Discrimination in Auto Retail Sales

On 24 Aug my daughter had the misfortune of being hit at an intersection, by a woman trying to beat the yellow light, as my daughter was waiting to make a left turn.  After the insurance company assessed the damages, my daughter found herself as one of the newest entrants into the new car marketplace.  After extensive research to determine what she wanted, she narrowed her options down to three models and began visiting dealerships to test drive and make the final selection.  At 29, my daughter was not a novice in the car shopping process as this would be her third such purchase.

She went to a local Ford dealership, found a salesman and asked to see and test drive the Ford Escape.  She indicated she wanted to see both new and any used models they may have.  He first showed her the Ford Focus, told her about its features and mentioned that insurance companies would give her a good deal on insurance for drivers under twenty-five.  She thanked him for the compliment, but informed him that she was beyond twenty-five and once again expressed her desire to see the Ford Escape.  He then proceeded to take her to the Ford Flex and once again reiterated the under twenty-five insurance discount.  Again she reiterated her age and desire to see and test drive the Escape, but rather than showing her the Escape, he showed her several other models.  Frustrated and annoyed, she departed the dealership after an hour-and-a-half without ever seeing the model she desired.

She recounted her ordeal to me that evening, and several days later, I accompanied her to the same dealership—albeit with a different salesman.  Although I was merely a silent companion on the visit, she was shown the Ford Escape, allowed to test drive the one she desired and was given a fair expectation what the actual sales price would be from the sticker price.  To finish my daughter’s saga, she found another dealership that had an Escape with the right color and features, secured a prearranged price (at $299 above invoice), arranged for her loan at a bank other than the Ford Credit at the dealership and bought the car—again with me as the silent companion.

Although my daughter’s experience was an individual experience, discrimination in the new car market at dealerships is an ongoing target of research and anecdotal observation.  Peter Blumberg wrote in the NY Times: "Women are scared to death of buying a car because the process can be intimidating,...In the showroom you generally deal with men, and some can talk down to women as if they’re interested only in color. Negotiations can be grinding. Couples often find that salespeople address mostly the man (Blumberg 1-2).”  Ian Ayres, a law professor, studied how gender and race affected price negotiations in new car sales and found discrimination against white women, black women and black men in prices quoted during the price negotiations.  He published his findings in Harvard Law Review in 1991 then expanded his study along with the assistance of a research fellow Peter Siegelman and confirmed the earlier results in 1995.

Car shopping and negotiating the final sales price is an example of two people interacting to agree on the value of the car which process also includes an assessment by each participant of the other participant.  This process of using values and labels to shape our interactions is an example of symbolic interactionism which states that the individual interactions within a society are defined by the values, or labels, we use to define all aspects of our society and the deference we either give or receive from others.  In the U.S. we rise at the entrance of the President, state governor or the playing of the national anthem similarly military members rise at the entrance of a senior commander or general.  As a society, there may or may not be a consensus on the labels certain groups used during interactions.  In some social circles it is considered good manners for a man to open doors for a woman or to offer his seat to a woman in situations such a crowded public transportation, however, certain groups may object to such chivalrous acts due to the implied label being placed on women by such actions.

In the case of my daughter’s experience, the first salesman apparently valued my daughter as being indecisive and unsure about her expressed preference for her new car and used that value to show her vehicles he felt were appropriate for the value he placed on her.  My daughter, who places a high value on avoiding contention, repeatedly reiterated her preference and the irrelevance of some of his observations regarding different models but never confronted him on his discriminatory practice—she just found a convenient excuse to leave the interaction.  My presence, even as a silent companion, can be seen as having altered the assessed value of my daughter’s preference.  Although we never did reengage with the first salesman my daughter encountered, the salesmen we did encounter most probably observed and accepted the high value I placed on my daughter being treated fairly and ensured their conduct was inline with that value.

The decision by my daughter to seek a prearranged price is inline with her high value on avoiding contention and what Blumberg describes as the grind of price negotiations.  This high value on avoiding the contention and grind of price negotiations is shared among a large portion of U.S. society and was one aspect to the popularity of the now defunct Saturn dealerships with their no haggle pricing (even though such prices included a significant markup over dealer invoice).  Car Max has adopted a similar pricing strategy to disarm the fears associated with price haggling (Blumberg 3). 

Ultimately, my daughter consummated the purchase at a cost coincidental to the value she placed on the vehicle that now impacts the value referred to as her self-esteem, the care and handling of her new car as well as the label of fair or discriminatory that she places on the dealerships she interacted with.

The key question to be studied is: why would elements of society, in this case car retailers, inject a discriminatory value into their interactions that in the end are self-destructive?

Citations

Ayres, Ian.  “Fair Driving: Gender and Race Discrimination in Retail Car Negotiations.”  Harvard Law Review 104.4 (1991): 817-872.

Ayres, Ian and Siegleman, Peter.  “Race and Gender Discrimination in Bargaining for a New Car.”  American Economic Review 85.3 (1995): 304-321.

Blumberg, George P. “To Sell a Car That Women Love, It Helps if Women Sell It.”  New York Times 26 Oct. 2005, nytimes.com ed.: 1-4.