CAR BUYERS REJECT FIXED SELLING PRICE : NUMBER OF NO-HAGGLING DEALERS DOWN SHARPLY IN U.S. SINCE '94.

Byline: Keith Bradsher The New York Times

Mark Smith was following the hottest trend in the auto industry two years ago when he plastered low, fixed prices on the cars and trucks at his family's Ford dealership and banned haggling by his sales staff.

But the result was not what the auto executives in Detroit or the high-priced dealership consultants predicted.

For every customer who came in eager to dispense with the traditional, time-consuming and often distasteful dickering, there were four or five others who insisted on trying to knock several hundred dollars off the sticker price. When the salespeople refused to budge, the customers stalked off.

So Smith abandoned fixed prices on his new cars last winter. The dickering resumed, and the dealership captured a bigger share of sales in the Kansas City market.

``They've improved enough that we're not thinking of going back,'' Smith said.

One of the most trumpeted trends in automobile retailing in years - fixed-price, ``no haggle'' new-car dealerships - is quietly in decline, according to dealers, automakers and consultants.

Despite all the complaints from car buyers about haggling, it turns out that many people actually enjoy bargaining and fear they will pay too much if they don't. Dealers found that setting fixed prices backfired when rival dealers ruthlessly undercut them.

John Campbell, a Saturn dealer in Santa Ana, recently sold his fixed-price Ford and Mazda dealerships, where he had expected customers to like the convenience.

``A bunch of us thought people would be willing to pay an extra hundred bucks'' for the convenience of fixed prices, Campbell said. ``We found that didn't prove to be the case.''

Fixed-price dealers do slightly better in rural areas where there are few dealers to undercut them. The consensus of Chrysler dealers, said Robert Eaton, the chairman and chief executive of Chrysler Corp., is that ``one price works better when you don't have dealerships selling the same product quite close.''

About 2,000 of the 23,000 new-car dealerships in the United States had one-price strategies in 1994. Only 1,000 to 1,200 still do, according to Mark Rikess, a consultant based in Los Angeles.

Surveys by Dohring Co., a market-research company in Glendale, have found that the proportion of Americans preferring dealers who negotiate prices has climbed sharply in the last three years.

``Automotive consumers need to feel that they get a good deal when they purchase a vehicle, and, for most, the only way they feel that they can get a good deal is through negotiation,'' a new report by Dohring concludes.

``Thus the trend is toward more buyers preferring to negotiate their vehicle purchases, and while one-price selling will likely not disappear, it will remain the preference of a decreasing minority of car buyers.''

A surprising number of customers at dealerships in Kansas City actually say that they do not trust no-dicker stickers.

``I'd much rather negotiate. I feel like I'd get a better deal,'' Marilyn Murdock said as she shopped recently at Platte City Ford, just north of Kansas City, for a replacement for her 1985 Cadillac Fleetwood. ``I need a low-end car. I don't want to pay a lot of money.''

Though Saturn, a division of General Motors Corp., still requires fixed-price selling by all of its dealers, the withering of the trend in other car lines has disappointed auto executives.

Automakers are barred by law from owning dealerships, and the business practices at some traditional dealerships have long dismayed auto executives. They fear that customers with bad experiences in making purchases will blame them on the manufacturer.

John F. Smith Jr., GM's chairman and chief executive, predicted in early 1994 that fixed-price dealers would bring credibility to the industry. ``Right now the pricing can be all over the lot - low price to high price,'' he said at the time. ``The customer's uncertain and can be scared by the process.''

But Chevrolet, GM's biggest car line, has found that many dealers tried fixed prices for only a few weeks before switching back. Even among dealers who tried fixed prices for six months, considered the minimum period necessary for a serious test, at least half have switched back, said Ronald Sobrero, Chevrolet's general sales and service manager.

GM is now pinning its hopes on what it calls value pricing, heavily advertising vehicles laden with popular option packages that are offered at discounts. The discount shaves the profit a dealer can expect per car in return for the promise of more sales. While the slimmer margin leaves less room to dicker, dealers and shoppers are free to haggle on a final price.

Dealers who engage in fixed-price selling, on the other hand, set their prices below the recommended prices from the manufacturers. The size of the discount depends on the popularity of the model, and no bargaining is allowed.

Some advocates of fixed-price selling contend that other trends in auto retailing are making it less important. Customers lease a fifth of all new cars, and many do not try to bargain on lease rates even though it may be possible.