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Using the Internet to Lower the New Car Haggling Hassle

[dropcap1]W[/dropcap1]e all love the smell of a new car, but hate the haggling element of the car buying process.  But now, new online tools and services are making it possible for you to buy a car online without doing the in-store haggle.

But, like the wine industry, the eye contacts industry, and the real-estate industry, entrenched legacy interests are trying to stop you from using the internet to save money and get better products.  But the irony is, the internet is actually helping car dealers make sales while helping consumers feel better about their purchase: a win-win.

Because of the internet more people have more access to more information than at any other time in history.  Now, instead of relying on a dealer to tell you the price, websites and services like,, and provide you with lots of information about the cost of a new car and recent car sales.  This makes you a more informed consumer when you buy a car.

This change of information asymmetry is great for you, but can scare some legacy interests.  Legacy interests, who are adverse to any change in the way they do business.

For example, from the earliest days of the automobile until now, haggling has been a fixture of the retail car buying experience.  Lengthy price negotiations where the information available to you, especially relating to price, came from a single source, the salesman you met on the lot.  This created an image of the car-buying process that persists in almost everyone’s head.  Eventually, a simple truth emerged; remove haggling from the equation, give you more information and price confidence, and a new era could be born.  A new era with positive benefits for you and the dealers.

Now, that era is upon us.  Consumers are turning to websites like TrueCar to help eliminate the hassle of the haggle.

[bquote_right]This change in consumer information is actually helping, not hurting, the auto-industry.[/bquote_right]

Using the Internet, TrueCar gives you powerful, relevant market-based pricing information – something that you never no access to before.  At the same time, TrueCar provides powerful tools to dealers that help them optimize their marketing efforts.  The result is a car buying transaction that is efficient, transparent, and cost-effective.  The hassle of haggling is eliminated and both parties leave happy: you with your car and the dealer with a sale.

And this change of information asymmetry is inevitable.  And from the looks of it, this change in consumer information is actually helping, not hurting, the auto-industry.

For the past year, the United States auto industry has been in recovery.  Sales are rising, and the number of dealers seems to be increasing.  Since 2009, the industry saw consecutive annual sales gains of over 10 percent and reached nearly 12.8 million vehicles sold in 2011.   The number of total dealers rose in the first half of 2011 for the first time in many years.

And what is one of the reasons for this rise in sale?  According to the National Automotive Dealers Association’s chief economist, one important factor is an increase in consumer confidence.  This increase in confidence can be attributed, in part, to an increase of information available to consumers.

Another important factor is the internet’s ability to help connect buyers and auto-dealers.  According to a 2011 study, over 70 percent of consumers use the Internet to facilitate car-buying.   Social media has also become an important information source as 38 percent of consumers will use it to aid their next vehicle purchase.   And now, you can even purchase a car without physically visiting the dealership, making it easier than ever for you to buy a car and dealers to make a sale.

[bquote_right]Over 70 percent of consumers use the Internet to facilitate carbuying.[/bquote_right]

Despite these goods, the growth of the internet and the informed consumer means that dealers have had to adjust to this new car-buying process during a difficult economic environment — some even failed.  For this reason, dealers are understandably very sensitive to the broader economic environment and the introduction of new products and services that they perceive could change historic ways of doing business or otherwise contribute to renewed disruptive change in the industry.

But in the end, you, the informed consumer will not be stopped.  And we’ve seen the benefits of the internet to you and to sellers.

We’ve seen in the wine industry, when it became more possible to have wine delivered to your home, you got the wine you wanted and winery got a sale.  We’ve seen in the eye care space, when you could buy your contacts online, you saved more money and contact manufactures got to sell directly.  And like these changes, we will ultimately see you with the car of your dreams, more money in your pockets, and, and the same time, auto dealers will see more car sales.

We may be going down the same road again, but hopefully, when everyone realizes the benefits of the internet, this time we reach our destination a little bit faster.