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What ways could dealers be more transparent, IDEAS anyone?

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#141
Looking at Trust across industries is not apples to apples. Take for instance real estate vs car sales. Most folks trust real estate reps, but not car sales reps.


In our industry, the car buyer understands they're making a relationship with the dealership. Franchised dealerships enjoy a layer of shopper-trust that comes from the OEM's relationship with the dealer. Trust also connects to product's reliability. Any way you look at it, cars are super reliable thereby reducing the shopper's need to be concerned with risk.

Is there a way to score how important is the "lack of trust" is in the car dealer industry?

Yes. Reviews.

I remember when car dealer reviews started to become easily visible, to my utter amazement, reviews were not a significant call to action to shoppers. Yes, reviews matter, but not like restaurants, hotels, and all things inside Amazon ;-).

SUMMARY:
For me, when I am thinking strategically, shoppers are telling me that 'as an industry', trust that we deliver is acceptable and it's not a major concern until the 11th hour when a shopper has decide what dealer they're NOT going to visit.
 
#142
First, shoppers are not monolithic. Generalizations will lead you to incorrect conclusions. Perhaps you could say, "The majority of auto buying consumers are such and such." In the case of many consumers, it makes no difference what they want, they'll take whatever they can get financed. Cars are super reliable? Check the recent recall numbers. Check the extreme angst of consumers who experience technology difficulties, some real, some imagined. When it costs a consumer $400 to get a key replaced, the term "reliable" doesn't exactly fit. When it costs $95 to have your dealer tell you your engine light is on because your gas cap isn't on tight, I'm not sure the term reliable even applies. There is a lot of bitterness in retail land from consumers about their cars. How many are driving around with warning light staring them in the face?

Second, OEMS do not inspire universal confidence. Some are better than others. We have a group of people who want to buy American, but won't buy GM or Chrysler. We have some who won't buy American under any circumstances. The vast majority aren't in a position of ultimate choice, they are in a position of relative choice dictated by their credit score, their degree of negative equity, and their cash position.

Only about 20% of auto buying consumers are in a position of ultimate choice. If all one wants to do is to appeal to those consumers, one's job becomes very easy. It might not be particularly profitable, and you might have a lot of grief from your OEM, but you can set up all sorts of systems and processes to give them what they want and do it quickly........ if that is your objective. The question is why would anyone want to do that?
 
#143
Another question: Why would we even be discussing the overall view of auto retail by consumers? What does that have to do with anything? As a dealer, if I can make my own consumers "happier" then I get more than my share of sales and gross. Why would my mission be to make YOUR customers happy? My mission is to capitalize on any differentiation that exists, either real or perceived.
 
#145
ruggles said:
Another question: Why would we even be discussing the overall view of auto retail by consumers? What does that have to do with anything? As a dealer, if I can make my own consumers "happier" then I get more than my share of sales and gross. Why would my mission be to make YOUR customers happy? My mission is to capitalize on any differentiation that exists, either real or perceived.
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Ya know David, for the most part I follow what you post and I actually agree with the majority of it. I believe that you are very well versed in the industry, and basically know what you are talking about.

Not this time bro.

Why do I care about the overall view of our industry by consumers......because they are paying the bills! They are the reason that we are all in business, and without them we are all standing around talking about how fun the car business USED to be before we destroyed it.

If you stop caring about our customer's view of auto retail, you will soon no longer know how to make your customers "happier".

Your goal is to capitalize on differentiation? That's good, and I agree. What exactly do you think this entire thread is about? It is about differentiation through transparency. I don't believe that transparency is the answer, but some folks do. If they can round up customers that are looking for that, and that makes their customers "happier", than so be it.

The reason that you have "your own consumers" is because they trust you and they like the way that you do business. However, the way that we all do business changes. These changes come about for lots of reasons, one of which is certainly consumer perception.

Again, I am not of the belief that transparency is the answer, but if a customer comes through my door and wants to see a bookout sheet or a vehicle condition report......they are gonna get what they are asking for.
 
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#147
Jeff Kershner said:
50% of consumers (survey) believe that a dealers NET Profit on a used vehicle sale averages over $2,000.

There's an article over on the blog with some interesting stats around what consumers believe dealers make on a used car sale. Be sure to read and review the chart.

Consumers will walk into an Apple store and lay down some big money and never once complain about the 21% NET MARGIN they just made. But boy oh boy they're quick to bitch over the average 2.2% net margin a dealers makes on a used car.

Check out the actual Google Consumer Insight chart

The truth is - the average consumer (possibly half) believes a dealer makes over a $2000 net margin on a used car sale. Could this possibly be a cause for the complaints? Seems obvious.

So how does one overcome this while helping consumers become more aware? Would it be wrong to disclose how the automotive market works?

What are some ways through transparency and education you can think of (or currently doing) that would educate the customer on the actual profit a dealer makes on a used car sale?
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I think that profit is irrelevant if you are selling the car at fair market price. If you paid up then your loss or if you made a great buy the price should be the same to be competitive and fair. With pre-owned it seems that several book values are a guide but as shoppers do their own homework on asking prices they can usually pick a good deal.

I do feel that new car pricing is confusing even for dealers and the advertising of major discounts or asking prices up to $10G off msrp is tough to navigate.

Being a fair dealer is doing your homework and pricing fairly not a set markup over what you paid or what you spent.
 
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#150
modernmotorcars said:
I think that profit is irrelevant if you are selling the car at fair market price. If you paid up then your loss or if you made a great buy the price should be the same to be competitive and fair. With pre-owned it seems that several book values are a guide but as shoppers do their own homework on asking prices they can usually pick a good deal.

I do feel that new car pricing is confusing even for dealers and the advertising of major discounts or asking prices up to $10G off msrp is tough to navigate.

Being a fair dealer is doing your homework and pricing fairly not a set markup over what you paid or what you spent.
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Sounds like AUTO NATION LOL
 
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