Study says minorities get better auto deals online - Berkeley, Calif - Brief Article - Statistical Data Included

Black Issues in Higher Education, Jan 3, 2002 by Ronald Roach

A study conducted by researchers at the University of California's Haas School of Business, the Yale School of Management, and J.D. Powers and Associates has revealed that women and minorities get better deals on car purchases by buying through the Internet rather than buying at car dealerships.

With findings showing that women and minorities generally pay more at dealerships than White men when buying the same cars, the new study released last month says the price differentials are erased when women and minorities buy their vehicles over the Internet. The study concluded the Interact acts as an "equalizer" for car buyers.

The new data revealed that minority car buyers pay about 2 percent more than White consumers, or about $500 for the average car, at dealerships. The researchers attributed the difference in purchase price to differing income, education and search costs on the part of the minority buyers. Statistics from Autobytel.com, a major online car-buying service, found that women and minority online shoppers paid the same prices as non-minorities, regardless of their education, income and search costs.

Dr. Florian Zettelmeyer, a Haas business school marketing professor who participated in the study, says the Internet could likely have the same "equalizing" effect in other purchases where negotiation and information on different rates help to determine the final price.

"The `digital divide' indicates that disadvantaged minorities are less likely to use the Internet. But this shows that if they do, they tend to benefit more than Whites. Hopefully, policy-makers will realize that there is a real benefit here from making sure that the digital divide gets eliminated," Zettelmeyer says.