'One-price' auto deals: Are they worthwhile?


New York -- A small but growing number of auto dealers are picking up on "one-price" selling. That's the no-hassle way to buy. Each car in the showroom is ticketed at the dealer's best price. It may not always be the lowest price in town, but it's still pretty low, and you don't have to dicker in order to get it. So you don't have to wonder whether, with more nerve, you'd have gotten another $100 off.

A survey last year by J.D. Power and Associates, a consulting firm, found that about 1,500 auto dealers engaged in one-price selling. (That excludes those that sell General Motors' Saturns, a line of cars positioned to sell at a fixed price.) Around half a million customers said they bought their cars in a one-price deal.

The most one-price experimentation is taking place in the South, says a J.D. Power analyst, Doris Ehlers; the least in the Northeast.

Auto dealers in general aren't crazy about the trend, reports the National Automobile Dealers Association in Washington. It lowers their average profit margin, and they think that it won't increase their total sales.

That hasn't been the experience of most dealers who have tried it. Morton Zetlin, who heads the American Service Center in Arlington, Va., switched his Mercedes Benz dealership to a one-price shop in January and says his sales are up 25 percent. "How can you keep customers for life if you're going to beat them up when they walk in the door?" he asks.

Zetlin has since switched his Ferrari and Isuzu franchises to one-price and started a one-price Buick franchise. "I don't think we'll ever go back to our old method, and I don't think our customers would like it if we did," he says.

Bob Dawes, chairman of the Lincoln Mercury Dealer Council, believes that "one-price selling adds tremendous credibility to our business, which is not looked up to by the average consumer as very credible."

But Ron B. Tonkin, of the Ron B. Tonkin Dealerships in Portland, Ore., says it didn't work for him. "Our sales volume remained roughly the same, and our grosses went down," he says. Also, "our sales people were very frustrated because people still wanted to negotiate."

Maybe in Portland they like negotiating, but not everywhere. Another J.D. Power study found that 68 percent of car buyers say they'd rather have the best price upfront.

GM and Ford are backing a form of one-price selling generally known as "value pricing." Traditionally, the manufacturer names

a high list price, which the shopper and dealer then bargain down. By contrast, a value-priced or "special-edition" car comes with a fixed set of popular options, like air conditioning, power windows and door locks and rear-window defroster, and is advertised at a low package price.

The dealer has so little room to maneuver that these packages sell for just about the same, from dealer to dealer. "We're trying to simplify the buying process," says Basil Coughlan, a vice president at Ford.

Today, you can get low package prices on Ford's Escort LXs (with the three-door, four-door and five-door models all at the same price), as well as on the Crown Victoria, the Mercury Grand Marquis and the Mercury Tracer. Ford also offers two Thunderbird models and a Cougar. In California, sales of the Thunderbirds rose 43 percent after the change.

General Motors pioneered one-price selling in 1990, with its Saturn line of cars. Since then, only Oldsmobile has picked up this strategy nationwide, although other GM divisions are putting "special edition" cars into the big California market.

Chrysler does value pricing on LeBaron convertibles. Nissan also promotes the strategy.

Neither Toyota nor Honda encourages value pricing, although some of their dealers use a one-price strategy in their showrooms.

When a dealer advertises "value pricing," be sure to look for a low, no-haggle price. Some dealers use the term only to mean, "Have I got a deal for you!"

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