Race, sex bias found in new-car bargaining

December 14, 1990|By Chicago Tribune

CHICAGO -- Blacks and women are charged higher prices for new cars after dickering with dealers over the sticker price, according to a study that will be published in the February issue of the Harvard Law Review.

The first phase of the study, which sent individual testers to Chicago-area new-car dealers in a manner similar to fair-housing tests, found that white women were asked to pay, on average, $142 more for a car than white men. The price for black men was $421 more per car than for white men, and for black women it was $875 more. The testers did not actually buy the autos.

A second, larger test came up with similar results, except that black males were quoted slightly higher prices than black females.

The study's author suggested that the "pathology of the new-car marketplace" was the primary reason for the higher prices negotiated with blacks and women, not race and gender discrimination. Most dealers get 50 percent of their profits from 10 percent of their sales, he said, and are constantly looking for vulnerable customers.

"Bigotry is a contributing cause, but the leading explanation is that the dealers were trying to make money," said Ian Ayres, a research fellow at the American Bar Foundation, which sponsored the three-year study. "They're looking for suckers, people who will make a big contribution to the bottom line."

But a representative of Chicago-area new-car dealers urged caution in drawing conclusions from the findings of discrimination.

"There's a difference between a shopping price and a buying price," said Jerry Cizek, executive vice president of the Chicago Automobile Trade Association, which represents 700 new-car dealers in the area. "These testers were in a shopping mode."

Mr. Ayres, who teaches at Northwestern University's law school, offered several reasons why dealers might be more likely to treat blacks and women as "suckers." He cited a Consumer Federation of America study that showed blacks and women were less likely to know they can bargain over a sticker price, for instance.

He also suggested that blacks, because of lower incomes and restricted housing opportunities, are more likely to have fewer choices when shopping for new cars, and dealers catering to a black clientele realize that. "Dealers believe there are more high-markup consumers among blacks, so they treat all blacks that way," he said.

The foundation is an independent arm of the American Bar Association that does research on the law, legal institutions and legal processes.

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