Are You Being Taken For A Ride? - Black Enterprise

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Black Enterprise Magazine July/August 2018 Issue

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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 dealerfinanced 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’

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