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New Car at a Fair Price–For Whom?

bigstock-Car-Purchase-An-Exchange-Of-M-6353705Fair price is a catch phrase that is often used by online automobile shopping sites, such as Kelly Blue Book , TrueCar, and Edmunds. Given that these sites, and all others dispensing such advice, make most of their money from new-car dealers, one has to wonder: fair price for whom?

The shopping sites’ fair prices tend to be based on some proprietary combination of new car sales data, market demand, and regional differences. Edmunds is the most transparent, defining their True Market Value as “the average price people are paying for a particular car in your area.” Edmunds preserves its credibility, but is an average regional price the kind of price you aspire to?

Websites often offer dealer price guarantees and promote the idea of a hassle-free fair price. Such guarantees are uniformly provided by the dealer rather than the site, so again one has to wonder: just how high a price does it take to get a guarantee from a dealer?

TrueCar was founded with the mission to unleash the free market in car buying by publishing sales transaction information to empower the consumer. The website also highlighted the lowest sales prices. In a 2009 interview with VatorNews, Scott Painter, CEO of Zag/TrueCar, said “…dealers that embrace it are going to win, dealers who hold back and … focus on the obfuscation of price are going to lose—they’re going to go out of business …”

However, things didn’t turn out quite as Painter envisioned. Dealers began to realize the downside working with TrueCar—lower sales prices. According to an interview published by Automotive News in 2012, TrueCar lost nearly 50 percent of its dealer network, and Painter was faced with “massive operating losses” due to the dealer backlash. With over 250 million dollars of venture capital investment and a business model that depended on dealer participation, TrueCar was forced to rethink their approach to new-car shopping.

The result? “We had to find a new DNA as a business.” According to Automotive News (subscription required), the new TrueCar, Painter promises, is friendly to dealers. He says the company’s website pitches a fair, low-haggle car-buying experience to customers instead of a low price, which was the main selling point last year. (My emphasis.)

So, what’s a consumer to do?

Is the choice really between the hassles of negotiating a good deal yourself versus paying a higher “fair price” for a no-hassle experience? Fortunately, the answer is no.

In our era of easy information access and growing consumer awareness, it really is possible to capture a great deal on a new car and minimize the stress and hassle of the experience. The beauty of it is that when you spend $30,000, on average, for a commodity like a new car, you already have the power to buy the way you want to. It’s simply a matter of knowing how to do it.

The purpose of this blog and the upcoming book, Power Shift: The New No-Stress, No-Hassle Way to Get Your Best New-Car Deal—Everytime!, is to provide you with all the information and methods you need to get a great deal on your own. Stress- and hassle-free new-car buying without the cost of car-buying services really is possible—you’ll see.

I’ll be here on a regular basis to share what I’ve learned; I hope you’ll join me. Tell your friends and neighbors!

Photo: bigstockphoto.com