The Gender Gap: Do Dealerships Treat Women Differently?
Women either buy or influence the purchase of 85 percent of all new cars and trucks sold in the United States today. And automakers spend millions of dollars annually in advertising and marketing targeted specifically to women. If this is true, why do most women hate the car-buying experience so much?
Sure, many people find it stressful to buy a car, but even women who have taken leadership roles in their professional, personal and civic duties admit that they are uncomfortable going into a dealership and negotiating the purchase of a car without the help of a friend or relative. Maybe this is due to the fact that women are consistently quoted higher prices than men, as economists Ian Ayres and Peter Siegelman found in their study of 200 Chicago car dealerships. Or, maybe it's because women buyers are put off by salesmen who patronize them by pointing out how the color of the car matches their eyes rather than whether the car gets good gas mileage.
With these issues in mind, Edmunds.com's senior consumer advice editor, Phil Reed, and feature editor, Carmen Tellez, decided to see for themselves exactly how women are treated on the car lot and compare that to the way men are treated. On a mission to add a manual-transmission Hyundai Elantra to the Edmunds.com long-term fleet, they shopped at three different Los Angeles-area dealerships to see how salespeople approached male and female shoppers in order to make a sale.
Dealership #1: Condescending Vs. Attentive Salesman
Her Experience There were two men talking next to a row of Corvettes when Carmen arrived on the lot. She waited for one of the two men to approach her. Neither did. She waited a full 10 minutes. The men continued talking so she walked toward them. They were wrapping up their conversation, and she waited for the salesman to say hello. No acknowledgement came.
He headed for the sales office, and she followed closely behind. As he reached the door, he glanced over and asked, "Do you need some help?"
"Yes. I'm interested in taking a look at an Elantra."
The salesman began talking while he was walking away. He asked if she was getting her car serviced next door (the dealership had an adjoining service center) and what kind of car she was looking for. Carmen said she was interested in a champagne-colored, manual-shift Elantra, and he quickly found one — in white with an automatic transmission.
She reiterated that she wanted a stick-shift in Champagne. He said, "This is the only Elantra we have here, but I can look around for you if you want to go inside and work some numbers."
Carmen declined his invitation to go inside. The salesman said that he might have another Elantra in the back lot and then changed his mind as they walked through the rows of cars. "No, I think we're out of Elantras. They've been selling really well." Just then they found one: a five-speed GLS in Champagne.
"This car just came in," he explained.
The salesman opened the driver-side door. "Can I drive this?" Carmen asked. The key was in the ignition. "No, not this one. It hasn't been prepped yet. You can wait inside, and we can work the numbers while they prep the car for you." "That's OK," she said, declining his second invitation into the dealership. He didn't volunteer another Elantra for her to test so she asked him about the car.
He described the Elantra as "a very good car with a 10-year, 100,000-mile warranty." He told her that in a survey by J.D. Power & Associates, it ranked right up there with the Japanese cars.
The sticker read $13,172, and the salesman told her he would sell her the car for that price. "You see," he elaborated, "Hyundai is selling these cars close to invoice. They just want us to sell a lot of cars so they've compressed the profit we can make. There's basically a $600 difference between invoice and sticker," he said matter-of-factly.
Later, Carmen found out that this was not true. According to the salesman's math, invoice would have been roughly $12,572. Edmunds.com listed the Elantra's invoice at $11,504. The difference was more like $1,668.
Alongside the window sticker was another sticker that listed an alarm for $586 and pinstriping for more than $100. The total price of the car was up to $13,868. When our car buyer asked the salesman about this, he told her that this was included because it was through these extras that they made money. For the second time, he assured her that they weren't making money anywhere else.
At this point, what little interest the salesman had at the beginning of the transaction disappeared. "I asked for his card, he said he was out," Carmen related. "I wanted to write down some of the information from the window sticker and ask him a few more questions, but he'd already started to walk away from me. So I asked him for his name, thanked him for his help and left."
His Experience Phil's experience turned out to be quite a bit different.
Within two minutes of having arrived on the lot, a salesman approached him. Phil asked for the salesman who had waited on Carmen. This salesman was paged and then appeared almost immediately.
They went out to look at the cars. On the way to the Elantra, the salesman began his sales pitch. He said that J.D. Power had given it an excellent rating.
He opened the driver door and the hood and asked if our car buyer wanted to take a test-drive. But Phil told him he didn't have time now but would make an appointment and return. He asked for his card. The salesman then said he would give him a brochure and write his numbers in it. Then, when Phil was ready to come back, he could easily reach him.
As they walked back inside, Phil asked him how competitive the dealership would be on the price. He answered that they were as competitive as anyone around, and then carefully wrote down all his numbers, gave Phil the brochure, shook his hand and urged him to come back soon.
Summary Phil and Carmen went to this dealership approximately an hour apart from each other. While the salesman was not blatantly rude, he definitely ignored Carmen, lied about pricing information and tried to control their interaction. Phil, however, said that the salesman was highly respectful, obliging and courteous.
Dealership #2: The Respectful Salesman
Her Experience As soon as Carmen stepped onto the lot, a salesman came walking briskly toward her. He greeted her with a big smile and asked if he could be of assistance. His name was Kevin.
She told him she was looking for an Elantra and that she would most likely purchase one within a week. He directed her toward a car and asked, "Why not buy a car today?" Carmen let him know that she was still shopping and asked him about the car.
"Let's start with the warranty," Kevin answered. "It's the best one out there. Ten years, 100,000 miles and a 5-year bumper-to-bumper warranty with no deductible." "Since when does a new-car factory warranty come with a deductible?" Carmen thought to herself.
Kevin continued and was soon into a full demonstration of the car. He opened the hood and pointed out the motor, the battery and the radiator. He opened all the doors and showed her the interior, and he even stepped into the car and demonstrated how the rear seats folded down in case she had to transport an extra-long object.
After a test-drive, Carmen asked for the car's price. Kevin pointed to the sticker. The price for this Elantra, with the same features, was about $500 less than the car in the first dealership she had visited.
Kevin wanted to give her a brochure on the Elantra, so they walked toward the inside of the dealership. There were a few people in offices, and she waited for Kevin to return with the information he'd promised.
Suddenly, a man stumbled out of his office, running to greet her. In an eager and chipper tone, he said, "Hello! My name is Rick! I'm the sales manager here, and I make deals happen!"
Rick and Carmen discussed what she had driven that day and he started to ask her some qualifying questions like, how she liked the Elantra, what she was driving now and whether she would be using that car as a trade-in. Rick was what they call a "closer." His job is to steer customers toward a sale and seal the deal.
Rick couldn't peg our car buyer's intentions and read her polite yet evasive answers as indecisiveness. He didn't press her further and said she should be sure to come back and see them when she had decided to buy.
At that point, Kevin returned with a brochure, his business card and a copy of a newspaper article on the Elantra. Carmen thanked Kevin for his time. "I hope you'll choose us," were his parting words.
His Experience About an hour later, Phil went into the dealership. At the time, Kevin was busy with another customer. Nevertheless, he greeted Phil warmly, invited him to browse the cars on the lot and assured him that he would attend to him in a few moments.
A couple of minutes later, Rick approached Phil and offered to show him the Elantra until Kevin was free. Just as Kevin had, Rick thoroughly explained the warranty to Phil and was highly professional. When Phil sat in the driver seat, Rick offered to take him for a test-drive, but Phil said he was only looking. Rick seemed to be OK with Phil's browsing and also didn't pressure him to buy.
On his way out, Phil spoke with Kevin. Once again, Kevin's manner was respectful and polite, as if to say, "I'll go along with anything you want to do."
Summary Kevin's approach was neither pushy nor condescending, and he was straightforward with the information. Nor did he try to persuade our woman car buyer to purchase an automatic instead of a manual. Sure, both Kevin and Rick were salesmen, and they wanted to sell our editors a car, but when each car buyer let them know that they weren't ready to go to the next step, these car salesmen respected their space and behaved accordingly.
Dealership #3: Mr. Slick
Her Experience A salesman named John listened intently as Carmen described the car she wanted and pointed her to the Elantras on the lot. Since they were all automatics, she told him she was specifically interested in a manual transmission.
"A manual," he said, both as a question and an exclamation. "Why would you want a man-u-al?"
"They're economical and fun to drive," she answered. He didn't respond. (Salespeople often don't respond to comments they cannot refute. However, they sometimes try to redirect your thinking.) "Well, that's not a car in demand," he countered. "We don't have any on the lot. What about an Accent? I have plenty of Accents with manual transmissions."
Carmen told John she really wanted an Elantra, so he offered to find out what they had on their back lot. Before he left he said, "By the way, cute shoes."
What did that have to do with anything?
"Oh, thank you," she responded politely. "By the way, what do the Elantras go for?"
"Five hundred dollars below invoice. We're blowing them out. We're getting rid of them 'cause they're not in demand." Carmen wasn't sure whether to believe John, but quickly decided to go with it rather than exhibit hesitation or disbelief.
"I'm looking for anything that's not black or white," she said.
"Well, I don't know about that," he answered.
Less than five minutes later, John returned saying he didn't have any five-speed Elantras. "You'd make my job so much easier if you wanted an automatic Elantra or an Accent. Got plenty of Accents with a stick, but no Elantras. We get shipments all the time. Let me tell you what — are you off work today?" He seemed to be trying to make a deal with her. "No, I'm just car-shopping on my break," she told him.
"I'll call you today if I can find what you're looking for," he said.
John called Carmen the next day. He had found a white manual Elantra. She reminded him that she wasn't interested in white.
"They only come in white," he said. "See the manuals are low-demand cars and they only come in white. In general, there isn't a big color selection for Elantras. Hey, does anybody know what color that stick Elantra is?" he yelled out. "Why would he have to ask if they only come in white?" she wondered.
"Well, Carmen, if I can find the car you're looking for, do you think you'll be able to come down here today?" She told him she was working all day and instantly the car's color changed. "It's blue!" he said, "The car is blue! I'm here 'til 6:30 tonight."
Understandably, Carmen decided to "wait" for a few days.
His Experience Next it was Phil's turn to ask John about the Elantra.
"It comes in a six- and a four-cylinder," John said, "but this is the four."
Phil knew this was completely untrue. Hyundai was not putting a six-cylinder engine in a compact car that competes with Civics and Corollas! Why had he told him this?
"It's a great car," John added.
"What makes the Hyundai a great car?"
"Look at it. It's real slanty." He pointed to the front of the car as if it were obvious.
John spent the next few minutes giving a less-than-dazzling sales pitch on the car. For example, he said that the Elantra was fun to drive but never qualified it by saying that its 140 horsepower and 133 pound-feet of torque gave it spirited acceleration and spunk. Similarly, when saying that it was a safe car, John didn't point out the standard side airbags. He also never talked about gas mileage, which is estimated at 25 miles per gallon in the city and 33 mpg on the highway.
"John, can you tell me what this car will cost me?" Phil asked.
"We'll sell it at cost," he said. Then, abruptly, he added, "Or 800 over cost — it depends."
When Phil decided to leave the dealership, John shook his hand and patted him on the back. Oddly, it wasn't a warm gesture.
Summary John was like the living caricature of a car salesman. If you were casting a movie with a stereotypical salesman in it, John would fit the part perfectly. Carmen and Phil were both certain he would pretty much do or say anything if he thought it would get him a sale. John quoted Carmen a lower price for the Elantra than he did Phil, and it was the lowest price of any of the three dealerships. Our editors suspected that his lowball offer was to bait Carmen and that many things would change once they got inside the closing room.
John approached Carmen using more charm than he did with Phil, and he didn't try to sway Phil toward a different car. On the other hand, he told Phil that the Elantra came with a six-cylinder engine, that it was a good car because it was "slanty," and he never attempted to get any follow-up information from him so John might not have considered Phil serious. Either way, they didn't trust him.
Closing the Deal When it came down to deciding where they would buy the Elantra, Phil and Carmen decided that Kevin from Dealership #2 had earned their business. He had treated them both seriously and with respect.
As he did the first time they met, Kevin greeted our car buyers warmly when they returned to his dealership. He was surprised to see Phil and Carmen there together, but didn't ask about it once they told him that they had returned to buy an Elantra. Kevin took them on another short test-drive and, afterward, ushered them into a small sales office.
Carmen opened the discussion telling Kevin that they had been shopping around, and although his dealership had not quoted them the lowest price, they had returned because he had been straightforward and courteous with his service. He was appreciative of this compliment and asked for their offer.
"Five hundred dollars below invoice," Carmen said, without hesitation. She waited for his response. Kevin didn't laugh, choke on his coffee or act if she had insulted him with her offer. Instead, he stood up and said, "Let me take it to the sales manager."
The secret of negotiation is to harmonize the real interests of the parties concerned. Consumers want to buy a car and get a good deal. Dealerships want to sell a car and make some money for their efforts. This sounds simple, but there can be a great distance between the two sides before they meet in the middle. However, if both sides approach the negotiation process with a sense of fair play, a compromise can usually be made.
Such an understanding likely contributed to Kevin's receptive reaction. Further, it was apparent that our car buyers had done their research, and therefore, he didn't consider their offer unreasonable. Additionally, Carmen's approach was both direct and open.
Kevin returned with a sales manager named George who had come in to finalize the negotiations and act as the closer. He had a more serious attitude that conveyed he was there to protect the profit.
Phil then asked George for a copy of the invoice. (This is something for which any person may ask. The invoice comes in handy during negotiations because it will show the MSRP next to what the dealer paid for the car and any optional features it may have.)
Once you start "working the numbers," things begin to move quickly. One minute you're looking at one figure, and the next minute more numbers, like advertising and destination fees, are being thrown into the mix. The salespeople told Carmen and Phil there was a $500 rebate. Because of this unexpected news, our car buyers agreed to pay $100 over invoice.
Although Phil had already secured financing from an independent lender, George offered them financing from the dealership. It's smart to arrange financing before you go out to purchase a car. For one thing, it allows you to negotiate for the total price of the car rather than focusing on a monthly payment. In addition, it gives you an alternative to the dealership's interest rates, not to mention leverage if the salesperson wants to compete for your business by offering a lower rate. A good way to determine whether you are getting a fair finance rate in your area is by using Edmunds.com's TMV Finance Rate Estimator.
After much discussion, our car buyers agreed to purchase the Elantra for about $100 over invoice price and gave the dealership a deposit on the car. According to our estimate, we believe the dealership made approximately $650 on the transaction largely because of the $500 rebate.
As requested, George brought them a copy of the invoice and a contract to review and take back to the office. The dealership's willingness to provide these documents confirmed that Phil and Carmen had been dealt with reasonably. (For a more detailed discussion on negotiating, read Phil's Negotiating 101).
Conclusion Since women are noted for doing thorough research and comparison-shopping before making a car purchase, one would think this would put them in a position of power over the car salesperson. Yet, a majority of women consumers still find themselves intimidated by the car-buying experience, leading many of them to buy from no-haggle dealerships or hire brokers. Dealerships and salespeople should keep this in mind when dealing with female customers.
Gender bias at car dealerships won't go away overnight, of course. In the meantime, women can make the car-buying process as painless as possible by doing their homework before they go to the dealership. Some important tips:
- Research the vehicle you want to buy and print out its True Market Value (TMV) before you go to the dealership.
- Keep a notebook during your car shopping experience when you visit more than two dealerships to keep track of everything, including prices, availability of the trim levels and options you want, what you like about the car and the salesperson, and so on.
- Ask for a copy of the invoice. It will show the MSRP next to what the dealer paid for the car and optional features. The difference between these two numbers is usually the room wherein you have to reach a deal. Bear in mind, though, that cars with rebates can often be had for less than invoice, while hot sellers may command a premium over MSRP no matter how hard you negotiate.
- When you're "working the numbers" with the salesperson and you start to feel pressured, the best thing to do is slow down and perhaps take a break.
- Arrange financing before you go out to purchase a car. It allows you to negotiate for the total price of the car rather than focusing on a monthly payment. In addition, it gives you an alternative to the dealership's rates, as well as leverage if the salesperson wants to compete for your business by offering a lower rate.
- Use dealer locator to submit multiple quotes to local dealerships. You can negotiate with the Internet manager via e-mail or over the phone rather than being trapped in a sales office at the dealership.