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What's it worth? Murky
pricing hurts consumers January
2005 Executive
Summary Sidebars: Director Author Editor For
more information, contact: Kevin
Jewell, Rafael
Ayuso, Click here to find out more about manufactured housing.
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Sticker prices have often been discussed as a solution for the manufactured housing market – A 2003 consumer protection bill in North Carolina would have required sticker prices on all manufactured homes, but after opposition by the industry, was watered down before it passed to only apply to some homes.1 Despite the simplicity of sticker prices, they are not voluntarily prevalent today – only 26% of our Texas survey respondents said that prices had been posted when they shopped for their home. Sticker prices have been required in the automobile marketplace since the 1950s. At that time, problems with sales practices in the automobile market were threatening the health of what was one of the U.S.'s largest post-war industries. In response, the U.S. Senate Committee on Interstate and Foreign Commerce formed the Subcommittee on Automobile Marketing Practices to investigate and document the problems in the industry. The committee found dealers using various tactics to inflate the price of cars and prevent valid price comparison by consumers. Dealers packed on extra charges and manipulated trade-in values, among other things. The problems confronting the auto industry at the time led to the introduction of the "Automobile Information Disclosure Act," (AIDA) requiring sticker prices on new automobiles. The house report on the AIDA found these questionable practices were so prevalent that all dealers felt they were forced to use them to stay in business. 2 The same report found that, as result of the confusion and suspicion of the auto industry caused by these tactics, the industry suffered from a decrease in the demand for new cars. Although the bill was supported by the American Automobile Association, not everyone supported the final sticker price bill. The Department of Justice's comments on the Automobile Information Disclosure Act when it was filed foreshadowed the limitations of a non-binding price. "…[I]f the purpose of this bill is to protect the consumer, it would seem that most helpful information to the consumer would be either the price actually paid by the dealer or the excise tax from which the purchaser could easily calculate the price paid by the dealer." In today's auto market, it is standard advice to consumers to negotiate up from the invoice price rather than down from the sticker prices, which are often inflated to give dealers negotiation room. These invoice prices can be obtained through private pricing service, (such as Consumers Union's own Consumer Reports New Car Price Service), but such consumer services have not yet developed in the marketplace for manufactured homes. The limited size and regional variation of models in the manufactured housing market, as well as the difficulty of obtaining transaction prices, makes it more difficult for such market intermediaries to develop. It can perhaps be said that sticker prices didn't solve all the problems in the auto industry, but it did open up the market to some transparency, allowing consumers to easily compare the upper range of prices as well as the included options and specifications such as mileage. 1 Stradling, Richard, "Mobile home bill passes," The News & Observer, July 17th, 2003. |
 Consumers Union Offices: Communications Office, New York - Washington Office West Coast Office - Southwest Office - Consumer Policy Institute
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Fifty years of auto sticker pricing