive bargaining that I teach in my course.  I plan to blog about the experience over the next several days. 

Background:

People hate shopping for cars.  We are not a "haggle" culture.  It's the reason that Saturn's "no-dicker-sticker" proved to be such a popular selling technique.  

Studies show that U.S. buyers tolerate about 3 or 4 rounds of bargaining.  In contrast, people living in haggling cultures will engage in 10 to 15 rounds of bargaining.  Guess who typically gets the better deal?

Because we lack experience in bargaining for small things like food and clothing, bargaining for an expensive car brings great anxiety to most people in the U.S.

But, I teach negotiation.  In fact, I am one of the very few law professors in the U.S. to teach how to effectively bargain over money.  I expected these negotiations to be fun and interesting.

Round 1 - Insist on Using Objective Criteria:

My goal for this past week-end was to collect information about the vehicles I might want to buy.


First, I collected objective criteria so I could have an informed conversation with each salesperson.  I bought a Blue Book for less than $10 and two issues of Consumer Reports.  Over a lovely dinner of French food and wine at Cafe Lola in Johnson City, TN, I circled in the magazine the descriptions of the small SUVs recommended by Consumer Reports' June 2104 "New Car Ratings & Review" issue.

The following vehicles made my short list.  The stars show my relative interest:

  • Honda CR-V *
  • Hyundai Santa Fe
  • Hyundai Santa Fe Sport ****
  • Kia Sorento
  • Mazda CX-5 ****
  • Nissan Rogue (even though the magazine did not recommend it; shows my brand loyalty) ****
  • Subaru Forester ****
  • Subaru Outback **
  • Subaru XV Crosstrek **
  • Volkswagen Jetta SportWagen
  • Volkswagen Tiquan
I made notes about each vehicle in a format allowing easy cross-referencing.  

The magazine discusses the road test score, the car's reliability, owner cost, owner satisfaction, safety rating, and fuel economy.  It describes the features of each car and its base price range.

Before I returned to my hotel Thursday night, I drove through the parking lots of the nearby movie theater and the mall to see which body styles I liked.  This proved a quick way to see quite a few cars in a very short time.

The next morning I got on the websites of the local dealers. This research gave me more information about body styles and price ranges for the earlier models for each car that looked promising.  I also decided I wanted a red car this time around.

Next, I drove through the dealer lots that were closed on the 4th to see what they had on their used cars lots. I also visited the Mazda and Hyundai dealers (which were open) so I could drive a fully loaded version of the new vehicles they offered. The next day I visited the Nissan dealer before I left town.

Tomorrow, I'll start describing my conversations with each salesperson.  Who hit the sweet spot?  Who fumbled?  Why?

October 2014 Update:  Found this article discussing when you should buy new versus used car based on dealer incentives. 

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