抄録
We are all familiar with the negotiations that are carried out with sales persons when purchasing a new car at dealers. However, what is less known are the effects of these negotiations on the decline of the automobile franchise system. This paper discusses the negative aspects of these negotiations and their effects on the decline of the automobile franchise system.
(1) Because of the big discrepancies between list prices and the final sale prices, it is difficult for the customers to estimate the final sale prices. In addition, it could be considered unfair that dealers intentionally hide the real sale prices with false list prices.
(2) There are often big purchasing price differences between the same cars even for the same dealer and date of sale. This suggests that some customers are being discriminated against and may be the target of unfair sales practices.
(3) Final sales prices are dropping due to excess discounting during these negotiations. Many of these discount may not be needed.
(4) Because auto manufacturers often expect the auto dealers to take most of the risk in terms of the market price fluctuations, auto dealers often get stuck with unsold inventory. This excess inventory often causes a decline in market prices and thus lowers the profit of the dealers.
(5) Unilateral decision making by auto manufacturers and ex post report regarding how to pay rebates to dealers and customers have increases the complexity of car negotiations. Accordingly auto dealers have been suffering low profitability for so many years.
(6) Long negotiation period from initial contact to the closing of the sale increases the transaction costs of both dealers and customers.
