Dickering Days Are Done, Car Dealer Decides : Retail: A Costa Mesa Mazda franchise becomes the state’s first to use non-negotiable price tags, rare so far in the auto business.
COSTA MESA — A county Mazda dealer jolted customers and some competitors Friday by launching a discount-pricing, no-dickering policy.
In doing so, Campbell Mazda became the first new-car dealership in California, and one of just a handful nationally, to institute non-negotiable pricing--a common practice for most retailers but one considered revolutionary in the car business.
John B. T. Campbell, chief executive of Campbell Automotive Group, said he has been considering the move for several years but “got the guts to do it” after assuming the General Motors Saturn franchise for Orange County in 1990. Saturn dealers try to stick to the manufacturer’s suggested retail price, which has a lower-than-usual profit margin to discourage discounting, he said.
Gordon Chevrolet in the Detroit suburb of Garden City has had a fixed-price policy for three years, the longest of any U.S. dealer.
Barron Chevrolet in Danvers, Mass., began a similar program in January, 1991, and dealers in Florida, North Dakota and Texas followed suit.
Fixed-price selling “is not a magic pill” to dealer woes, Barron Chevrolet owner Reginald Barron said, but he hopes that the practice will catch on with many more dealers so cars will eventually be sold like most other products.
“We can get rid of the tension that interferes with setting up a continuing relationship with the customer,” Barron said.
Mary Flowers Boyce, managing editor of Auto Age magazine, said most dealers who have tried non-negotiable pricing are pleased with the process.
But winning over customers “takes a while,” Barron said. “Most of my sales, even after 14 months, come from people who get my price, then shop around and end up coming back. They don’t want to believe that I’m not trying to trick them.”
Malcolm Wilson, a sales manager at Beverly Hills Acura, said fixed-price selling “would be heaven. . . . Dealers are cutting each other’s throats, and customers are uneasy about the process. We wouldn’t be playing against each other.”
But not all dealers like the idea.
Craig Shearer, general manager of Anaheim Mazda, said he doubts that Campbell can stick with the program.
“The haggling is just expected,” he said. “It’s so entrenched in the customer’s mind.”
Ed Bryan, general sales manager of Glenn Thomas Dodge and Suzuki in Long Beach, added: “There will always be someone willing to undercut the next guy. It’s a dog-eat-dog world; it’s greed. I just don’t see it happening.”
Campbell has placed his sales staff on a pay system that includes a base salary, a $75-per-sale bonus and an equal share in a monthly profit pool, regardless of individual sales. He said he wants to make car buying a “kinder and gentler experience, for both the customer and us.”
Several customers at the Campbell dealership Friday said they were surprised when they walked onto the lot and were greeted by a salesman who told them about the fixed-price system.
“I thought, ‘Sure, just another gimmick,’ ” Mark Thury said. “But then I saw the price tags and heard some other salesmen talking about it to their customers. I decided it was legitimate.”
Thury bought a black, limited-edition 1992 Miata for $19,000 not long after being greeted by Campbell “sales consultant” Jack Demirjian.
Afterward, he said he was delighted with the way the system works. “I hate haggling,” he said, “and this was painless.”
He said he had not spent a lot of time comparison-shopping but knew that the top-of-the-line Miata is fetching premium prices at most dealers.
The manufacturer’s suggested retail, or sticker, price on the model Thury bought was just over $20,015. Campbell’s asking price was $19,715.
“I love it. I just bought a new car at a fair price, and the whole thing took less than 90 minutes,” Thury said as he prepared to drive off the lot.
While the markdown on Thury’s new Miata was not much, a 1992 Mazda 626LX sedan--with factory air conditioning, alloy wheels, a power moon roof and automatic transmission--showed a list price of $18,045 and a Campbell price of $14,170.
A luxury edition of Mazda’s flagship 929 was priced almost $5,000 below the manufacturer’s list.
“We are pricing to make a profit,” Campbell said, “otherwise, I’d have a going-out-of-business sale.”
He said he studied other dealers’ prices and priced his cars at “the low end” of the range.
“We want to be the Wal-Mart of car dealers,” he said.
Campbell, whose company owns several other dealerships in Orange and Riverside counties, said he intends to extend the fixed-price program to his other franchises.
“We’re working the bugs out of it here,” he said, “but I’m committed to doing this.”
