See He Earns $1,000 a Job—and He’s a Car Dealer’s Worst Nightmare: With car prices soaring, one man deploys dealer speak to talk down the sticker price on behalf of buyers by Imani Moise of The WSJ.
What if you don't like haggling over the price of a car? Would you hire someone to do the haggling for you? You might if the price of the haggler is less than how much he was able to save you on the car. This makes sense since specialization is what raises output and our standard of living.
Excerpts:
"On this last business day of the month, he [Tomi Mikula] set a goal of closing 30 car purchases for the clients who had hired his firm as their professional negotiator."
Mikula "spent more than a decade selling cars and auto financing at dealerships. Now he deploys his fluency in car-dealer speak and his encyclopedic knowledge of dealer inventory to try to talk down the sticker prices."
"“You’re hiring a middleman to deal with the middleman to make the middleman more efficient,” he said."
"There are also high borrowing costs"
"Then there are add-ons like extended warranties, tire protection and GAP insurance that can inflate the final price by as much as 30%."
"Buyers who spend hours at a showroom start to feel like they have invested too much time to walk away."
"When a salesperson told him [Payam Amiri who studied Mikula’s videos] discounts would be slim because the model was popular, Amiri pulled up local inventory on his phone and pointed out that dozens of similar vehicles sat on lots within 50 miles. The discount got bigger."
"Mikula . . . approaches several dealerships to get quotes on the same car even if he gets a bargain on his first call. Pitting dealers against each other forces them to cut into their own margins to win business"
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See Creative Destruction by Richard Alm and W. Michael Cox. Excerpt:
"Joseph Schumpeter
(1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)Although Schumpeter devoted a mere six-page chapter to “The Process of Creative Destruction,” in which he described capitalism as “the perennial gale of creative destruction,” it has become the centerpiece for modern thinking on how economies evolve."
But also see this link which suggests that the idea goes back even before Schumpeter to other scholars: Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter by Hugo Reinert and Erik S. Reinert.
"Abstract
This paper argues that the idea of ‘creative destruction’ enters the social sciences by way of Friedrich Nietzsche. The term itself is first used by German economist Werner Sombart, who openly acknowledges the influence of Nietzsche on his own economic theory. The roots of creative destruction are traced back to Indian philosophy, from where the idea entered the German literary and philosophical tradition. Understanding the origins and evolution of this key concept in evolutionary economics helps clarifying the contrasts between today’s standard mainstream economics and the Schumpeterian and evolutionary alternative."
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