The only sources cited are you and the anonymous testimonials from your website. I don’t see anywhere in the article that says that anyone at Fortune has ever seen your product at work, let alone that someone at Fortune observed it outperforming human negotiators.
And to top it off, it says right at the bottom that it was written by AI.
80 character limit on the post title is why I edited it in that way. Thanks for the feedback. Also the article was entirely organic. The journalist saw our article/interview in PYMNTS from last week (as referenced in the Fortune piece) and then wrote this. He interviewed me yesterday. This is a bummer. I have been building this company for six years and am so proud of what we have accomplished. I hope we can get this post back on the front page. It's a tremendous moment for our team and company and I am so excited to get feedback from commenters here on HN.
OP here. I’m not sure I understand your point. The AI Negotiator is only intended for customers who want to buy a car — that’s what we mean by qualified.
No, this works for customers who are financing the purchase of their vehicle, leasing, or paying cash. The AI Agent negotiates the out-the-door price for the user regardless of payment method and then goes from there.
Dealers sometimes have promos or get spiffs for selling financing which can further reduce the price for a net savings to the buyer.
On one purchase we were upfront from the start that we were paying cash but after we negotiated the final price the dealer told us the manufacturer was offering a $1,000 rebate off the dealer's final price for cars financed through their plan. They pointed out the deal only required keeping the loan for six months at which time we could pay it off with no prepayment penalty. Since the financing had a 0% promo rate for the first year, we took the loan, made payments for five months and paid off the balance at six months and saved an extra $1,000 at no cost. The dealer said the manufacturer was aware people could do this and bank free money and were fine with the dealer suggesting it to cash buyers.
I guess they were counting on some cash buyers deciding to keep the loan after six months. The dealer didn't care either way since they got a spiff for selling the loan and we got an extra $1K off. We carefully penciled out the numbers and there was no trick (my wife worked in finance). A few weeks later we got a $1,000 check direct from the manufacturer's finance arm and ended up paying nothing more than our out-the-door price (plus the inconvenience of writing five monthly payment checks). Essentially, our $1K was funded by the profit from people who kept the loan. This was also a good reminder that any time a dealer is offering 0% financing (or financing well below the market rate like "no payments for X months" deals), that discounted financing has a real cost that's being paid by the seller (because money has a fixed time value). So a cash buyer who doesn't use that discounted promo financing saves the seller money and should be able to claw that value back into their final price.
So, does is your AI handle this kind of situation during the negotiation? I'm also curious how deep your AI's knowledge of various strategies and tactics unique to auto transactions goes? Just having an AI to deal with all the back-and-forth communication and obvious negotiating gambits to get to a "final out-the-door price" is good but if it was more deeply prompted to be savvy to the level of exploring ways to save money which can vary based on a buyer's (or dealer's) unique situational context - that's even more valuable. Things like model year timing, dealer incentives, buyer flexibility on car model/features, delivery or purchase timing.
There are ways to pay cash from the dealer’s viewpoint even if you don’t have the cash— whole life policy loans, credit union loans, borrowing temporarily from retirement accounts (then financing to repay). So, it’s not the worst limitation. Anyway, having the cash is the best negotiating position, so this shouldn’t be a big surprise.
Carvana is destined for acquisition or bankruptcy. They have WAY too much inventory that they overpaid for. Consumer demand has plummeted and new car supply is bouncing back (up 78% year over year). They have too much debt on their books to make the model work. Good thing the CEOs dad cashed out when he did.
Disclaimer; I run a popular youtube channel educating consumers on car buying.
Greg did a good job documenting the challenges of buying a car in today's market. Fortunately, we are starting to see a softening in consumer demand which has led to used car prices to begin to drop in some areas and for certain types of vehicles.
We expect that as automakers increase production we'll go away from markups. The timeline for that is tricky since Asian brands (Toyota and Honda especially) are struggling MUCH more than American automakers. MSRPs are rising fast too, so while dealer markups may disappear as demand weakens and supply increases, don't be surprised if you see MSRPs that are 5-10% higher year over year.
Wait times right now for hybrid vehicles are over a year. The push to PHEV and BEV will continue to be delayed due to ridiculous prices. The average transaction price for a new EV last month was north of $66,000. Not affordable.
Great insights in Greg's article. I wish we could have helped him before he embarked on the journey.
The current supply shortages made the process less bothersome for me in some ways because I didn't really expect to have much luck haggling. Wasn't perfect. "In transit" meant it wasn't built yet and I was in a bit of a hurry. (Had car but car had problems.) Doc fee was high. A couple of 50% BS sets of "factory installed options." (Though got price tacked onto my pretty generous trade-in.) Some annoying attempts to upsell but "no" worked fine. Didn't need financing.
But overall, it was a couple of visits and a few hours and I got the vehicle (Honda) in six weeks.
The market is SO inefficient. While you’re right in describing the principles of supply and demand, the reality is that buying a car should be 10x simpler and the price should just be the price. No games, no haggling, no BS add-ons that increase dealer profits. Retail auto is due for a wake up call, and I sense it’s happening right now. You wouldn’t need markups to make extra profit if the cost infrastructure associated with selling cars was lower than it currently is.
Tesla is leading the way today (somewhat painfully in some areas) but they're not the first to try fixing this. GM's Saturn tried to make buying simpler in the 1990s and surely there were other previous examples, too.
There's plenty of dealerships who have historically had simple purchase processes with standard no haggle pricing but often buyers have to do extensive research in order to find such dealerships.
Ford Corporate is livid with their dealers. Back in 2018 when they put out the Focus RS, dealers basically killed that car with markups. Dealers all marked them up 20-30k which put them around 70-80k OTD. While some bought it at that price, they all just languished on the lot and Ford eventually cancelled due to sluggish sales.
An almost similar thing happened to the F150 Lightning, Ford had to threaten dealers that they would withhold any future deliveries if they caught wind of markups.
From what I'm hearing from friends that work inside Ford, the dealers have burned all their bridges. Ford is sick of their crap and is working to move to direct customer sales (their electric vehicles I believe have already made steps towards this).
If Ford had really wanted the Focus RS to succeed they would have just built more cars. Dealer markups only happen on models in short supply. There just aren't many customers willing to pay even $40K for a small Ford hatchback, even though it had good performance specs.
Tesla has increased prices a lot. What’s the difference to the consumer if the increase comes from the manufacturer or a dealership? Tesla also is known for delaying vehicle deliveries if you don’t pay extra for FSD. Tesla just appears to be better than a dealership but they engage in the same shenanigans.
The market is inefficient because dealerships form a cartel, divvy up the geographical areas where they operate and don't allow any competition there. If it was an actual market, carmakers would sell off cars to dealers (e.g. at mega-auctions), who can set up wherever they want (or sell online), and all the games, haggling etc. would disappear.
And to be clear, consumers shouldn't have to negotiate for hours to try and get a "fair" price during "normal" market conditions.
The current "markup" phenomenon is the same as the prior experience (pre-pandemic) where OEMs intentionally subsidized the purchase of their vehicles well below MSRP, and savvy customers could negotiate thousands off a car deal. It's mind boggling to me that we allow for such an inefficient market to perpetuate! 100 years of franchise dealerships is enough! Time for business and consumers to wake up and enact change.
Even during normal times if you wanted a trim that was somewhat desirable you would get hit with this behavior. Plus you get so many hidden fees that don’t have to be listed like the “Toyota Advertising fee” for over 1k. A few of those different fees Added 3-5k in normal times
Conditions may be different now, with the internet at all, but the fact is this has been tried a number of times by individual dealers, and at least in one very large scale circumstance that I can recall - the now defunct Saturn division of GM. Saturn famously touted fixed, non-negotiable sales prices as a feature of their vehicles, part of the total package of the car similar to its warranty and so on.
Even with all of the might of GM behind it, and with the cars themselves having a distinct position in the market with a few unusual features no other brand had, such as polymer body panels that were lightweight, rust proof and easy to repair (by simply replacing entirely), Saturn only lasted a few years before folding.
I was selling cars myself for a few months during their peak, and recall that they mainly got used as a rhetorical backstop by customers who would bring in an invoice for our vehicle (printed out from edmunds.com, which had just barely become a thing at the time), and argued that they should pay some absurdly small fixed number ($100, $300, possibly $1000 if they were buying an NSX, our "halo" vehicle) over invoice to get a fixed price like saturn.
This was a couple years before dealerships had organically responded to the internet by adding all sorts of hidden costs that do not show up on an invoice to the base price (in addition to the usual ones) so unlike today the invoice was literally our invoice price. But they were not there to buy a Saturn they were there to buy a different brand of car.
Let me be clear; we should move away from Manufacturers SUGGESTED Retail price and go towards Manufacturers Retail Price. Just make it that the price is the price, and then the dealers can become glorified delivery centers/showrooms and service centers.
They'll make tons of gross profit because their cost infrastructure will go down, and OEMs will be happy because they still won't have to deal with customers and can focus on wholesaling cars to their "dealer" network.
The rub is in the finance and insurance products. OEMs all have captive lending arms, and currently dealers make a ton of money ($1,500+ per vehicle retailed) in finance and insurance profit. Navigating that relationship will be interesting as OEMs take on more control of the sales process.
Great point (I’m the Zach Shefska referenced in the article), and have been working in this space to advocate for consumers. Two things:
1) new FTC proposed rules (which are open for public comment!) would ban the practice of “surprise” add-ons at the dealership.
2) a lot of folks that contribute to markups (and other crowdsourced initiatives) go all the way to getting a buyers order and then report those add-ons when they show up then.
The FTC (or congress) should mandate this for everything. The price for something should be the final, out the door price. It's amazing to travel in the UK and buy something at the supermarket. If it says ￡1, then that's the cost at the register.
Right now in the US, there's resort fees, booking fees, regulatory compliance fees, and on and on that all get added during checkout. It's so deceptive.
Hey, cool to see you post on HN. I started following you and your dad on YouTube during the pandemic.
It's been fascinating how you've (very intentionally) built your online following. Between social media vectors, the website, forums, paid tier access, pricing tools, and now insurance, you have quite the operation.
Other folks on HN should take notes on what you've accomplished so far.
Thank you for the kind words. We have so much more work to do! Trying to innovate in this industry is TOUGH. All of the incumbent business models are predicated on information asymmetry. We're having fun changing the way things work and sliding the scale in the consumers favor.
