April 13, 2007
BrainTrust Query: Why don’t car dealers just give people the price?
By Mark Lilien, Consultant, Retail Technology Group
This is Auto Show season, so here’s how I bought my new car recently.
I
decided to buy either a Subaru or a Suzuki, whichever price came in lowest.
Using the two manufacturers’ websites, I called the closest 19 Suzuki and 30
Subaru dealers (all within an hour of my home) to get their fax numbers. Each
dealer received a single-page fax listing the model, color, and three dealer-installed
options requesting their best cash price faxed back to me (as in “net price,” including freight, fees, prep, plates, etc.). Faxes were sent the morning of January 30th, assuming everyone would be under maximum pressure to achieve their monthly sales goal.
I figured it’s easier to spend three hours faxing than 100 hours visiting dealers.
The results?
Of the 49 dealers, 19 responded: 13 Subaru and six Suzuki. Exactly one dealer (Suzuki) faxed a typed business letter listing exactly what I wanted, with the price. Everyone else faxed me invoices with handwritten comments, various handwritten forms, business cards, etc. Numerous dealers called me on the phone and wanted to know when I’d “come in.”
Of the six Suzuki faxes:
Four omitted the options. Four omitted the taxes. One fax listed two different prices for the same car on the same page. I asked one salesperson why he didn’t include the options prices. First, he said that the options were “parts” and parts were another department. When we discussed this further, he said Suzuki customers usually wanted the cars stripped, so options weren’t a consideration.
Of the 13 Subaru faxes:
Eight omitted the options. Like the Suzuki dealerships, all three options are dealer-installed. One Subaru dealer told me, “We don’t get involved in that” when I asked about the options. Six omitted the taxes. One fax listed two different models, both incorrect.
The low-price winner? A Subaru dealer who phoned. I asked him to submit a fax, and he did. He omitted the options, but after I mentally added them at the list price, I knew he’d win. When I came in that evening to leave a deposit, the salesman turned out to be a fellow with six weeks on the job.
He had a loose-leaf notebook with third-generation grayed-out copies of the options prices, and those prices were less than the ones on the Subaru site. He didn’t know if the prices on the copies included labor. He hadn’t seen the brand’s web site, so I took him through it, showing him how it automatically priced the options. Since he didn’t know what to charge for the options, and he was alone (the boss doesn’t work nights and neither do the parts or service departments), we agreed to use the web price and signed a deal.
Discussion Questions: Are most car shoppers today simply bargain hunters looking to come out ahead on negotiations? Or are most satisfied with getting a fair price acknowledging that car dealers and salespeople have a right/need to make money? Would car dealers be better off having faith in the basic decency of consumers or do they need to approach selling as if the shopper is a sort of enemy?
The golden rule of sales: treat each shopper the way they’d like to be treated. Of the 19 dealers, only one gave me the information requested, which was extremely basic: what’s the price?
What caused the poor salesmanship? I doubt the cause was a conscious attempt at manipulation, since 19 dealers actually did respond. The other 30 dealers either didn’t have the inventory (unlikely) and/or don’t want price shoppers. Was it basic contempt for the customer? Sloppiness from poor training? Not having simple “How To Price A Car” software? Overwork from too much customer traffic? Recruiting and screening folks with poor empathy for the customer? Why spend time responding when the response is inappropriate?
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Auto franchise dealers are caught in a time warp. They have learned only one way to conduct business and have trained the consumer to do business their way. When I am unfortunate enough to be caught in front of the TV when a dealership ad airs, I am bombarded by trite, loud, often condescending and obnoxious messages that are the very same ones that I heard 25 years ago. Reinvention is necessary for survival in every retail business it seems, except the auto trade. Commodity businesses definitely have an edge when it comes to dictating the rules of the game. Cars are a necessary commodity in the USA–our lifestyle and infrastructure demand personal mobility.
A purchase which for most people is the second largest single deal they’ll ever make has become an adversarial process characterized by manipulative selling, incomprehensible pricing, and sketchy ethics. All this in an attempt to upsell, oversell and cap the sale with expensive, low-value add-ons and the highest interest rates possible.
Why not make the process fun, informative, straightforward and exciting? Size me up if you wish, but then you’d better be able to personalize your approach to my level and not treat me as you would your lowest common denominator. Heck, if you do, I might even come back the next time I need a vehicle.
I wonder if their method of selling their cars had any effect at all on the horrible performance of the domestic big three? Think they could connect those dots?
While helping a VW dealership and a Honda dealership revamp their marketing plans a couple of years ago, I learned a lot. One thing I learned was that there are two basic types of dealers: Those who sell on price, using aggressive internet selling techniques and phone banks, and those who don’t. Those who sell on price have the volume advantage, but attract business from so far away that they often fail to secure the long-term, very lucrative, manufacturer-supported warranty repair/service business. Those who don’t sell on price get more than their share of the warranty business and of general repair and parts business. (And if you don’t think this business is meaningful, consider all the competitors for it, including stores that sell tires, brakes, mufflers, oil changes, transmission service, smog tests, body repair, and parts.)
The holy grail for profitability in the car business, however, is financing. That’s where my VW and Honda clients made most of their money, followed by parts & service, used car sales, and new car sales.
I suspect that of those car dealers that didn’t respond to Mark Lilien’s faxes, most were non-price or non-volume stores. They knew they couldn’t match prices with the high-volume stores that sell on price. Mark further eliminated some dealers who figured they’d never get any of Mark’s warranty work because he lived too far away (they had to know his location to calculate the tax figure he requested). And finally, Mark eliminated even more dealers because he asked for a cash price, indicating that they’d get no financing revenue from him. In other words, he automatically eliminated the top two revenue generators for the dealers he contacted.
Ummm…remember Saturn? Not the Saturn of today, but the fuzzy, friendly, original Saturn. They had a no-haggle price, and, for better or for worse, people knew what they’d spend on a new vehicle. Then GM ruined everything, but that’s another story….
Each major segment of consumer goods has its own pricing scheme. Gasoline prices fluctuate EVERY DARNED DAY, and we expect EDLPs at certain stores.
Automobile dealers all are willing to wiggle the prices because the distribution model does not support manufacturer pricing. It’s dependent on the “cowboy” dealer who is his own boss but creates utter confusion among salespeople. The reality is that no one knows what to charge. No one knows the true costs or markups or how to cut through the crappy advertising and connect with the target market.
The answer depends on what kind of car buyer you are to start with. Car buying is a highly involved and invested process for most of us–with buyers like Mark (who appears to be very utilitarian in his approach) probably not the norm. Sometimes even the same buyer approaches different purchases very differently. Shopping for the commuter car is one thing. Searching for that dream convertible or that 1969 Corvette you’ve always wanted is a whole different deal!
Dealers know this and that’s why they want a chance to “size you up.” Assuming you are working with a professional dealership, the salesman will determine your motivations pretty quickly. Demonstrating you are an informed and disciplined buyer is key to getting the best deal. I never buy a car without leaving the dealership at least once.
But let’s flip the perspective here for a moment. We typically chastise sales reps for relying on price as their only weapon. Tomes are published on how to make a “value-added” (i.e. more profitable) sale. So why do we chastise the car dealer for trying to do just that?
Being a car salesman is a difficult job with very high turnover. Their income depends upon them not just selling you a car at the highest price possible but also to sell you worthless add-ons with no value such as rustproofing, extended warranties, and making you pay a higher interest rate than you deserve. A patient car buyer who is willing to put up with all the headaches as the sales people go through the motions, will eventually find that the sales people give in when they realize you know the invoice price, dealer holdbacks and incentives, you are smart enough to finance on your own, and you don’t want any phony extras.
My advice is to research exactly what the dealer needs to break even, shop at the end of the month, don’t be in a hurry, demand a price and tell the dealer that you want the price to be so low that when you take it to their competitor, the competitor will refuse to match or beat the price. Tell the dealer you have every intention of buying the car but only after their competitors refuse to beat their offer. In order to make all makes and models apples to apples, I suggest a price such as 2 or 3 percent below dealer invoice cost. Make sure you see the dealer invoice and that the VIN numbers match up. If they won’t show it to you, walk out and go someplace else.
Your goal should be that the dealer will lose money and that the salesman only gets the minimum commission. If they make you play the wait game, throw it back at them and waste their time as well. Eventually they will do anything to sell you a car and get you out of the dealership.
Anybody who doesn’t shop just on price is a darn fool. Cars are commodities, pure and simple. I think car salesmen are mostly fired supermarket clerks, perhaps even another life form. Why is every car ad really, really stupid? I try hard not to stigmatize, but car dealers are pretty much all alike. I just don’t get it. The last car I bought, my wife and I did a major web search and a lot of phone calling, and bought a car from a dealer that was 100 miles away. We do not get it serviced at the local dealership, which is a rip-off, choosing instead to get it serviced at a repair shop we’ve come to trust. (Perhaps it’s no coincidence that the shop also does all the state police cars.)
There are a lot of factors at work here; selling cars at retail is in fact different in many ways. But the basic rule still applies: you’re losing sales if you don’t put the customer first.
Good story, Mark–enjoy the car!
The majority of respondents are in some way retailers or consultants. And you only shop on price. So it’s do one thing in your personal life and yet I assume you tell your clients something else. Hmmm. Like someone griping about a big-box retailer coming in and stealing sales but going to Costco for supplies. You can’t have it both ways. You want support, you give support.
I think you can get any experience you want in retail–it is up to you.
My consistent message to clients is to raise prices to differentiate, walk away from the sale if you can’t make a profit, and train your sales staff to make it memorable. And that is who I do business with. You can’t have it both ways and be credible.
Having had five of the major car manufactures as customers, I don’t think you are being entirely fair to car dealerships. I have done many focus groups, training seminars and interviews with dealership staff. By and large they do understand the importance of customer satisfaction. They also understand that most of the margin these days comes from service and not sales.
If you build a relationship with your local dealer, you will be amazed at how they treat you. Tell the sales person it is your X car at that dealership and that you do your repair work there and they will treat you very well. All of a sudden, when you buy your next car, loaners with under 2,000 miles will be offered at huge discounts and new car financing. Like any business, they treat their most profitable customers very differently than a bargain shopper they will never see again.
Remember dealership sales people work in an environment in which most people who walk in the door do so with the assumption that the sales person is dishonest and inept. Unlike the vast majority of workers, they are willing to bet their livelihood on their ability to succeed at their job. Like any good sales person, they will try to size you up and adjust their approach accordingly. Walk in with a print out of their invoice and focus only on price and you will get a very different experience than presenting your self as a car enthusiast.
A car purchase is very stressful for most people so it is also memorable. There are good and bad car sales people much like any other industry. How many desserts have you purchased after a meal knowing it is actually bad for your health, simply because a waiter sold it to you?
There is a great analogy to this discussion. Many of us have to travel in our jobs and are experiencing the recent difficulties as the airlines try to figure out how to cope with higher fuel prices. I overheard one flyer complaining about the airline services when another responded “you get what you pay for….”
I have thought about that conversation a lot. Are consumers just shooting themselves in the foot when they merely shop price? Is there a better way retailers can quantify their service performance in such a way that it makes the car sale merely the initiation of a three year relationship (assuming a lease)? Or have the dealers shot themselves in the foot with lease programs that make the customer relationship too short for them to consider anything but price? When customers purchase their own vehicle that service period is a significant consideration.
As our economy becomes more and more “service oriented” how do we measure the quality of services? For that matter, I always wonder how the government calculates productivity figures in an economy that is primarily services based.
I recently went through a purchase decision with a friend. In this case she conducted it over the internet. Price was a big consideration, but so were the courtesy car options and the customer testimonials on the service department. She did not choose the lowest price. The final decision came down to the dealer with a good service reputation and a “reasonable price.” She has not regretted the decision.
Actually, there is a thriving “no haggle” way of buying a car. Car buying services such as those offered by COSTCO take the hassle out of the car-buying experience. It’s admittedly not the lowest price that a determined haggler (who often puts little or no value on his time) might extract after dealing with numerous dealerships.
The upside is that prices are pre-negotiated and there are consequences for the dealership if they engage in inappropriate selling practices once the COSTCO member is in the dealership.
I’ve purchased several cars this way. Typical time required 30 minutes (e.g. initial visit to COSTCO web site, 1 phone call to/from the dealership rep to schedule appointment, 1 visit to dealership to sign the paperwork). Doesn’t get much less painless than that.
Buying a car is by no means an investment. Consumers are not under any obligation to provide anyone with a profit. In this day and age all dealer costs are available over the internet and any capable consumer can determine within $100 exactly what a dealer has invested in any inventory. A decision to go with the lowest price will in 99% of the situations be the best solution for the consumer. I would encourage everyone to consider buying used inventory rather than new. Certain models depreciate sharply in the first year or two. With regard to salesmanship at car dealers, there are many factors in the lack of service that was experienced. Dealerships are finding it increasingly difficult to make a profit and don’t pay any more than they have to. Sales people are usually heavily commissioned, but don’t have any real authority at a dealership. Their job is to detain a prospective customer with promises until a proposition can be presented to the sales manager. The sales manager is actually the party who determines the deal that the consumer receives. This applies to walk-in traffic and FAX communication is routed to this “Walk in” SERVICE system. This should partially explain why you received such shoddy service. Most dealerships now have an internet sales department. I believe you would have gotten better results had you taken a little extra time and dealt with the internet sales arm of the dealerships.
To me the fascinating part of this story is not the insanity pricing in the car business (stipulated) but the incredibly inept sales force that, across a wide range of dealers, cannot answer a question from a customer.
I have a similar-but-different experience. I long ago decided never to buy a brand-new car again. Instead, I shop for a car that is two model years old and has less than 30,000 miles. I always select the car make and model and the minimum I want for equipment and then look for a car that matches my intentions most closely. I never buy at a probate sale, only from dealerships with repair facilities, etc.
In the old days, before the internet, this was a tedious process that involved “dropping by” a LOT of car dealerships. Late model low mileage used cars are not all that hard to sell, so the inventory moves fairly fast, and being at the right place at the right time wasn’t always easy.
Inevitably, I would be greeted by a salesperson. I would describe EXACTLY what I wanted, and if they didn’t have one on hand, I would get a business card, give them my card in return, and ask them to call me if one came in that might match my needs.
I did this for 20 years. Not one salesman EVER called. Not one. Ever. I could re-visit the dealer and see a car that matched my preferences, and often the same salesperson would come out and usually have no recollection of who I was, and in two decades not one salesperson (in two different states, I might add) ever called me back and sold me a car.
With the internet, I don’t need them anymore. But the quality of salesmanship out there is and has long been pretty dismal.
Shopping to negotiate and purchase a new car can be very time consuming, however, it’s probably still to the consumer’s advantage that all car dealers don’t publish an exact price. The competition between dealers is what ultimately brings the ultimate price to the most competitive sum. For those that prefer to bypass the negotiation process, the online purchasing option works pretty well. Personally, I love the ordeal of buying new cars!
Car Salespeople are no different than any other salespeople–insert whatever stereotype you want here ________.
The crux of the issue is customer service and integrity, not price. Everyone is out to make a buck while saving a buck, that is what makes the world of commerce go around and why many of us are even taking the time to subscribe to and read RetailWire.
Typically, I buy where I get the best possible customer service, even if it costs a little more on occasion. Find the right group of people to deal with and the cost becomes negotiable without feeling like a negotiation. I purchased my last two new cars from the same salesperson, as a direct result of the first experience and excellent customer service. Guess what–the price of the second car beat the competitors–without haggling….
Price shopping contributes to miserable experiences and horrible service because if it only comes down to price, who cares?
Car sales is yet another career choice in transition thanks to the internet (add to that, realty…here comes zillow.com). The internet is to these positions as mass retail is to Mom and Pop stores: an irreversibly commotidized, low-margin, frustrating business! I really do feel for the guys and gals out there spending hours and sometimes days with heavily-armed (with information) shoppers daring them to take deals with the promise of $100.00 in commission. That said, I’ve purchased my last two cars via the internet; a move that often immediately links you up with a dealership’s much less smarmy “internet” sales representative; a guy or gal who won’t try to coax you in for a chat and who knows that you’re history if they don’t move fast and at an aggressive price. One dealership’s “No way!” is another’s “When can you come by and did you say you had cash?” I’ve paid under invoice since I could click. The consumer is the enemy here, I’m afraid.
Basic marketing. You keep your price secret until the other person reveals what they’ll pay.
Problem with your fax was that dealers had to reveal their price, while you didn’t have to buy. Automated faxing is very easy to do and I’m sure by now car dealers are on to it. Your “offer” wasn’t real.
Only fair thing would be a computerized stock market type system. You make an offer, it’s binding.
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Auto franchise dealers are caught in a time warp. They have learned only one way to conduct business and have trained the consumer to do business their way. When I am unfortunate enough to be caught in front of the TV when a dealership ad airs, I am bombarded by trite, loud, often condescending and obnoxious messages that are the very same ones that I heard 25 years ago. Reinvention is necessary for survival in every retail business it seems, except the auto trade. Commodity businesses definitely have an edge when it comes to dictating the rules of the game. Cars are a necessary commodity in the USA–our lifestyle and infrastructure demand personal mobility.
A purchase which for most people is the second largest single deal they’ll ever make has become an adversarial process characterized by manipulative selling, incomprehensible pricing, and sketchy ethics. All this in an attempt to upsell, oversell and cap the sale with expensive, low-value add-ons and the highest interest rates possible.
Why not make the process fun, informative, straightforward and exciting? Size me up if you wish, but then you’d better be able to personalize your approach to my level and not treat me as you would your lowest common denominator. Heck, if you do, I might even come back the next time I need a vehicle.
I wonder if their method of selling their cars had any effect at all on the horrible performance of the domestic big three? Think they could connect those dots?
While helping a VW dealership and a Honda dealership revamp their marketing plans a couple of years ago, I learned a lot. One thing I learned was that there are two basic types of dealers: Those who sell on price, using aggressive internet selling techniques and phone banks, and those who don’t. Those who sell on price have the volume advantage, but attract business from so far away that they often fail to secure the long-term, very lucrative, manufacturer-supported warranty repair/service business. Those who don’t sell on price get more than their share of the warranty business and of general repair and parts business. (And if you don’t think this business is meaningful, consider all the competitors for it, including stores that sell tires, brakes, mufflers, oil changes, transmission service, smog tests, body repair, and parts.)
The holy grail for profitability in the car business, however, is financing. That’s where my VW and Honda clients made most of their money, followed by parts & service, used car sales, and new car sales.
I suspect that of those car dealers that didn’t respond to Mark Lilien’s faxes, most were non-price or non-volume stores. They knew they couldn’t match prices with the high-volume stores that sell on price. Mark further eliminated some dealers who figured they’d never get any of Mark’s warranty work because he lived too far away (they had to know his location to calculate the tax figure he requested). And finally, Mark eliminated even more dealers because he asked for a cash price, indicating that they’d get no financing revenue from him. In other words, he automatically eliminated the top two revenue generators for the dealers he contacted.
Ummm…remember Saturn? Not the Saturn of today, but the fuzzy, friendly, original Saturn. They had a no-haggle price, and, for better or for worse, people knew what they’d spend on a new vehicle. Then GM ruined everything, but that’s another story….
Each major segment of consumer goods has its own pricing scheme. Gasoline prices fluctuate EVERY DARNED DAY, and we expect EDLPs at certain stores.
Automobile dealers all are willing to wiggle the prices because the distribution model does not support manufacturer pricing. It’s dependent on the “cowboy” dealer who is his own boss but creates utter confusion among salespeople. The reality is that no one knows what to charge. No one knows the true costs or markups or how to cut through the crappy advertising and connect with the target market.
The answer depends on what kind of car buyer you are to start with. Car buying is a highly involved and invested process for most of us–with buyers like Mark (who appears to be very utilitarian in his approach) probably not the norm. Sometimes even the same buyer approaches different purchases very differently. Shopping for the commuter car is one thing. Searching for that dream convertible or that 1969 Corvette you’ve always wanted is a whole different deal!
Dealers know this and that’s why they want a chance to “size you up.” Assuming you are working with a professional dealership, the salesman will determine your motivations pretty quickly. Demonstrating you are an informed and disciplined buyer is key to getting the best deal. I never buy a car without leaving the dealership at least once.
But let’s flip the perspective here for a moment. We typically chastise sales reps for relying on price as their only weapon. Tomes are published on how to make a “value-added” (i.e. more profitable) sale. So why do we chastise the car dealer for trying to do just that?
Being a car salesman is a difficult job with very high turnover. Their income depends upon them not just selling you a car at the highest price possible but also to sell you worthless add-ons with no value such as rustproofing, extended warranties, and making you pay a higher interest rate than you deserve. A patient car buyer who is willing to put up with all the headaches as the sales people go through the motions, will eventually find that the sales people give in when they realize you know the invoice price, dealer holdbacks and incentives, you are smart enough to finance on your own, and you don’t want any phony extras.
My advice is to research exactly what the dealer needs to break even, shop at the end of the month, don’t be in a hurry, demand a price and tell the dealer that you want the price to be so low that when you take it to their competitor, the competitor will refuse to match or beat the price. Tell the dealer you have every intention of buying the car but only after their competitors refuse to beat their offer. In order to make all makes and models apples to apples, I suggest a price such as 2 or 3 percent below dealer invoice cost. Make sure you see the dealer invoice and that the VIN numbers match up. If they won’t show it to you, walk out and go someplace else.
Your goal should be that the dealer will lose money and that the salesman only gets the minimum commission. If they make you play the wait game, throw it back at them and waste their time as well. Eventually they will do anything to sell you a car and get you out of the dealership.
Anybody who doesn’t shop just on price is a darn fool. Cars are commodities, pure and simple. I think car salesmen are mostly fired supermarket clerks, perhaps even another life form. Why is every car ad really, really stupid? I try hard not to stigmatize, but car dealers are pretty much all alike. I just don’t get it. The last car I bought, my wife and I did a major web search and a lot of phone calling, and bought a car from a dealer that was 100 miles away. We do not get it serviced at the local dealership, which is a rip-off, choosing instead to get it serviced at a repair shop we’ve come to trust. (Perhaps it’s no coincidence that the shop also does all the state police cars.)
There are a lot of factors at work here; selling cars at retail is in fact different in many ways. But the basic rule still applies: you’re losing sales if you don’t put the customer first.
Good story, Mark–enjoy the car!
The majority of respondents are in some way retailers or consultants. And you only shop on price. So it’s do one thing in your personal life and yet I assume you tell your clients something else. Hmmm. Like someone griping about a big-box retailer coming in and stealing sales but going to Costco for supplies. You can’t have it both ways. You want support, you give support.
I think you can get any experience you want in retail–it is up to you.
My consistent message to clients is to raise prices to differentiate, walk away from the sale if you can’t make a profit, and train your sales staff to make it memorable. And that is who I do business with. You can’t have it both ways and be credible.
Having had five of the major car manufactures as customers, I don’t think you are being entirely fair to car dealerships. I have done many focus groups, training seminars and interviews with dealership staff. By and large they do understand the importance of customer satisfaction. They also understand that most of the margin these days comes from service and not sales.
If you build a relationship with your local dealer, you will be amazed at how they treat you. Tell the sales person it is your X car at that dealership and that you do your repair work there and they will treat you very well. All of a sudden, when you buy your next car, loaners with under 2,000 miles will be offered at huge discounts and new car financing. Like any business, they treat their most profitable customers very differently than a bargain shopper they will never see again.
Remember dealership sales people work in an environment in which most people who walk in the door do so with the assumption that the sales person is dishonest and inept. Unlike the vast majority of workers, they are willing to bet their livelihood on their ability to succeed at their job. Like any good sales person, they will try to size you up and adjust their approach accordingly. Walk in with a print out of their invoice and focus only on price and you will get a very different experience than presenting your self as a car enthusiast.
A car purchase is very stressful for most people so it is also memorable. There are good and bad car sales people much like any other industry. How many desserts have you purchased after a meal knowing it is actually bad for your health, simply because a waiter sold it to you?
There is a great analogy to this discussion. Many of us have to travel in our jobs and are experiencing the recent difficulties as the airlines try to figure out how to cope with higher fuel prices. I overheard one flyer complaining about the airline services when another responded “you get what you pay for….”
I have thought about that conversation a lot. Are consumers just shooting themselves in the foot when they merely shop price? Is there a better way retailers can quantify their service performance in such a way that it makes the car sale merely the initiation of a three year relationship (assuming a lease)? Or have the dealers shot themselves in the foot with lease programs that make the customer relationship too short for them to consider anything but price? When customers purchase their own vehicle that service period is a significant consideration.
As our economy becomes more and more “service oriented” how do we measure the quality of services? For that matter, I always wonder how the government calculates productivity figures in an economy that is primarily services based.
I recently went through a purchase decision with a friend. In this case she conducted it over the internet. Price was a big consideration, but so were the courtesy car options and the customer testimonials on the service department. She did not choose the lowest price. The final decision came down to the dealer with a good service reputation and a “reasonable price.” She has not regretted the decision.
Actually, there is a thriving “no haggle” way of buying a car. Car buying services such as those offered by COSTCO take the hassle out of the car-buying experience. It’s admittedly not the lowest price that a determined haggler (who often puts little or no value on his time) might extract after dealing with numerous dealerships.
The upside is that prices are pre-negotiated and there are consequences for the dealership if they engage in inappropriate selling practices once the COSTCO member is in the dealership.
I’ve purchased several cars this way. Typical time required 30 minutes (e.g. initial visit to COSTCO web site, 1 phone call to/from the dealership rep to schedule appointment, 1 visit to dealership to sign the paperwork). Doesn’t get much less painless than that.
Buying a car is by no means an investment. Consumers are not under any obligation to provide anyone with a profit. In this day and age all dealer costs are available over the internet and any capable consumer can determine within $100 exactly what a dealer has invested in any inventory. A decision to go with the lowest price will in 99% of the situations be the best solution for the consumer. I would encourage everyone to consider buying used inventory rather than new. Certain models depreciate sharply in the first year or two. With regard to salesmanship at car dealers, there are many factors in the lack of service that was experienced. Dealerships are finding it increasingly difficult to make a profit and don’t pay any more than they have to. Sales people are usually heavily commissioned, but don’t have any real authority at a dealership. Their job is to detain a prospective customer with promises until a proposition can be presented to the sales manager. The sales manager is actually the party who determines the deal that the consumer receives. This applies to walk-in traffic and FAX communication is routed to this “Walk in” SERVICE system. This should partially explain why you received such shoddy service. Most dealerships now have an internet sales department. I believe you would have gotten better results had you taken a little extra time and dealt with the internet sales arm of the dealerships.
To me the fascinating part of this story is not the insanity pricing in the car business (stipulated) but the incredibly inept sales force that, across a wide range of dealers, cannot answer a question from a customer.
I have a similar-but-different experience. I long ago decided never to buy a brand-new car again. Instead, I shop for a car that is two model years old and has less than 30,000 miles. I always select the car make and model and the minimum I want for equipment and then look for a car that matches my intentions most closely. I never buy at a probate sale, only from dealerships with repair facilities, etc.
In the old days, before the internet, this was a tedious process that involved “dropping by” a LOT of car dealerships. Late model low mileage used cars are not all that hard to sell, so the inventory moves fairly fast, and being at the right place at the right time wasn’t always easy.
Inevitably, I would be greeted by a salesperson. I would describe EXACTLY what I wanted, and if they didn’t have one on hand, I would get a business card, give them my card in return, and ask them to call me if one came in that might match my needs.
I did this for 20 years. Not one salesman EVER called. Not one. Ever. I could re-visit the dealer and see a car that matched my preferences, and often the same salesperson would come out and usually have no recollection of who I was, and in two decades not one salesperson (in two different states, I might add) ever called me back and sold me a car.
With the internet, I don’t need them anymore. But the quality of salesmanship out there is and has long been pretty dismal.
Shopping to negotiate and purchase a new car can be very time consuming, however, it’s probably still to the consumer’s advantage that all car dealers don’t publish an exact price. The competition between dealers is what ultimately brings the ultimate price to the most competitive sum. For those that prefer to bypass the negotiation process, the online purchasing option works pretty well. Personally, I love the ordeal of buying new cars!
Car Salespeople are no different than any other salespeople–insert whatever stereotype you want here ________.
The crux of the issue is customer service and integrity, not price. Everyone is out to make a buck while saving a buck, that is what makes the world of commerce go around and why many of us are even taking the time to subscribe to and read RetailWire.
Typically, I buy where I get the best possible customer service, even if it costs a little more on occasion. Find the right group of people to deal with and the cost becomes negotiable without feeling like a negotiation. I purchased my last two new cars from the same salesperson, as a direct result of the first experience and excellent customer service. Guess what–the price of the second car beat the competitors–without haggling….
Price shopping contributes to miserable experiences and horrible service because if it only comes down to price, who cares?
Car sales is yet another career choice in transition thanks to the internet (add to that, realty…here comes zillow.com). The internet is to these positions as mass retail is to Mom and Pop stores: an irreversibly commotidized, low-margin, frustrating business! I really do feel for the guys and gals out there spending hours and sometimes days with heavily-armed (with information) shoppers daring them to take deals with the promise of $100.00 in commission. That said, I’ve purchased my last two cars via the internet; a move that often immediately links you up with a dealership’s much less smarmy “internet” sales representative; a guy or gal who won’t try to coax you in for a chat and who knows that you’re history if they don’t move fast and at an aggressive price. One dealership’s “No way!” is another’s “When can you come by and did you say you had cash?” I’ve paid under invoice since I could click. The consumer is the enemy here, I’m afraid.
Basic marketing. You keep your price secret until the other person reveals what they’ll pay.
Problem with your fax was that dealers had to reveal their price, while you didn’t have to buy. Automated faxing is very easy to do and I’m sure by now car dealers are on to it. Your “offer” wasn’t real.
Only fair thing would be a computerized stock market type system. You make an offer, it’s binding.