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Automotive Shoppers Can Thank the Internet for Rational Market Price Policies

Posted on 5/16/2017 by Rick Allen

Taking a trip down the memory lane of car shopping about 13 years ago would prove that car shoppers were competing in non-rational and inefficient shopping markets. I know this sounds like economist mumbo jumbo but when simplified it can be defined as a great benefit for the automotive shopper. Looking back a little over a decade ago, shoppers had to come into the dealership to research everything to do with buying a car. Even to get a product brochure, you had to go to the dealership. The process was broken down into steps known as the "Road to a sell" which every sales person was drilled on. You had to go through a meet and greet, a needs and facts assessment, a product presentation and demonstration before you could ever think about asking for a price. If that wasn't cumbersome enough, then there was the whole price negotiation thing. Am I overpaying for this vehicle? What is the true cost of the vehicle? What should I expect for my trade?

This is a clear example of what is meant by non-rational and inefficient market. Markets are considered non-rational and inefficient when the buyer and seller do not have the same information. The internet was the information bridge that placed the buyer on the same information playing field as the seller. Large car-buying sites such as AutoTrader.com, CarMax.com, Edmunds.com, and Aol.com have made it easy for the buyer to find the exact model and equipment they want, manufacturer incentives and even maufacturer invoices. Used car buyer sites like Kellybluebook.com, Nada.com, and Blackbook.com provide values for used car customers whether for trading their current vehicle or purchasing a quaity used car. Because of this, dealers have been offering sale prices for new and used cars consistant with their markets to gain consumer confidence to the dealer. All of these online sources of information have driven the automotive buying segment into rational and efficient markets.

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