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The Car Purchase Process: A Look at Haggling

» Posted October 12, 2016Resources | Share This Post

Buying a car can be very stressful, as there is often a lot to learn. Consumers in Orange County and elsewhere throughout California need to know about consumer protection laws like the lemon law, as well as how to actually decide which car to buy and how much to pay. 

One of the things that makes car buying so unpleasant for a lot of people is that they don't just walk into the dealership and find out what the price is (as they do in almost all other transactions they do over the course of their life).  Instead, consumers end up haggling with car dealers in a process that often makes them miserable.

With haggling over the price of cars such a standard feature of everyday life, it is surprising that so many people don't know why we haggle for cars and how this tradition got started with this particular consumer item.  Priceonomics provides insight into the history of haggling.

Why Do We Haggle for Vehicles?

According to Priceonomics, one of the big reasons why people haggle for new car prices, but not for most of their other consumer goods, is because there is a different history with cars. 

An anthropologist of American consumer culture indicated there is a “circumscribed range of culturally tolerated bargaining behavior.”  Haggling with the “friendly neighborhood grocer” falls outside of the bounds of that cultural acceptance of bargaining.

However, car culture is unique because the horse pre-dated the modern vehicle as a means of transportation. The horse-trading mentality defines the car market today because in this earlier mode of transportation, people were actually engaged in the literal trading of horses.

One of the established practices of horse trading involved an owner swapping out an old ride for a new ride, while paying cash to make up the difference. Once cars began to replace horse-drawn carriages as a means of transportation, car buyers demanded that sellers keep up this traditional of the “trade-in” which occurs when an old vehicle is swapped for a new one.

Once the trade-in had been introduced to the transaction, some haggling was inherently necessary because it was essential to negotiate over the value of the trade-in.  While this used to involve the horse-traders of old looking at the teeth of the horse to estimate its worth, today it involves car dealers checking over the car or “kicking-the-tires,” as the metaphor goes.

Since the lack of certainty over the trade-in left room for negotiation, the rest of the haggling process naturally evolved from there.  This became such a standard practice that now every consumer who goes to a car dealership expects to haggle, even though most hate it. 

While consumers can feel overwhelmed by haggling, at least understanding the cultural background means the process makes a little more sense. Consumers need to be sure they are smart about the haggling process to get a good deal. They also need to know their rights under the lemon law in case there turns out to be a problem with the vehicle they purchased.

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Posted By: Kareem H