Are you being taken for a ride - African Americans charged more for automobiles

Black Enterprise, April, 1997 by Marjorie Whigham-Desir

African American buyers spend more than anyone for new or used cars. Why are we getting "shafted"? Here's how to fight back.

IN THE MARKET FOR A NEW OR USED CAR?

You'd better be prepared. It seems most African American consumers are not getting the best deal when they go into a dealership to buy a car. And you're most likely to get ripped off if you have no idea how much a vehicle is really worth.

In fact, African Americans pay more for their cars than Caucasians, warns Ian Ayers, a professor at Yale Law School. In two separate controlled studies in 1991 and 1995 in the Chicago area of more than 150 auto dealers and more than 300 new cars, Ayers found that both black men and women "testers" were offered higher prices for cars than whites.

"There is some evidence that suggests dealers may have acted as if they disliked black men more than black women," says Ayers. "Dealers are primarily interested in making money. In their effort to make more, they will prey on consumers they think will pay more," he explains. The studies didn't suggest that car dealers refused black patronage, but rather, in a sardonic twist, may have derived a certain pleasure out of getting a higher price from a black consumer than a white one. "It's a different, more subtle kind of racism," he adds.

Often the discrimination isn't even recognized until a pattern emerges and someone happens to stumble across it. That was the case for attorney Edward D. Buckley III when he happened to file a class action suit against Atlanta-area car dealer, George Sutherlin, for misappropriating and defrauding customers of a manufacturer's rebate. Of the 31 plaintiffs, seven were African American men and 21 were African American women. In the evidentiary and discovery phase of his suit, Buckley found that the prices set for cars sold to African Americans "generated two to three times more profit" for the dealer than those sold to whites.

According to the brief filed in Federal District Court August 30, 1996, the plaintiffs charged that "the Sutherlin Mazda dealership made twice as much profit on sales to African Americans (6.3%) than to whites (2.4%) in dealer-financed transactions." When buyers had their own financing, the dealership made seven times more profit on black buyers than it did on whites (7.7% vs. 1.1%). In total profit on dealer-financed transactions, the dealership earned, on average, 14.9% on cars sold to African Americans, while making just 6.9% on cars sold to whites. Buckley has built the case based upon sales commission reports matched with buyers' orders made available by former salesmen. Based on deposition testimony filed in court, "the dealer was not willing to do the same deal for African Americans that he was for whites," says Buckley.

Research suggests that preconceived notions about who's buying a car weigh into the purchase price. According to a survey by the Consumer Federation of America, 37% believed car prices were not negotiable, with that number jumping to 61% among African Americans. Only 31% of whites believed prices couldn't be haggled. More interestingly, however, test shoppers in Ayers' Chicago survey found that dealers were more likely to volunteer information about the real price of a car to white males because they believed they already knew.

But African American consumers share some of the blame. Oscar Smith, a former car salesman in Nashville, says that "psychologically, it's easier to sell a car to someone who is easily convinced that the monthly payments should be the basis of the buying decision. Most black customers are very forthcoming and want a car to drive home that day. Based on this, a key negotiating edge has been compromised within minutes."

"Dealers are not used to African Americans coming in knowing what the car buying process is. The fact is we don't do as much research as we should, or would, if we were buying something else, like a house," says Randi Payton, publisher and editor-in-chief of African Americans On Wheels, an automotive magazine. "Buying a car is an emotional experience," he adds.

Race aside, buying a car must involve consumer strategy and preparedness. The "mind game" played by hustling, fast-talking salespeople is not the only way to buy a car these days. Now consumers can access a barrage of information, from guidebooks to Internet Web sites. And there are a host of ways to buy a car, from auto brokers to wholesale buying clubs to matching services that pair dealers with customers looking for a fair price.

CHANGING THE WAY CARS ARE SOLD

Traditionally, May, June and August are the best months for car sales; February, the slowest month. But that too may be shifting as buyers no longer exclusively go to the dealer to shop for or buy a car. Now you can shop online by logging onto Internet buying services, where you can check out models and prices and make purchases from subscribing dealers.

Auto-By-Tel (http://www.autobytel. com), an automotive purchase-lease site on the Internet, reports that over 30,000 potential buyers fill out a form in order to be contacted by subscribing dealers each month. According to spokesperson Cassandra Cavanah, about 60% follow through and buy a car. "They're not your typical car buyer, however. They don't want to deal with the hassle of looking for a car, and they don't want the headache of haggling," she explains.