Automobiles & Shopping 11 Dec 2006 05:18 pm

Racism in Car Buying

by Sean Hackbarth

Car Shoppers

James Joyner gets into a debate between The Tipping Point and Blink author Malcolm Gladwell and Steve Sailer over why black car buyers end up paying more. Joyner summarizes:

Gladwell believes it is obviously evidence of “unconscious racism” whereas Sailer argues that it is much more likely that car salesmen have learned over time that they can get more money on average out of blacks and women and therefore are discriminating against them as suckers, not out of bias.

Joyner then quotes economist Robert Stonebraker with a possible explanation:

While dealers and/or salespeople may know little or nothing about a particular customer, they know quite a bit about statistical differences among races and genders. They know that women and African-Americans typically enter the showroom with less information and less proclivity to bargain. Although white males often salivate at the chance to lock horns with car dealers in a bargaining struggle, females and African-Americans may be unaware that bargaining is even possible. Ayres and Siegelman cite a Consumer Federation of America survey that discovered that many female respondents, and more than one-half of African-American respondents, believed that sticker prices were non-negotiable.3

Armed with such knowledge, salespeople will rationally adopt a more stubborn stance while bargaining with female and African-American customers. Their stern posture may not be the result of bigotry, but the results are the same. Women and non-whites pay more.

I’m very hesitant to go to car dealers. The extent of my knowledge of them entails how to drive it (automatic only), where to put the gas, and where to put the oil. That’s it. So I’d be very cautious going to a dealer without someone knowledgeable at my side. That’s, of course, after I spent oodles of time researching cars. I don’t want to haggle so my last purchase was through someone who could get me a car from an auction. eBay would be a possibility as long as I could get the car checked out a mechanic before taking it. I like the idea of bidding up to my price ceiling instead of trying to force a dealer to come down. I am interested in places like CarMax where haggling isn’t involved. All I want is to buy the car not turn into a game where in the back of my mind I think I’m getting fleeced.

For used cars Clark Howard suggests:

• Arrange your financing first
• Check Consumer Reports’ listings of car models that have performed well. Don’t buy any car on the magazine’s list of used cars to avoid
• Find out what you should pay by checking prices at edmunds.com or kbb.com, or ask a friend to look for you.
• Have a used car inspected by a diagnostic mechanic, to see if it’s been wrecked or has any major defects.
• Pay for a report on the car at carfax.com. It’s worth it.
• Don’t buy from an old-style used-cars-only lot.

For buying new he advises:

# First, go to your bank or credit union and prequalify for a car loan or apply online. That tells you how much car you can afford and what type of monthly payment you will have to budget.
# Buy your new car from a no-haggle dealership. In most cases, you’ll save money and the process of buying will be faster and easier.
# Look at cars when a dealership is closed, so there’s no salesperson to pressure you.
# The best way to test-drive a car is to rent it for a day or two. It’s the ultimate test drive and it’s not expensive.
# Use the Internet to find out the dealer cost of the vehicle and the options you want. Update!
# Start your research with at least two different vehicles in mind. Then check out the price, reliability, and cost to insure each of the cars you’re considering.
# When you’ve narrowed the search to one or two vehicles and have the actual dealer cost for each, shop online for instant price quotes.
# If you prefer not to buy online, use the online price quotes as a guideline and call the dealers to see if they’ll match the price quote.
# If you choose to negotiate with a traditional car dealer, be prepared for a difficult process.
# When you go into the dealer to sign the paperwork, make sure what is on the purchase agreement is what you’ve agreed to previously by phone or fax. If it’s not the same, do not go through with the deal.
# The best way to protect yourself in a dealership is to be willing to walk out.

Have any tips on getting a good deal on a car?

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