U.S. vehicle buyers may want greater price transparency, but many still appear to value the opportunity to negotiate, according to new research from CDK.
The company surveyed more than 1,000 vehicle buyers in the second quarter about the incentives they found most attractive. Among options ranging from cash back to low interest rates, the dealer discount came out on top.
The findings highlight a potential tension for dealers as regulatory pressure pushes the industry toward greater up-front pricing transparency while some consumers continue to associate negotiating with securing a better deal.
CDK’s Ease of Purchase score, which measures whether consumers found it easy to buy their vehicle, has hovered around 80 per cent since June, below the annual average of the previous three years. When buyers were asked specifically about the ease of agreeing on a final price, the June-through-August average was 61 per cent, compared with a three-year average of 62 per cent.
Customer comments suggest the problem may not necessarily be negotiation itself, but how the process unfolds. “The negotiations took a really long time, but I got a price I was happy with,” one respondent said.
Others pointed to transparency. One buyer said, “The process was difficult because there was a lack of transparency regarding the ‘out-the-door’ price.”
CDK argues negotiation and transparency do not necessarily have to work against one another. Instead, dealers can make the components of a deal clearer, including manufacturer incentives, dealer offers, financing options and trade-in valuations.
Digital retailing tools can also allow customers to compare scenarios and see how financing terms, incentives and trade values affect their payments.
The emerging challenge for retailers may therefore be less about eliminating negotiation and more about making the process understandable and efficient while giving buyers confidence they have considered the available options.
