Car Dealer Tricks: How to Outsmart the Auto Dealer

When you are buying a new car, you need to be an informed consumer. This means you need to know the California car lemon law in case your new car turns out to have problems, you need to know what the vehicle you're shopping for will likely be worth, and you need to know how to interact with the dealer to get the best possible deal.

Negotiating with car dealers can be a challenge, but Insead recently published a guide to outsmarting car dealers that could prove helpful the next time you are making a new vehicle purchase and you need to negotiate a price.

Guide to Outsmarting Tricks Used by Car Dealers

According to Insead, many car dealer tricks are based on psychology techniques related to the power of persuasion.  The example provided is a situation where a car dealer tells a potential consumer that the vehicle they are looking at is a number one best seller.  The technique of claiming the car is a best seller gets people thinking that if the car is good enough for the majority of people, it is also a good enough choice for them. 

This is an influence principle called social proof, which refers to the fact that people assume if a lot of people are doing something it must be the right thing to do.  In reality, however, an individual car buyer may have different needs than the majority of buyers so the car might be wrong for them — but they don't think about that because of psychological shortcomings and emotional reflexes. 

To be prepared for the different kinds of techniques that car dealers use, one of the first steps is to be prepared before going to the car dealer.   For example, you should do your homework to understand pricing before going to the dealer so you can avoid falling victim to a common psychological trick that uses the principle of reciprocity. 

If a dealer comments that they're giving you a good price or that they're giving you top dollar for your trade-in vehicle, you'll feel they have already done you a favor and the principle of reciprocity prevents many buyers from asking for more.  However, buyers who are informed will know if a price is actually higher or if the trade-in value they're being offered is actually low so they won't be tricked into feeling like the dealer is doing them a favor when the dealer really isn't.

Buyers should also recognize other key influence principles that dealers use including authority and scarcity.  Dealers leverage the principle of authority by claiming the car runs well or has been inspected, but buyers should do their own assessment of the vehicle.  Dealers leverage the principle of scarcity by claiming that the car is the last one in the area but buyers can overcome this technique by researching available vehicles at different dealers and by researching backup options.

Dealers also need to understand consumer protection laws such as the California car lemon law and should take appropriate action in contacting a lawyer if a vehicle they buy turns out to have problems.