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e p i l o g u e Still Horse Trading in the Internet Age In a bargaining situation, knowledge is power. If one side knows that the other is “highly motivated,” then the price can be adjusted accordingly. Knowing the other party’s desires, concerns, and financial resources provides the bargainer an edge in deciding whether to accept a given offer or hold out for a better one. The one thing that neither side wants is for the other to know what their best offer will be. For the buyer, the purely financial elements in that calculus are based on personal factors like savings, income, ability to borrow, current debt, and current expenses. In car bargaining the buyers were always at a disadvantage , because the salesmen felt free to ask about any or all of these factors. Getting this data was part of the qualifying process that the sales staff used to determine which cars they might be able to sell this particular person, based on the prospect’s capacity to pay. The customers, however, were in no position to ask the sellers about their financial condition and thereby determine how motivated they were to make a sale. Nor could the customers know about the dealers’ economic particulars, not the least of which would be what the dealers paid the manufacturers for the cars—the wholesale price. The Studebaker Company described their costs and dealer markups to the public in 1916, but their frankness was not followed up by others—or for that matter, even by themselves.1 As a rule, sellers do not tell buyers what their goods cost them or how much they are marking them up, although in some atypical instances, such as real estate and stock shares, that information is a matter of public record. Because prices were negotiable and car dealers were always claiming that they were selling for just a few dollars over wholesale, the dealers’ cost was a datum point that mattered to auto sales. The Dealer’s Cost No businesses had ever routinely published their wholesale prices, and automobile retailers were not about to break that pattern. From time to time individual dealers did offer to show their invoices to customers as part of a particular promotional campaign, but these attempts were either short-lived advertising gimmicks or met with concerted industry opposition.2 Just before the hearings that would lead to the Monroney Act, Ford dealer O. Z. Hall of Birmingham anticipated the law by displaying Photostats of his factory invoices along with posted prices that represented a low markup. Neither the factory nor his competitors were pleased by this breach of retail protocol, and they successfully pressured the firm to end its experiment in commercial transparency.3 Industry attempts to stop the public from knowing dealer costs were ultimately doomed to failure by the industry’s own history of negotiating prices. Before World War II, posted list prices for autos meant that most negotiation took place over trade-in allowances, thus maintaining the semblance of price normalcy for new cars. That changed between 1946 and 1959, when companies stopped posting list prices, and the entire industry pricing system (for both new and used cars) reverted to a preindustrial practice of price haggling. When the Monroney price stickers became standard, the postwar system of bargaining ensured that the sticker price would not be the selling price. Except in rare instances , the sticker became the ceiling not the floor in negotiations. The floor was what the car cost the dealer, and the most determined consumers wanted to bargain up from the bottom, not down from the top. The easiest way to find out what the dealer had paid for a car was to ask to see the invoice, and there were customers who would do just that. There were also dealers willing to comply, and even more dealers who were willing to show customers what they claimed were the invoices but that were actually forgeries concocted to make the wholesale price appear higher.4 Even if the dealers were Epilogue: Still Horse Trading in the Internet Age 165 unwilling to show it, buyers were advised to ask to see the invoice, because the request would mark them as savvy shoppers.5 Asking to see the invoice took a lot more brass than most people had. In many cases they were asking for information that the dealer denied to the salesmen themselves out of fear that they would use the information to...


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