Blacks and women were often discriminated against by Chicago area car dealers, who generally offered better prices for the same cars to white males, according to a study to appear in the February issue of Harvard Law Review.
The report, based on a two-part study of 90 car dealerships, said dealers are likely to reap two to three times higher profits from black men and women than they get from white men on the same car. White women generally give dealers a 50 percent higher profit than white men, according to the report commissioned by the American Bar Foundation.
The study suggests that the profit motive rather than discrimination may provide the impetus for the unequal treatment of blacks and women, because dealers feel they are more likely to be "suckers," said Ian Ayres, an assistant professor at the Northwestern University School of Law and author of the report. "Although blacks and women as a group are poorer than white males, the dealers may be making inferences about the differences in their knowledge about the car market and their willingness to bargain," Ayres said.
The study employed black and white test buyers who had identical educational and economic backgrounds and identical training in negotiating new-car sales deals. In the first phase of the study, one black man, one black woman, one white woman and three white men were sent to the same dealers to buy the same car.
Based on final offers gleaned from 165 visits in the first phase, the average dealer would have made a profit on transactions with the white male testers of $362, compared with $504 for the white woman, $783 for the black man and $1,237 for the black woman. No cars were actually purchased.
A follow-up survey involving 400 visits and 36 test buyers yielded similar statistical results, said Ayres.
"The testers used the same bargaining strategy with equal aggressiveness," Ayres said.
The discrimination found in the study wasn't practiced only by white males. In fact, the study's testers were likely to get the worst deals from people of their own race and gender, Ayres said.
Freddye "Action" Jackson, who is black and part owner of Brown Lincoln-Mercury in Fairfax, said such discrimination is commonplace.
"It's absolutely true," Jackson said of the findings in Ayres's report. "I've seen women come into showrooms who had read all of the consumer reports, all of the car buff books, who knew exactly what they wanted to buy and what they wanted to pay," Jackson said. "There is a mind-set among some salesmen that women and black people aren't very knowledgeable, and those salesmen will dicker and play games with them longer than they do with white men, especially white-collar white men."
Jackson earlier this year was stung by charges that he was anti-semitic because he promoted a "Christian Buyers Plan" that offered special deals to people who belonged to Christian churches.
Several other local auto salespeople, including a former auto saleswoman who is black, said the tendency of many of their peers is to prejudge car shoppers.
"We used to like black professionals to come in because they seemed to take pride in their ability to pay a higher price. It was almost as if they were ashamed to bargain," said the onetime saleswoman, who had sold BMW and Honda cars.
Certainly, car salespeople routinely stereotype potential buyers entering their showrooms or sales lots, said Darrell Parrish, author of "The Car Buyer's Art," a book on the often arcane world of retail auto sales.
"The car salesman's foremost talent ... is his ability to know people," Parrish wrote. "When involved in a bargaining session, he must not only be able to spot the most insignificant signs of fear and indecision in the buyer, but he must be able to capitalize on them at once -- taking control, leading his unsuspecting consumer through a planned sequence of events, which in the end will relieve the buyer of the maximum amount of dollars in exchange for an automobile."
But the study's conclusions were questioned by representatives of the nation's auto dealer business.
"My concern is that this study does not represent typical buying situations," said Frank E. McCarthy, executive vice president of the McLean-based National Automobile Dealers Association, which represents 20,000 of the country's franchised new-car dealers. Thirty percent of NADA's 425-member staff are black or other minorities, "and any one of them can go out and negotiate a good deal if given basic information on how to buy a new car," McCarthy said.
Key to that "basic information" is comparison shopping -- looking at the same car at several different dealers before deciding to buy, McCarthy said.
"My concern is that the testers in the Chicago study didn't comparison shop and didn't negotiate to get their deals down low," McCarthy said.