Transparency goes beyond pricing to process

[ryan.leslie]

Stumbled across this Popular Mechanics article and thought it was worth throwing out as just another example of how the free flow of information has changed every aspect of the automotive industry. How long will it be before every dealer is a "no-haggle" dealer out of necessity not choice?

Confessions of a Car Salesman - How to Buy a New Car - Popular Mechanics

 

[joe.pistell]

Stumbled across this Popular Mechanics article ... How long will it be before every dealer is a "no-haggle" dealer out of necessity not choice?

Confessions of a Car Salesman - How to Buy a New Car - Popular Mechanics

I am so sick of this urban legend.


SALES REPS ARE A BIG COST TO THE DEALER. ALL DEALER'S PREFER NOT TO HAGGLE, BUT CUSTOMERS FORCE THEM INTO IT. Oh! And when a dealer bears it all and goes to the lowest price in his market... the shoppers STILL expect a discount.

My Article on this topic: Negotiating the Car Deal - Consumers Are Out For Blood | DealerRefresh

"...the legend persists, we’ve see it all the time. Bloggers and journalists writing about the Evil Car Dealer and how they want to eat your children.

To all these pandering and lazy wordsmiths, I tell you all look around, this is 2011, not 1981. Information is now universal. If a shopper needs to find the lowest price all it takes is a few keystrokes and the shopper can shop every single dealership within 200 miles. Shoppers know dealer invoice. Dealer profits are compressed by the internet. A $35,000 transaction hovers between .0028% over or under invoice. If the shopper has a trade-in, they have 3 different independent valuation guides plus services that can offer them cash on the spot..."


​

No God fearing editor has the BALLS to tell his audience that this new thing called the Internet has tipped the scales in the shoppers favor and now shoppers have to own up to the fact that they are part of the problem.

Anyone that cannot see this new reality is... not in reality.

 

[ryan.leslie]

I don't disagree with you Joe, "this new thing called the internet" definitely shifted some of the power of knowledge to the consumer. I'm not sure the playing field is level as most people do not negotiate well, and certainly don't understand how a car deal is structured as intimately as dealer staff. I think you are going to have a difficult time convincing the general public to feel sorry for dealers because their profit margins are compressed, honestly some of that blame needs to be carried by the OEMs too.

Back to the point though, let me ask you this because I genuinely appreciate your opinion, how do you reconcile CarMax in this new equation? I don't think you mentioned them in the post you referenced.

350,000 units sold between 2/2008 and 2/2009; that represents a lot of customers walking in and paying an advertised price on a used car presumably to avoid the negotiation. Are all the laydowns going to CarMax and leaving mostly grinders that want to negotiate at the traditional stores? How do they fit in to this new era?

 

[joe.pistell]

Ryan,

Watch HGTV, watch "House Hunters" or "Selling NY" or "Property Virgins". Buyers ALWAYS haggle the seller, even when the seller has dropped the price $xx,000. BUYERS ALWAYS HAGGLE. I'll say it again. ALWAYS.

Why is it ok to Haggle in Real Estate or buying a car on the side of the road, or at a garage sale... but, ooo.. those EVIL CAR DEALERS! SCREW THAT, GET THAT GUILT CLOUD OFF OF US. Customers are blood thirsty and want a deal, I don't care what business your talking about.

/rant.


KMX?
Personally, I like one price (like CarMax) and it's has plenty of room to grow. The whole one price system is built on NOT LETTING THE CUSTOMER HAGGLE. Management has to let them walk. Dealers don't start the haggle, the haggle starts when the customer walks and the dealer CAVES into fear chases them out the door and tries to find a price to complete the sale.

It takes a special commitment from management to make this happen AND make it profitable.