I give my best price on the first volley, and stick to it. Hit or miss, then move on...
That is exactly what I want as a buyer. I think that is what I got when we bought a car last summer...not positive because the price was so good I did no negotiating. The price paid was also about $700 less than the no-haggle price I could have obtained via my credit union.
It went something like:
Email from me "what will you sell car X (which was in their on-line inventory) for".
Email from dealer "blah, blah...$X...blah".
"My reply okay how much out the door, with all fees, etc.".
there are trade-in values and financing issues, I don't think you're going to see a more efficient sales method. The internet buyer with perfect credit and no trade is a rare bird. Many times the big issue is not the sales price, but trying to convince the customer that their 10 year old miled up trade-in isn't worth $5K just because KBB said so, or trying to get them financed when they're $6000 upside-down on their current ride. Or if their credit is in the toilet.
Actually, I'd argue the converse. Remember, I grew up in the era when the sales managers guared their Black Books (listing used car prices) like they were their own wallet.
With regard to trade-ins, the internet provides a consumer with really good, really realistic information about the trade-in value of that existing vehicle . . . as well as providing attractive alternatives to trading it in. It's hard for Mr. Consumer to argue that his Ford Fiesta is worth $10,000 on a trade-in when the consensus of the internet used car guides is $500 for an excellent condition vehicle.
Furthermore, selling a used vehicle *used* to mean buying a "consumer's version" of the a blue book (NADA, Kelley, or Black Book), figuring out the price to ask for, placing an ad in the local paper and waiting for the phone to ring. Now? Auction that puppy 24/7 on ebay (access to regional, if not national buyers), etc.
Credit?? Well, five years ago a consumer couldn't even find out what his/her credit score was. Now, pay less than $50 and shazzam, there they are . . . the three scores from the major credit scoring agencies (with a comparison of how you rank regionally, nationally, etc.). So now the consumer can now EXACTLY where - or how much - in the toilet his/her credit actually is.
Additionally, five years ago if you were wanting a loan, you essentially had 2 choices (1) apply at your local bank or credit union or (2) financing through the dealer. Now? you can get "bids" for your car loan through places like "lendingtree.com" and "Elending.com." And, if the consumer likes the terms of the loan, he/she can print out a "pre-approval" (subject to income verification).
So, what you're going to see is more and more buyers - of all credit scores - walking in (or emailing or faxing) who are "pre-approved" for their car loans . . . and dealers are going to be given an opportunity to "beat those pre-approved terms."
True, the dealer can likely meet or beat the "pre-approved" terms on all but the very worst credit risks (e.g., the dealer can convince a lender to move a person with a mediocre credit score from one tier to a better tier if necessary to make a deal or solve a potential problem).
But, at the end of the day, more and more consumers are going to come knocking (be in person, by email, fax whatever) with ALL of the information and resources they need to buy a car: (1) the price their willing to pay (based on the price of what others are paying); (2) their "worst case" scenario loan terms (via pre-approval) and (3) their "best" and "worst" case trade-in (if any).
Consequently, the potential for the dealer to exploit the consumer in any of the three important profit dimensions - namely - (1) price of new vehicle; (2) trade-in value; and (3) financing terms - is vanishing because the internet gives the consumer ready access to pretty much exact same information as the dealer.
Because of this, IMO, the traditional way of selling cars - like the dinosaur - is doomed.
Are rarely right. Not all options are real ads when it comes to wholesale value and generally every single option is listed on online auto guides.
Everyone always thinks their car is in exellent condtion but very few, less then 5% are in that condition, so that always throws off the calculation.
Finally, the mileage deductions for online guides are never enough. They work fine for a car that has average miles but if the car has a lot over or under average then they never get the price right.
That's a good analysis, but I think you are overly optimistic about the technology.
A lot of this information has been available for years. You could get the new car version of KBB at your library, buy an Edmund's price guide and books about car-buying tips and negotation at your local bookstore, and get pre-approved by your lender or credit union many moons ago. Yes, it is easier to do from the comfort of your home, but the data was still readily available.
One thing being missed here is that despite the high cost of cars, many cars are bought on impulse -- the customer strolls into his dealership to have a look, and leaves a few hours later with new keys, perhaps to his astonishment. That's another reason why the dealer would prefer to run through the system in person, rather than online -- the person online is more research-oriented, and therefore provides less opportunity for pack.
Your scenario may play out, but I suspect that it may not become the tech-dominated experience that you predict. I suspect that internet buyers will represent an important but limited segment of the market, and that dealers will fight it as much as possible. The savvy dealers will leap on before their competitors, but those dealers will probably need to be volume-oriented sellers in order to make it worth their while.
I would bet that everyone posting here is way more used to using the Internet for day to day business than the "average" car buyer. How many people truly know how to value their trade, find the market value of the car they want to buy, check their credit score and arrange financing all online? I would guess way less than 50%. A few people have used the travel agent analogy here. My premises are next to a travel agency and that place is busy with foot traffic (and we're in an office park, not a retail area) and 'phone traffic all day from people wanting to book flights. Yes, they probably aren't as busy as a business of their type would have been 10 years ago but they are busy enough.
Some customers look at four different sources of trade values, pick the one that was the highest, rate thier marginal car as "excellent" and come in waving these at us.
Trouble is, nobody wants their stripper, five speed PT Cruiser that's four years old with 98,000 miles.
We sure don't want it, the wholesalers don't want it and the local Chrysler dealer REALLY doesn't want it.
So, as a favor, a wholesaler agrees to take it for 1500.00 "back of book". He seriously doesn't want it but we sell him a lot of cars and he feels obligated.
Maybe "The Internet" will write him a check for what they told him it was worth?
Miles are a good example. The books may say to deduct 1000.00 for the high miles but in reality the miles affect the car's value a lot more. A car with real high miles is impossible to sell at any price. People just won't buy them and the banks won't finance them.
Your scenario may play out, but I suspect that it may not become the tech-dominated experience that you predict. I suspect that internet buyers will represent an important but limited segment of the market, and that dealers will fight it as much as possible. The savvy dealers will leap on before their competitors, but those dealers will probably need to be volume-oriented sellers in order to make it worth their while.
Well, if my crystal ball was perfect, I sure would use it elsewhere . . . say the stock market??
From my life perspective: 20 years ago, in private practice of law, no lawyer in the firm I worked at had a PC on his/her desk. When the first one arrived, one of the partners scoffed at using it saying he'd be darned if he'd "become a secretary" and type his own documents, etc. Now?? Lawsuits are filed electronically - nary a shred of paper - with the courts (and your local third branch of government ain't exactly amongst your "first adapters"). When my union carpenter cousin is using the internet out in his home in a rural part of this state . . . well, let's just say "the times they are a changing"!!
I believe, that when the internet was introduced, it was interperted a a cheaper way to buy a car, like autobytel and the such. But in recent years it is not a tool to provide information that in tune will give you a better deal in the long run.
I think that buying habits negotiation culture varies by region. I think Southern California is the WORST place to work in the business, and the worst place to buy a car as a whole. I think that you have dealt with soooo many scummy dealers and somewhere down the line you paid way tooo much for a car and now you have a wealth of negotiating knowledge and you will not let someone pull the wool over your eyes.
Remember, dealers who have small profit margins, make their customers pay for their own sodas, do not offer loaner vehicles, Can not afford to hire a quality staff in sales or service.
Having the attitude of "make it on the next person" does not work.
I think that you have dealt with soooo many scummy dealers and somewhere down the line you paid way tooo much for a car and now you have a wealth of negotiating knowledge and you will not let someone pull the wool over your eyes.
Not at all. I've never been blindsided by a car dealer -- I have fun buying cars, because negotiation is fun. (Ironically, the one time that I left money on the table was when a bought a used car from a private party, an elderly woman with a nice dog. I took pity on her, and probably paid a few hundred more than I should have. But that time, I let my guard down and I won't be doing that again.)
Again, the efforts by dealers to stigmatize negotiation is really something. The whole business is built around negotiation, so I absolutely have no desire to fight the system by refusing to negotiate, or thinking that there are shortcuts available that allow buyers to avoid negotiation. The people who create the most drama for themselves are buyers who attempt to dominate the dealer, when head-on confrontation simply betrays your own tactics and is easily sidestepped by a smart salesperson.
Having the attitude of "make it on the next person" does not work.
That's a core component of the car sales business: nobody pays the same price. Of course, you're going to make it on the next guy (and I thank you for that.)
From my life perspective: 20 years ago, in private practice of law, no lawyer in the firm I worked at had a PC on his/her desk. When the first one arrived, one of the partners scoffed at using it saying he'd be darned if he'd "become a secretary" and type his own documents, etc. Now?? Lawsuits are filed electronically - nary a shred of paper - with the courts (and your local third branch of government ain't exactly amongst your "first adapters"). When my union carpenter cousin is using the internet out in his home in a rural part of this state . . . well, let's just say "the times they are a changing"!!
Good rebuttal, and you may be proven right. (In that case, feel free to drop-ship me that crystal ball of yours...)
Perhaps it occurred too early to be used as a case study, but I would think that one lesson of the dot-bomb is that not every product is conducive to online commerce. Cars are complex and expensive enough that I'm thinking that some segments will be online ready, while others won't. Just as most people wouldn't buy a house based solely on its appearance on a website, I wonder whether car buying is in the same category, at least for a certain segment of customers.
Perhaps there could evolve a hybrid model, such as multi-brand dealerships which hold no inventory and just take special orders, with manufacturers and distributors building cars on a JIT system with a goal for rapid delivery. We'll see what happens.
"Perhaps there could evolve a hybrid model, such as multi-brand dealerships which hold no inventory and just take special orders, with manufacturers and distributors building cars on a JIT system with a goal for rapid delivery."
There are brokers back home in the U.K. who work something close to this model. The market is different there though in as much as dealers don't carry huge inventories of new cars and most new car sales are made to order at the factory. Wether it would work in the U.S. where people expect to buy and driver away in their new car the same day is another matter.
A lot of dealers who use every tactic to decieve and lowball their customers. Full page screamer ads...read the fine print. They have constant turnover of salespeople. Some stores hire and fire a third of their staff on a monthly basis.
Salespeople go three months without making any money and they quit. Desperate for floor coverage, some stores hire almost anyone that walks in the door.
Just a nasty, ruined marketplace. Ruined by sleazy stores and tightwad mean spirited customers hellbent on squeezing the last dime.
Having said this...there are good stores as well, run by quality people who treat customers as they should be treated. On balance, it's pretty bad!
There are brokers back home in the U.K. who work something close to this model. The market is different there though in as much as dealers don't carry huge inventories of new cars and most new car sales are made to order at the factory. Wether it would work in the U.S. where people expect to buy and driver away in their new car the same day is another matter.
You're one step ahead of me, because I pretty much cribbed this thought from what goes on abroad.
And you've made a good point, I'm not sure whether it would work here, either. I'm wondering whether the ability to customize and personalize would help prove to be a selling point for such a model. On the other hand, this could raise producer costs, while possibly making the buying process more confusing -- Honda has done a good job of simplifying the buying process by eliminating large numbers of option packages, and perhaps that is a more efficient way for automakers to follow.
Just thinking out loud, really, but perhaps US tastes are changing. Dell and Netflix are two examples of models that provide some sort of benefit in exchange for delayed gratification. (Dell allows personalization and ensures high quality, while Netflix swaps the benefit of instant gratification in exchange for convenience and cost protection for the customer, i.e. no late fees.)
It might help the dealers to look at businesses outside of the auto industry for ideas about how to work the internet to your advantage. Just don't do too well with it, because for my own purchases, I really prefer the traditional model the way things are now...
Where to start....dealers open 7 days, until midnight in some cases....ruthless customers who you work for for a week who will drive 75 miles to save 100 dollars. Customers who if they are talking they are lying. Dealers who chew up salespeople and spit them out. (I drove 50 miles to work and was late for a sales meeting and had to work bell to bell for 30 days)
On the up side, you get to work with all cultures meet the occational celebraties weather is never that horrible unless in the desert or valley.
I love Texas because people here want a good deal but are fair in negotiations. On a whole if you treat them good they will be loyal to you. And all and all just fun people!
"uthless customers who you work for for a week who will drive 75 miles to save 100 dollars"
If you're lucky. I had one guy who worked with me over 2 weeks. I got him finance despite his grotty credit, test drove him in 6 different cars, took it to his work so he could see what his buddies thought and then he bought it from a dealer 90 miles away for a huge saving of $38! (on a $45000 car). I was pretty green then though.
"Dealers who chew up salespeople and spit them out"
I was senior sales-person after a whole 9 weeks! Never again!
"I took pity on her, and probably paid a few hundred more than I should have."
Consider that a deposit in the Bank of Good Karma!
Someone up above said no one would buy a house just based on pictures on the Internet. Well - that does happen. My neighbor is a Realtor and has sold a few houses like this. Of course No. VA is a very hot market and if you snooze, you lose. She sold a few houses based only on on-line pictures, supplemented by her taking more detailed digital pictures and e-mailing them, to military and diplomats who were overseas, returning to the D.C. area, already knew the neighborhoods and wanted a house ready upon their return. The Internet made it all happen.
People order cars now sight unseen, or at least test-drive undriven, based on car reviews and information on the internet, in much the same way. I bet it happens a lot more now than it used to. Every manufacturer, far as I know, has a "build it yourself" section on their car site where people can configure exactly what they want. Pictures of used cars are also very often included on dealership web-sites. People can get an idea very quickly of what's available and what are the asking prices.
What spurs Internet use is that it can be brought into play very early on in the process, and can either go all the way to a sale by on-line contact only or can break off into face to face contact at any point. Look for a car, research information, get all the details, swap opinions on sites like this one, and make an initial approach to the dealer. From there on, the Internet experience really depends on both sides feeling comfortable with proceeding. The dealers who won't quote a price on-line will certainly lose some sales. The buyers who think they can negotiate a better price in person won't be bothered by that, and will come in after having done their research.
A dealership that is flexible will stand the best chance of using on-line marketing to maximum advantage, and can attempt to snag both types of customers.
I think you might remember that I am not one to dicker endlessly over the last $100, so the internet manager is the way I bought the last two vehicles. The 2001 Civic was easy due to honda's lack of ala carte options, I think every dealer in Minnesota had the exact combination that I was looking for. I think I bought it for 3-400 over invoice in may 2001. I probably could have done a little better (1-200 over?) by spending a few days beating my head against the wall, but life is too short for that.
I emailed Brooklyn Park Honda at noon, and by 8:00 that night the civic was in my Garage. No trade, 12K down and the home equity check for the balance. Granted that is a clean deal for all involved, but I think the internet guy(or fleet manager he was called then)was kind surprised that I really showed up with the money six hours after first contact.
People who have to wring the blood out of the salesman must either just plain enjoy it, be spending right up to or beyond their means, or have little else in their life.
I have no Idea what the salesman made on my 01 Civic, nor is it any of my business, but if the salesman only did get the $100 mini commission (that seems to be the popular number around these forums)then he made the hundred for ten minutes of emails, a couple minutes to throw me the keys for my test drive, and 45 minutes delivering the vehicle. 1 hour total for his pay. he was happy and I was happy, and he was off to the next opportunity.
Now I can't imagine if I was the salesman and I had to spend 5-6 hours for that hundred bucks. I wouldn't do it. I would give them price and ask them to call me if they decide to purchase, and off to the next opportunity.
I wanted to get your opinion whether the salesman I had in 2003 was on the level or giving me a line of bull.
I was ready to trade in my 99 Yukon slt in 2003 with 140,000 on the ticker. I contacted the fleet manager/internet guy of the local GMC dealer and after he knew i was serious to buy quickly he told me he wanted "FRED" to handle the sale. Fred was a floor salesman. I was leary that I was getting into a round and round negotiation session that I didn't want.
I had a friend of mine, who buys a truck or two a year from the guy for his business, call The truck manager. My friend is a real gruf no nonsense guy and he told the truck manager that if they screw around with me I would walk, and if he was straight and shot me a good price I would buy in a few minutes. The manager said he was sending my business to Fred to help him out.
Fred called me and talked available inventory and they had the truck I wanted in blue (I wanted red, such is life).
I went to the dealer after work,and I was given a price of $33,800 + TT (45k sticker), and they offered $8000 for my 99 yukon, which was about 2-300 less than they were selling for at the Minneapolis auction. But there was a catch to get that price.....Here we go I thought....I am out of here in two minutes if I don't like what comes next.
The catch was I had to sign GM paperwork saying I agree to not sell the truck for six months. He went on to say that The manager agreed to allow me to get fred's employee family discount. Now this a year or more before the employee discount craze the industry. He went on to say that he got a commission check from GM for each car he had sold for the entire year, and by selling two additional cars that day (it was August 31st I believe)he would get a higher GM salesman kick back for each of the cars he sold that year by reaching a higher plateau in the commission structure.
My sale allowed him to get a nice chunk of cash from GM. The truck manager and internet guy sent him two easy sales to get him over the hump.
My question for you, Isell...Is there really such a program at GM where salesmen get a year end sales commission directly from GM for each car sold in a given year, and does it really have levels that increase the amount for each previous car sold once certain plateaus reached?
It was either a great thing the other sales guys did for Fred, or the most unnecessary sales ploy ever. It was the no nonsense - no negotiation price that sold the truck.
btw--I did sign stating I wouldn't sell the truck for six months...........was I given a line of bull?
to keep with the thread here, first me say that i plan to use the internet to by this car.
I have driven the following wagons and Suvs in the last week and I am very frustrated at the available wagons out there. I have never had trouble finding a car I like, but this time I have found a deal breaker in each car (not in the deal)
Mazda 6 wagon -- tin can at $26K? Rav4 ----- wife ruled out a basic SUV after I tested it. Honda CRT- Same as above. Honda Pilot--She said it was to big (funny that is the first time she has ever said that to me) highlander---She thinks it is ugly Saab 9-7 suv...really a GM under a saab skin at $40K Saab 9-5 wagon...noisiest $38k car ever, no awd Volvo xc90-- nice suv, but not worth $45k Volvo xc70 -- Nice $32K car unfortunately it's $42K Audi a4 avant --very nice car possibly a tad small. Audi a6 avant---best car I have ever driven but 50K
I thought we had a winner in the Outback, She likes the look and at 250 horse and torque it moved along well, Dealer had several new 05's left in stock. It is over priced for what it is, but the new 05 had a 32K sticker and a window tag at 25K......... one half the price of the A6.
It is a little small for my liking, but she thought it was cute. the deal breaker is the back seat room. over an inch less than her civic...less. The kids could live with that around town, but back seat passengers can't put their feet under the front seat. The power front seats go all the way to the floor due to the power seat mechanics. that made the floor space in the back shorter that the length of a normal human being's foot. you have to set your foot sideways to sit in the back seat. Stupid engineering. Much more room in the back of an $18K Honda than a supposedly $33K subaru family vehicle.
This probably does not belong on this forum, but...
If you want back seat room, the Ford 500 is like sitting on a livingroom couch back there. I assume the wagon ("crossover") version, the freestyle, would be about the same, but have not been in one.
I think VW Passat is available in a wagon. I don't know anything about it, but might that be similar to the A6, but at a lower price?
It was either a great thing the other sales guys did for Fred, or the most unnecessary sales ploy ever. It was the no nonsense - no negotiation price that sold the truck.
Yup, there sure is... but only if the salesperson sells something like a hundred or two cars for the year. GM is pretty generous in giving manufacturer-to-salesperson bonuses.
btw--I did sign stating I wouldn't sell the truck for six months...........was I given a line of bull?
Back when employee pricing was really only for family, that statement was true (only I thought it was actually for a year), and it is probably still true when you are an employee/family and they're not running their program. The point is that they don't want people buying these cars for so cheap and then turning around to make a profit on them.
Maybe one of the GM guys can answer this question because I don't know the answer. I do know that GM and the other domestics have seriously shot themselves in the head. They fluff up the MSRP's, then offer huge "discounts" in order to make their "deals" seem attractive.
When sales are in the toilet, they come up with more gimmicks like "employee pricing" or zero percent financing.
They mortgage tomorrow for today's shot in the arm business. Some of these deals equate to a good price for the consumer but in the end (like right now)they run out of tricks and gimmicks.
This deal worked out well for you and that's what matters.
I just know I wouldn't want to be a GM shareholder right now. As a long time GM fan, I fear for their future, I really do.
The lack of rear seat legroom has always been a problem for Subaru and this is one of their biggest weaknesses. they just can't seem to get this fixed. As kids get bigger, it becomes more of a problem.
Too bad your wife can't get over the LOOKS of a car and focus more on the things that really matter.
Yup cause a complete air suspension failure on a 2002 Range Rover with 51,000 miles will cost you 3,000 dollars minimum but that same air suspension failure at 49,000 miles will cost you nothing.
Oh and all Mark II Range Rovers have an air suspension failure it is guranteed. Most of the time the FIRST one happens in warranty but not always. Sometimes the air bags or lines hold together just past warranty end.
If you want back seat room, the Ford 500 is like sitting on a livingroom couch back there. I assume the wagon ("crossover") version, the freestyle, would be about the same, but have not been in one.
I have one and you're correct. Even with the front seats all the way back, there's a ton of rear seat room. Even if you don't need the 3rd row, you can leave it down for a big flat cargo area.
I was at a GM dealership a couple weeks ago, just browsing around. Talked to the 'Bruce' the salesman that I have bought my last two GM's from. He pointed out to me that GM is beginning to take a different approach to pricing. Instead of the inflated MSRP's plus huge discounts, Bruce said that GM is reducing the MSRP and eliminating (or reducing) the discounts. He said that they have had some experiences of people just looking at the MSRP and not figuring in the REBATE to get the actual cost. Actually I did notice that the Malibu that I had been looking at... the MSRP did drop about $1,000 since I looked at it a couple months ago.
Instead of the inflated MSRP's plus huge discounts, Bruce said that GM is reducing the MSRP and eliminating (or reducing) the discounts
Something similar happened at Ford....Domestics always built in rebate room in their MSRP numbers. This type of big discount marketing worked well before the internet.
Fast forward to today and built in rebates have caused MSRP numbers to climb above competitive vehicles. If the consumer is unaware of the big rebates they start to think the price is way to high....Of course if the buyer figures in the reabtes things get in line....but many younger or import oriented buyers are not familiar with $3000, $5000 or $10K discounts you see of some domestics. So they just think the Ford or GM car is thousands to much to even consider.
There will be some growing pains with this but in the long run it will benefit GM and the other domestics.
...tightwad mean spirited customers hellbent on squeezing the last dime.
I'd translate that as being "the prudent little guy who keeps money in his pocket for his family, instead of handing it over to a big meanspirited corporation."
There's nothing meanspirited about a customer paying as little as possible, that's just good economic sense. If the dealer doesn't like the price, then it is simple -- he is free to decline the sale. No one is forcing the dealer to close a deal that he doesn't want to close.
On another note, a friend of mine is carshopping exclusively via the internet. I have to say that I'm quite impressed and pleasantly surprised by the quotes he has been given (in writing, by the way), a fair bit better than I would have expected. Not sure if he'll complete the purchase, but I'll be interested to see whether there is a bait-and-switch underway if and when he is actually ready to write the check. Stay tuned...
There's nothing meanspirited about a customer paying as little as possible, that's just good economic sense.
May be yes, may be not. If paying as little as possible requires too much time and/or efforts, it does not have economic sense. Driving 100 miles to save $100 does not pay, as a rule. The same with spending every evening on Internet for a month to save $200.
Folks, please look at the discussion title and keep your posts relevant - if you need help finding other discussions for different conversation, please let me know!
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I much prefer to see the inventory. If I want to configure a car I'd do that here or at manufacturer's site.
One dealer who we ultimately bought from had even listed their expected incoming cars of one particular new model. One of them was going to be the exact car my wife wanted. I checked back occassionally during about a 2-3 month period. Finally when it actually arrived I sent an email saying "what will you sell that car for?".
We bought the car about 5 days after it had rolled off the truck at the dealership .
No, there is a big difference between "the prudent little guy" and a "mean spirited tightwad".
And you are correct, people like this walk avery day without buying a car. Eventually they come to grips with the the reality of the market. At that point, they either settle for less or pay the price.
When I want to get an internet quote I usually go directly to the dealer site, rather than using edmunds or something similar, becuase somehow what I want always gets lost in the detail.
I have seen dealer websites in ALLL shapes and sizes and most of the time I really do not find them anymore useful than what you can get directly from the Manufacturer's website.
I've seen your website and that chick keeps popping up scaring the kadoodles out of me *snicker*
I guess I have it engrained what a dealer has or doesn't have on thier lot is almost irrelevant. Since, if a dealer wants to make the deal he will find you "that" car if you want.
And nothing drives me more batty then incorrect inventory amounts. For example, last night I checked for some cabineets at an office supply store, they said they have 4. I went to the store and I got the ohhh..that number is wrong.
Lets face it no inventory system is perfect or in real time. And if a customer "thinks" you have a car and they show up and you don't it will only add to the negative feelings about the dealership.
What I think Internet departments should do, is add more drop down menu's so a customer can "configure" the exact quote of a vehicle they want ie:
Model - Pilot Trim - EX-L _2wd __AWD Color choice 1/2/ Options: check all that apply.
I think this would help ease all the "quote frustration" since I am sure the typicall customer asks for a Quote on a Pilot- and most salesman will fire back with the price of a 2WD LX and the customer was thinking that quote applied to a AWD EX-L/NAV/RES woodtrim, etc....*rattle*
Comments
That is exactly what I want as a buyer. I think that is what I got when we bought a car last summer...not positive because the price was so good I did no negotiating. The price paid was also about $700 less than the no-haggle price I could have obtained via my credit union.
It went something like:
Email from me "what will you sell car X (which was in their on-line inventory) for".
Email from dealer "blah, blah...$X...blah".
"My reply okay how much out the door, with all fees, etc.".
Response with itemized list and total.
Went in and bought the car a few days later.
Actually, I'd argue the converse. Remember, I grew up in the era when the sales managers guared their Black Books (listing used car prices) like they were their own wallet.
With regard to trade-ins, the internet provides a consumer with really good, really realistic information about the trade-in value of that existing vehicle . . . as well as providing attractive alternatives to trading it in. It's hard for Mr. Consumer to argue that his Ford Fiesta is worth $10,000 on a trade-in when the consensus of the internet used car guides is $500 for an excellent condition vehicle.
Furthermore, selling a used vehicle *used* to mean buying a "consumer's version" of the a blue book (NADA, Kelley, or Black Book), figuring out the price to ask for, placing an ad in the local paper and waiting for the phone to ring. Now? Auction that puppy 24/7 on ebay (access to regional, if not national buyers), etc.
Credit?? Well, five years ago a consumer couldn't even find out what his/her credit score was. Now, pay less than $50 and shazzam, there they are . . . the three scores from the major credit scoring agencies (with a comparison of how you rank regionally, nationally, etc.). So now the consumer can now EXACTLY where - or how much - in the toilet his/her credit actually is.
Additionally, five years ago if you were wanting a loan, you essentially had 2 choices (1) apply at your local bank or credit union or (2) financing through the dealer. Now? you can get "bids" for your car loan through places like "lendingtree.com" and "Elending.com." And, if the consumer likes the terms of the loan, he/she can print out a "pre-approval" (subject to income verification).
So, what you're going to see is more and more buyers - of all credit scores - walking in (or emailing or faxing) who are "pre-approved" for their car loans . . . and dealers are going to be given an opportunity to "beat those pre-approved terms."
True, the dealer can likely meet or beat the "pre-approved" terms on all but the very worst credit risks (e.g., the dealer can convince a lender to move a person with a mediocre credit score from one tier to a better tier if necessary to make a deal or solve a potential problem).
But, at the end of the day, more and more consumers are going to come knocking (be in person, by email, fax whatever) with ALL of the information and resources they need to buy a car: (1) the price their willing to pay (based on the price of what others are paying); (2) their "worst case" scenario loan terms (via pre-approval) and (3) their "best" and "worst" case trade-in (if any).
Consequently, the potential for the dealer to exploit the consumer in any of the three important profit dimensions - namely - (1) price of new vehicle; (2) trade-in value; and (3) financing terms - is vanishing because the internet gives the consumer ready access to pretty much exact same information as the dealer.
Because of this, IMO, the traditional way of selling cars - like the dinosaur - is doomed.
Everyone always thinks their car is in exellent condtion but very few, less then 5% are in that condition, so that always throws off the calculation.
Finally, the mileage deductions for online guides are never enough. They work fine for a car that has average miles but if the car has a lot over or under average then they never get the price right.
That doesn't include the cars they sell off the floor...just Internet. I am Internet only, no floor sales...no incoming phone calls...just Internet.
A lot of this information has been available for years. You could get the new car version of KBB at your library, buy an Edmund's price guide and books about car-buying tips and negotation at your local bookstore, and get pre-approved by your lender or credit union many moons ago. Yes, it is easier to do from the comfort of your home, but the data was still readily available.
One thing being missed here is that despite the high cost of cars, many cars are bought on impulse -- the customer strolls into his dealership to have a look, and leaves a few hours later with new keys, perhaps to his astonishment. That's another reason why the dealer would prefer to run through the system in person, rather than online -- the person online is more research-oriented, and therefore provides less opportunity for pack.
Your scenario may play out, but I suspect that it may not become the tech-dominated experience that you predict. I suspect that internet buyers will represent an important but limited segment of the market, and that dealers will fight it as much as possible. The savvy dealers will leap on before their competitors, but those dealers will probably need to be volume-oriented sellers in order to make it worth their while.
A few people have used the travel agent analogy here. My premises are next to a travel agency and that place is busy with foot traffic (and we're in an office park, not a retail area) and 'phone traffic all day from people wanting to book flights. Yes, they probably aren't as busy as a business of their type would have been 10 years ago but they are busy enough.
Well..sometimes, and sometimes not.
Some customers look at four different sources of trade values, pick the one that was the highest, rate thier marginal car as "excellent" and come in waving these at us.
Trouble is, nobody wants their stripper, five speed PT Cruiser that's four years old with 98,000 miles.
We sure don't want it, the wholesalers don't want it and the local Chrysler dealer REALLY doesn't want it.
So, as a favor, a wholesaler agrees to take it for 1500.00 "back of book". He seriously doesn't want it but we sell him a lot of cars and he feels obligated.
Maybe "The Internet" will write him a check for what they told him it was worth?
Well, if my crystal ball was perfect, I sure would use it elsewhere . . . say the stock market??
From my life perspective: 20 years ago, in private practice of law, no lawyer in the firm I worked at had a PC on his/her desk. When the first one arrived, one of the partners scoffed at using it saying he'd be darned if he'd "become a secretary" and type his own documents, etc. Now?? Lawsuits are filed electronically - nary a shred of paper - with the courts (and your local third branch of government ain't exactly amongst your "first adapters"). When my union carpenter cousin is using the internet out in his home in a rural part of this state . . . well, let's just say "the times they are a changing"!!
I think that buying habits negotiation culture varies by region. I think Southern California is the WORST place to work in the business, and the worst place to buy a car as a whole. I think that you have dealt with soooo many scummy dealers and somewhere down the line you paid way tooo much for a car and now you have a wealth of negotiating knowledge and you will not let someone pull the wool over your eyes.
Remember, dealers who have small profit margins, make their customers pay for their own sodas, do not offer loaner vehicles, Can not afford to hire a quality staff in sales or service.
Having the attitude of "make it on the next person" does not work.
That is a HORRIBLE, HORRIBLE marketplace!
I remember some of the experiences I had and I know I could NEVER work in that enviroment.
Not at all. I've never been blindsided by a car dealer -- I have fun buying cars, because negotiation is fun. (Ironically, the one time that I left money on the table was when a bought a used car from a private party, an elderly woman with a nice dog. I took pity on her, and probably paid a few hundred more than I should have. But that time, I let my guard down and I won't be doing that again.)
Again, the efforts by dealers to stigmatize negotiation is really something. The whole business is built around negotiation, so I absolutely have no desire to fight the system by refusing to negotiate, or thinking that there are shortcuts available that allow buyers to avoid negotiation. The people who create the most drama for themselves are buyers who attempt to dominate the dealer, when head-on confrontation simply betrays your own tactics and is easily sidestepped by a smart salesperson.
Having the attitude of "make it on the next person" does not work.
That's a core component of the car sales business: nobody pays the same price. Of course, you're going to make it on the next guy (and I thank you for that.)
Good rebuttal, and you may be proven right. (In that case, feel free to drop-ship me that crystal ball of yours...)
Perhaps it occurred too early to be used as a case study, but I would think that one lesson of the dot-bomb is that not every product is conducive to online commerce. Cars are complex and expensive enough that I'm thinking that some segments will be online ready, while others won't. Just as most people wouldn't buy a house based solely on its appearance on a website, I wonder whether car buying is in the same category, at least for a certain segment of customers.
Perhaps there could evolve a hybrid model, such as multi-brand dealerships which hold no inventory and just take special orders, with manufacturers and distributors building cars on a JIT system with a goal for rapid delivery. We'll see what happens.
I think it's fine. The negotiation methods are the same. From the customer's standpoint, it makes no difference at all.
There are brokers back home in the U.K. who work something close to this model. The market is different there though in as much as dealers don't carry huge inventories of new cars and most new car sales are made to order at the factory. Wether it would work in the U.S. where people expect to buy and driver away in their new car the same day is another matter.
Salespeople go three months without making any money and they quit. Desperate for floor coverage, some stores hire almost anyone that walks in the door.
Just a nasty, ruined marketplace. Ruined by sleazy stores and tightwad mean spirited customers hellbent on squeezing the last dime.
Having said this...there are good stores as well, run by quality people who treat customers as they should be treated. On balance, it's pretty bad!
You're one step ahead of me, because I pretty much cribbed this thought from what goes on abroad.
And you've made a good point, I'm not sure whether it would work here, either. I'm wondering whether the ability to customize and personalize would help prove to be a selling point for such a model. On the other hand, this could raise producer costs, while possibly making the buying process more confusing -- Honda has done a good job of simplifying the buying process by eliminating large numbers of option packages, and perhaps that is a more efficient way for automakers to follow.
Just thinking out loud, really, but perhaps US tastes are changing. Dell and Netflix are two examples of models that provide some sort of benefit in exchange for delayed gratification. (Dell allows personalization and ensures high quality, while Netflix swaps the benefit of instant gratification in exchange for convenience and cost protection for the customer, i.e. no late fees.)
It might help the dealers to look at businesses outside of the auto industry for ideas about how to work the internet to your advantage. Just don't do too well with it, because for my own purchases, I really prefer the traditional model the way things are now...
On the up side, you get to work with all cultures meet the occational celebraties weather is never that horrible unless in the desert or valley.
I love Texas because people here want a good deal but are fair in negotiations. On a whole if you treat them good they will be loyal to you. And all and all just fun people!
If you're lucky. I had one guy who worked with me over 2 weeks. I got him finance despite his grotty credit, test drove him in 6 different cars, took it to his work so he could see what his buddies thought and then he bought it from a dealer 90 miles away for a huge saving of $38! (on a $45000 car). I was pretty green then though.
"Dealers who chew up salespeople and spit them out"
I was senior sales-person after a whole 9 weeks! Never again!
Consider that a deposit in the Bank of Good Karma!
Someone up above said no one would buy a house just based on pictures on the Internet. Well - that does happen. My neighbor is a Realtor and has sold a few houses like this. Of course No. VA is a very hot market and if you snooze, you lose. She sold a few houses based only on on-line pictures, supplemented by her taking more detailed digital pictures and e-mailing them, to military and diplomats who were overseas, returning to the D.C. area, already knew the neighborhoods and wanted a house ready upon their return. The Internet made it all happen.
People order cars now sight unseen, or at least test-drive undriven, based on car reviews and information on the internet, in much the same way. I bet it happens a lot more now than it used to. Every manufacturer, far as I know, has a "build it yourself" section on their car site where people can configure exactly what they want. Pictures of used cars are also very often included on dealership web-sites. People can get an idea very quickly of what's available and what are the asking prices.
What spurs Internet use is that it can be brought into play very early on in the process, and can either go all the way to a sale by on-line contact only or can break off into face to face contact at any point. Look for a car, research information, get all the details, swap opinions on sites like this one, and make an initial approach to the dealer. From there on, the Internet experience really depends on both sides feeling comfortable with proceeding. The dealers who won't quote a price on-line will certainly lose some sales. The buyers who think they can negotiate a better price in person won't be bothered by that, and will come in after having done their research.
A dealership that is flexible will stand the best chance of using on-line marketing to maximum advantage, and can attempt to snag both types of customers.
I think you might remember that I am not one to dicker endlessly over the last $100, so the internet manager is the way I bought the last two vehicles. The 2001 Civic was easy due to honda's lack of ala carte options, I think every dealer in Minnesota had the exact combination that I was looking for. I think I bought it for 3-400 over invoice in may 2001. I probably could have done a little better (1-200 over?) by spending a few days beating my head against the wall, but life is too short for that.
I emailed Brooklyn Park Honda at noon, and by 8:00 that night the civic was in my Garage. No trade, 12K down and the home equity check for the balance. Granted that is a clean deal for all involved, but I think the internet guy(or fleet manager he was called then)was kind surprised that I really showed up with the money six hours after first contact.
People who have to wring the blood out of the salesman must either just plain enjoy it, be spending right up to or beyond their means, or have little else in their life.
I have no Idea what the salesman made on my 01 Civic, nor is it any of my business, but if the salesman only did get the $100 mini commission (that seems to be the popular number around these forums)then he made the hundred for ten minutes of emails, a couple minutes to throw me the keys for my test drive, and 45 minutes delivering the vehicle. 1 hour total for his pay. he was happy and I was happy, and he was off to the next opportunity.
Now I can't imagine if I was the salesman and I had to spend 5-6 hours for that hundred bucks. I wouldn't do it. I would give them price and ask them to call me if they decide to purchase, and off to the next opportunity.
I was ready to trade in my 99 Yukon slt in 2003 with 140,000 on the ticker. I contacted the fleet manager/internet guy of the local GMC dealer and after he knew i was serious to buy quickly he told me he wanted "FRED" to handle the sale. Fred was a floor salesman. I was leary that I was getting into a round and round negotiation session that I didn't want.
I had a friend of mine, who buys a truck or two a year from the guy for his business, call The truck manager. My friend is a real gruf no nonsense guy and he told the truck manager that if they screw around with me I would walk, and if he was straight and shot me a good price I would buy in a few minutes. The manager said he was sending my business to Fred to help him out.
Fred called me and talked available inventory and they had the truck I wanted in blue (I wanted red, such is life).
I went to the dealer after work,and I was given a price of $33,800 + TT (45k sticker), and they offered $8000 for my 99 yukon, which was about 2-300 less than they were selling for at the Minneapolis auction. But there was a catch to get that price.....Here we go I thought....I am out of here in two minutes if I don't like what comes next.
The catch was I had to sign GM paperwork saying I agree to not sell the truck for six months. He went on to say that The manager agreed to allow me to get fred's employee family discount. Now this a year or more before the employee discount craze the industry. He went on to say that he got a commission check from GM for each car he had sold for the entire year, and by selling two additional cars that day (it was August 31st I believe)he would get a higher GM salesman kick back for each of the cars he sold that year by reaching a higher plateau in the commission structure.
My sale allowed him to get a nice chunk of cash from GM. The truck manager and internet guy sent him two easy sales to get him over the hump.
My question for you, Isell...Is there really such a program at GM where salesmen get a year end sales commission directly from GM for each car sold in a given year, and does it really have levels that increase the amount for each previous car sold once certain plateaus reached?
It was either a great thing the other sales guys did for Fred, or the most unnecessary sales ploy ever. It was the no nonsense - no negotiation price that sold the truck.
btw--I did sign stating I wouldn't sell the truck for six months...........was I given a line of bull?
I have driven the following wagons and Suvs in the last week and I am very frustrated at the available wagons out there. I have never had trouble finding a car I like, but this time I have found a deal breaker in each car (not in the deal)
Mazda 6 wagon -- tin can at $26K?
Rav4 ----- wife ruled out a basic SUV after I tested it.
Honda CRT- Same as above.
Honda Pilot--She said it was to big (funny that is the first time she has ever said that to me)
highlander---She thinks it is ugly
Saab 9-7 suv...really a GM under a saab skin at $40K
Saab 9-5 wagon...noisiest $38k car ever, no awd
Volvo xc90-- nice suv, but not worth $45k
Volvo xc70 -- Nice $32K car unfortunately it's $42K
Audi a4 avant --very nice car possibly a tad small.
Audi a6 avant---best car I have ever driven but 50K
I thought we had a winner in the Outback, She likes the look and at 250 horse and torque it moved along well, Dealer had several new 05's left in stock. It is over priced for what it is, but the new 05 had a 32K sticker and a window tag at 25K......... one half the price of the A6.
It is a little small for my liking, but she thought it was cute. the deal breaker is the back seat room. over an inch less than her civic...less. The kids could live with that around town, but back seat passengers can't put their feet under the front seat. The power front seats go all the way to the floor due to the power seat mechanics. that made the floor space in the back shorter that the length of a normal human being's foot. you have to set your foot sideways to sit in the back seat. Stupid engineering. Much more room in the back of an $18K Honda than a supposedly $33K subaru family vehicle.
Gez I wish they made and an accord or TL wagon.
I picked up my new 06 xt ltd on sat....WOW!! Never mind the lack of room in the back,stick the kids in care and enjoy:))
I drove lots of wagons and nothing comes close:))
If you want back seat room, the Ford 500 is like sitting on a livingroom couch back there. I assume the wagon ("crossover") version, the freestyle, would be about the same, but have not been in one.
I think VW Passat is available in a wagon. I don't know anything about it, but might that be similar to the A6, but at a lower price?
Yup, there sure is... but only if the salesperson sells something like a hundred or two cars for the year. GM is pretty generous in giving manufacturer-to-salesperson bonuses.
btw--I did sign stating I wouldn't sell the truck for six months...........was I given a line of bull?
Back when employee pricing was really only for family, that statement was true (only I thought it was actually for a year), and it is probably still true when you are an employee/family and they're not running their program. The point is that they don't want people buying these cars for so cheap and then turning around to make a profit on them.
Maybe one of the GM guys can answer this question because I don't know the answer. I do know that GM and the other domestics have seriously shot themselves in the head. They fluff up the MSRP's, then offer huge "discounts" in order to make their "deals" seem attractive.
When sales are in the toilet, they come up with more gimmicks like "employee pricing" or zero percent financing.
They mortgage tomorrow for today's shot in the arm business. Some of these deals equate to a good price for the consumer but in the end (like right now)they run out of tricks and gimmicks.
This deal worked out well for you and that's what matters.
I just know I wouldn't want to be a GM shareholder right now. As a long time GM fan, I fear for their future, I really do.
Too bad your wife can't get over the LOOKS of a car and focus more on the things that really matter.
I know...."happy wife, happy life".
Most european cars are like that. A BMW, Merc, Audi, or Land Rover with 51,000 miles on it is not worth nearly as much as one with 49,000 miles.
Oh and all Mark II Range Rovers have an air suspension failure it is guranteed. Most of the time the FIRST one happens in warranty but not always. Sometimes the air bags or lines hold together just past warranty end.
The long established warranty company we use refuses to sell warranties for Rovers for ANY price!
Rovers are cool cars but the people who buy them really need to know and accept the dollars it takes to keep them going as they age.
I have one and you're correct. Even with the front seats all the way back, there's a ton of rear seat room. Even if you don't need the 3rd row, you can leave it down for a big flat cargo area.
Something similar happened at Ford....Domestics always built in rebate room in their MSRP numbers. This type of big discount marketing worked well before the internet.
Fast forward to today and built in rebates have caused MSRP numbers to climb above competitive vehicles. If the consumer is unaware of the big rebates they start to think the price is way to high....Of course if the buyer figures in the reabtes things get in line....but many younger or import oriented buyers are not familiar with $3000, $5000 or $10K discounts you see of some domestics. So they just think the Ford or GM car is thousands to much to even consider.
There will be some growing pains with this but in the long run it will benefit GM and the other domestics.
Hmmmm, so what came first, the chicken or the egg? The sleazy store or the tightwad mean spirited customers? My guess is the dealers created the mess.
I'd translate that as being "the prudent little guy who keeps money in his pocket for his family, instead of handing it over to a big meanspirited corporation."
There's nothing meanspirited about a customer paying as little as possible, that's just good economic sense. If the dealer doesn't like the price, then it is simple -- he is free to decline the sale. No one is forcing the dealer to close a deal that he doesn't want to close.
On another note, a friend of mine is carshopping exclusively via the internet. I have to say that I'm quite impressed and pleasantly surprised by the quotes he has been given (in writing, by the way), a fair bit better than I would have expected. Not sure if he'll complete the purchase, but I'll be interested to see whether there is a bait-and-switch underway if and when he is actually ready to write the check. Stay tuned...
May be yes, may be not. If paying as little as possible requires too much time and/or efforts, it does not have economic sense. Driving 100 miles to save $100 does not pay, as a rule. The same with spending every evening on Internet for a month to save $200.
That's true, but it's just as easy to negotiate well as it is to negotiate badly. And a well-executed haggle will save a lot more than just $200.
I think that's net,not gross.
Have you been to a dealers web site?
Did they have their inventory listed or did they request you "build" a car?
More and more I'm seeing dealers not list their inventories online and using these "configuarators".
Do you think this helps or does it hunder the dealerships ability to reach the customer?
Any thoughts?
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One dealer who we ultimately bought from had even listed their expected incoming cars of one particular new model. One of them was going to be the exact car my wife wanted. I checked back occassionally during about a 2-3 month period. Finally when it actually arrived I sent an email saying "what will you sell that car for?".
We bought the car about 5 days after it had rolled off the truck at the dealership
But even then, there were good dealers. Small family run places that treated their customers well.
things went downhill from then to where they are now.
And you are correct, people like this walk avery day without buying a car. Eventually they come to grips with the the reality of the market. At that point, they either settle for less or pay the price.
I have seen dealer websites in ALLL shapes and sizes and most of the time I really do not find them anymore useful than what you can get directly from the Manufacturer's website.
I've seen your website and that chick keeps popping up scaring the kadoodles out of me *snicker*
I guess I have it engrained what a dealer has or doesn't have on thier lot is almost irrelevant. Since, if a dealer wants to make the deal he will find you "that" car if you want.
And nothing drives me more batty then incorrect inventory amounts. For example, last night I checked for some cabineets at an office supply store, they said they have 4. I went to the store and I got the ohhh..that number is wrong.
Lets face it no inventory system is perfect or in real time. And if a customer "thinks" you have a car and they show up and you don't it will only add to the negative feelings about the dealership.
What I think Internet departments should do, is add more drop down menu's so a customer can "configure" the exact quote of a vehicle they want ie:
Model - Pilot
Trim - EX-L
_2wd __AWD
Color choice 1/2/
Options: check all that apply.
I think this would help ease all the "quote frustration" since I am sure the typicall customer asks for a Quote on a Pilot- and most salesman will fire back with the price of a 2WD LX and the customer was thinking that quote applied to a AWD EX-L/NAV/RES woodtrim, etc....*rattle*