Canadian car buyers face negotiation intimidation
There’s nothing to fear except fear itself.
Well, that and the prospect of negotiating one’s next vehicle, apparently.
A recent online survey by autoTRADER.ca found that many Canadians are opting to hold on to their existing set of wheels rather than face what they see as the intimidating process of snagging a deal on a new one.
While almost half of individuals polled said they were in the market to buy a vehicle within the next six months, nearly one in five of them said they would hold off on purchasing due to value uncertainty and fear of negotiation.
What’s more, 73 percent of Canadian car owners don’t know their current vehicle’s value, and 44 percent do not believe the last vehicle they sold was reflective of its market value at the time. When asked to estimate the true value of common used vehicle makes and models, including a Honda Civic, Toyota RAV4 and a Ford F-150, the vast majority of Canadians undervalued these vehicles by thousands of dollars. In fact, 90 percent of survey respondents could not identify the true value of these vehicles within $1,000.
“It’s very difficult to put a value on a used vehicle, even for a professional. Every used car is different,” Roger Dunbar, TRADER’s vice president of marketing, told Auto Remarketing Canada. “There are a lot of variables that go into the valuation of the vehicle. Age and condition obviously has a huge impact. There are endless combinations of features that can be added to any model. Having an extended warranty (or not) can add or subtract value. Even things like single owner or non-smoker can factor into the value. And it can all change from one week to another.”
Dunbar said the fear of negotiating is happening for new and used-vehicle purchases alike.
“The fear is real for both as it is borne out of doing something they will regret or being played as a fool,” he said. “The higher the cost of any item the higher the perceived risk and the associated fear. We all have a fear of being taken. I hate having to pay $6 for a bottle of water at a Maple Leafs game.”
But overall, he said, people do like the process of buying a new car.
“With the exception of negotiating the price, they are excited about the prospect of driving away in their new car. This likely overrides concerns about not getting full value for their used car — the same used car they have grown tired of driving. Also, consumers are happily surprised to understand the HST tax advantage of trading in a used car and count this towards the value of their old car. Finally, the availability of this information is still a work in progress for the industry as a whole.”
The study found that confidence in the process does come with age, as Canadians 55 and older are more than twice as likely as millennials to say they feel confident about making a good deal when it comes to negotiating a car deal. Millennial car owners ages 18-34 are significantly more likely than those age 35-54 and 55 and older to say they feel stressed out when negotiating a car deal.
Asked whether it’s simply because younger folks haven’t been through the process before, Dunbar said, “That’s it. There is no mystery here.
“The fear is always higher of the unknown. We are all human after all. Although it might be exacerbated by the fact that millennials are also less familiar with the experience of not knowing everything in this Google age.”
Additional results from the autoTRADER.ca study:
—Among those not confident about making a good deal, 59 percent would rather keep their old vehicle than negotiate a car deal.
—While 68 percent of Quebec residents (more than any other region) think they negotiated reasonably well in their last vehicle sale or purchase, they are also the most likely (17 percent) to say they feel a “fear factor” when it comes to negotiating a car deal, nearly twice as high as the national average of 9 percent.
—One-quarter (24 percent) of Canadian car owners say they feel stressed out when it comes to negotiating a car deal, with British Columbians (29 percent) most likely to feel this way.
—While men (35 percent) are significantly more likely than women (20 percent) to think they know the market value of their current vehicle, they are significantly more likely than women (55 percent versus 38 percent) to use an online marketplace to determine a fair vehicle price.
—When it comes to information gathering, 74 percent of Canadians would consider a second opinion on value before buying or selling their next vehicle with nearly half (47 percent) using an online marketplace (such as autoTRADER.ca) as a central source for intelligence.
New customer tools
autoTRADER.ca recently unveiled new tools for consumers who are buying and selling vehicles. The site now highlights dealer listings from across the country that offer new vehicles at heavily discounted prices from suggested retail price (MSRP).
For those seeking to buy or sell used vehicles, autoTRADER.ca has introduced new functionality on its Vehicle Detail Pages called “I.Q.” that takes the guesswork out of finding a vehicle’s value. Many profile pages now incorporate up-to-the-minute data and figures, allowing buyers and sellers to quickly finding out a vehicle’s true current value based on a number of key criteria.
Features of autoTRADER.ca I.Q. include:
—Price Analysis: How your price compares to average market value
—Condition Analysis: The condition of the specific vehicle
—Feature Highlight: The unique features of a specific vehicle
—Summary Widget: A summary of the above three features