Tom's Life Bits

Car-buying services help shoppers find a fair price

RALEIGH — Susan L. Davis couldn’t face another trip to the local car dealership. She was afraid she would spend too much money – again – only to drive home in a car she really didn’t like.

“I’m not someone who has an easy time negotiating,” said Davis, 53, of Raleigh. “I typically pay what the dealership is asking for. Last time, I just paid what they asked on the sticker.”

This time, she got the 2014 Toyota Camry hybrid of her choice – black, with gray interior and only the options she really wanted. And she paid about $7,000 below the sticker price.

She never dickered with a salesperson or set foot in a showroom. She took delivery at a West Raleigh branch of the State Employees Credit Union.

Davis used one of the increasingly popular car-buying services provided by insurance companies, motor clubs and credit unions, to help their members get a car for a fair price. Car shoppers use the services to get competitive offers they can use in negotiations with the local car dealer – or to avoid haggling with a dealer altogether.

“We don’t guarantee the lowest price through our service, but we’re going to get our members a good, fair price,” said Troy Moore, who runs the State Employees Credit Union’s car-buying service. “If a member tells me they got a better deal on an out- the-door price through a dealership, then we’re going to urge them to go with the better deal.”

These services usually involve someone who checks available car inventories across the state, negotiates a purchase price and confirms the deal with the buyer by phone.

Some car shoppers skip the human intermediary and conduct their own research online, through price information services such as Edmunds.com. Or they go with an automated car-buying service such as the one provided through TrueCar, a California-based car pricing and information company that generates instant offers from local dealers who compete to offer the lowest price.

TrueCar, a leader in the industry, reaches many of its customers by contracting to provide buying services for nonprofit organizations across the country, including Consumer Reports.

“People don’t like going into the dealerships and negotiating for a car,” said Mike Dempsey, the Consumer Reports auto section products manager. “We’re trying to bring some peace of mind to that process, so at the end of the day you’re getting a great car and getting a great price.”

TrueCar and Consumer Reports say their customers buy cars at savings that average around $3,000 below sticker price. Individual shoppers and salespeople agree that the buying- service discounts can vary widely. And some shoppers will still get the best deal by negotiating on their own.

These days at AutoPark Honda in Cary, about half the shoppers walk in with a price quote from a car-buying service or from their own online research, says veteran salesman Charlie Bruce.

He’s happy to see this trend – even though he believes new-car salespeople are an endangered species.

“If people come in, we’ll sit here and hash out the deal,” Bruce said. “It’s not the hardest thing in the world. And it’s easier when they walk in with the Internet quote. It makes my life easier if we don’t have to do that whole negotiating process.”

Boosting auto loans

Jeff Jennings of Clayton used TrueCar to buy his Hyundai Elantra. The service generated competitive bids that ranged between $1,500 and $2,100 below sticker price.

“I thought it was very helpful to use TrueCar,” Jennings, 48, said by email. “Once the price quotes were offered, dealers tried harder to sell the car.”

TrueCar gets a $299 fee from participating dealers for every sale – a reported 400,000 sales nationwide last year. When Consumer Reports is involved in the transaction, it receives $55 from TrueCar.

Car manufacturers are engaging shoppers in similar online buying services. General Motors says its dealers sold 3,700 new cars last year through its online portal at ShopClickDrive.com.

The nonprofit SECU started its service 12 years ago to attract more business for its auto loan department. Last year SECU lent its members more than $1 billion to buy 8,000 new cars and 71,000 used cars. The buying service is for new cars only.

By phone or online, the SECU customer chooses the model, picks out colors and options, and gets quick feedback on the likely range between the invoice (what the dealer pays for the car, not counting the occasional manufacturer incentive discount) and the “suggested retail price” – the sticker. The eventual negotiated price usually is somewhere in that range, which can be thousands of dollars for a car loaded with extras or just a few hundred dollars for a stripped-down budget model.

“The Fiat 500, the Honda Fit, there’s not a lot of dealer markup on those,” said Greg Pence of the AAA Carolinas motor club car- buying service, which also finds cars for Moore’s operation at SECU. “I’ve had discounts over $9,000, and some as low as $100 below the sticker price.”

Turned off by salesman

Conner Atkeson turned to SECU for help buying a Toyota Tacoma pickup. He had been turned off by a car salesman who pressured him to buy a package with multiple options – when all he wanted was cruise control.

“I called SECU, told them what I wanted and what my offer was, and two days later the truck was in my driveway,” said Atkeson, 84.

Sid Baynes of Wendell negotiated for a Chevy Tahoe with his local dealer, who eventually made a “bottom-line” offer. “When I told the salesman that SECU’s price was about $1,000 less, he went back to his sales manager, who matched that price,” said Baynes, 68.

TrueCar’s TV commercials suggest that car shoppers are happy when they know they’re getting a fair price. Bruce and SECU’s Troy Moore agree that buyers feel better about the transaction if they’ve done enough research to get a feel for what price they can expect to pay.

Dan Ariely, a Duke University economist who studies how people make decisions, says it isn’t easy to make a car shopper feel satisfied with the deal. Sometimes it’s better not to get everything you ask for, he said.

“If you say, ‘Oh, I want a thousand- dollar discount,’ and I just give it to you, you would not feel good,” Ariely said. “But if I say I can really only give you three or five (hundred), all of a sudden you would feel much better. Why? Because you figure you got everything you could.”

Ariely’s perspective may hold true for shoppers who feel they have to haggle. But that would not include Susan Davis. She was relieved to have the credit union do her bargaining for her.

“I run a business, and it’s rare that I negotiate for anything,” Davis said. “I mean, when I go to the grocery store and they want $1.40 for eggs, I’m not going to ask if they’ll take $1.29.”