I would regard "arms-length" as a situation where both buyer and seller are aware of other options in the market and there is no dirty dealing going on. To use your vehicle analogy, I recently purchased a new truck. I purchased the one with the fancy seats and all the bells and whistles, while being perfectly aware that I could have saved 20% on the cost of the truck had I purchased a more plain but functionally identical vehicle.

I wanted the fancy one, so I bought it.