I got ya. I was pushing the no-haggle idea, but you've got that.
Have you made a purchase that started with a net quote?
I'm also curious. Do you think there's any difference between quotes you receive from dealers nearby vs. dealers further away - say more than a 100 miles away?
No, I have not purchased a car via a net quote yet. This will be my 1st purchase using the internet as an aid. I came to the net because of my past "high pressure" experiences I have had when visiting the dealership. With kids now, I just don't want to do that because it can get emotional at the dealership and I don't want to subject them to that.
Regarding pricing and distances of dealership- good question as I have not really thought about that. So far, I have not seen much difference in the numbers. Maybe its because when I fill in my profile to request a quote for a car, I only leave accurate information with regards to my internet address as I don't want phone calls or mailings to come to my house until I am sure I will buy from that dealer.
If a dealer knew you lived close to them, would that benefit you on pricing?? You might say, yes it would, thinking that the dealer would know they would not only be selling you the car, but also getting your business in service since you live close to their dealership. You might say no, because the dealer might think, "I am the closest dealer to him, they will most likely buy from me even if I charge a higher price for the car". I guess it could swing either way. What are your thoughts??
You've got the hypothesis I'm checking out. I sorta figured a smart salesguy would would factor in the value of the travel time to me, so quotes from further away would be a bit lower. I bought before I thought about this, so maybe I don't have enough data to know for sure. The pattern seemed to be better quotes from dealers further away, but that was skewed a little by a local guy running an ad. Even so, the net factor showed up in the courtesy and "I wanna talk on the phone" areas. Further away seemed to bring better acceptance of the net venue as well as slightly lower quotes. A couple of dealers 200-300 miles away even offered to deliver the car. I used a straight city location on my requests and either skipped street address or put in an obvious fake (when the net form required an entry), so 'twas clear I was wanting to net. FWIW, I did no purposeful gaming with the requests; and I think that helped elicit straight replies. FWIW II, there was some gaming at pick up on the dealer's part; thus, getting the deal was only getting 1/2 way home.
Rivertown - I do believe you have it figured out from the buyers perspective. Have you ever thought about starting a little side business?
I think there is room for a "Doityourself Priceline" type of business to generate some part time income.
After all you do have the time on your hands.
I'm not being sarcastic at all. I don't think there is a viable business model there where you could have full time employees, but a couple part timers working out of their homes could easily generate an extra grand a month or so....
Let me reitterate. At first from reading your posts I thought you were pretty clueless and basically just a ship disturber. After reading your last couple posts I realize where you're coming from.
Actually, I know a guy who makes his money buying cars for folks; but it's mostly in-person style; and occasionally you see stuff about car 'brokers'. In my town, public transport sucks; most everybody needs a car; and some large %age really hate the experience of buying a car. IMO (observation), most love having a new car; but a lot end up feeling confused, with a vague feeling of having been ripped off, and with a financial problem. Well, duh! My best friend is paying almost $400 a month on a compact PU he rushed out and bought, and my ex is driving herself broke in a SUV she 1) can't afford and 2) paid too much for. Just examples from my life, but not rare. You don't have to read far on these boards to find consumers who oughta confine their shopping to the grocary store and leave the car buying to someone else. You also don't have to read far to find bizguys/gals taking great joy in a customer's, anybody's customer, getting fleeced.
So, I am a boat rocker - but with a point. This buying-of-a-car need not be so confusing or destructive. Dumb, greedy, and ill tempered consumers? You betcha. Carbiz hooey, greed, and scam? You betcha, too! Where's the fix? On both sides, obviously. I put a lot of my attention on the biz, though, because . . . that's where the pro's are.
That's a long winded reply, but I agree with you that there's a living to be made buying cars for folks, especially via the net. Not meaning it all as a slam, but I think it's telling and ironic that we can even say this about an industry with such a high investment in sales and marketing.
Those were direct quotes cut&pasted from e-mails I got in reply to internet quote requests. It was pretty clear to me which was straight and which was hooey. Of course, you never know in the carbiz 'till you do the deal. I found it interesting that while neither guy had flawless command of grammar, the most articulate was the least willing to shoot straight. A case of walking the walk vs. talking the talk is what I thought.
what I got out of the article is that dealers need to try to better understand the internet systems instead of just using it as a leads inbox. This may have worked fine in the 90's, but not today. It would be intersting to get some input from dealership owners that are newer to the biz(ie more ready to adopt new technology and not tainted by old school sales tactics) vs dealership owners that are from the old school trying to transition to the new economy.
I find its easier for internet salesmen to be successful if they haven't sold cars before. Old school doesn't work well in the internet environment, and its easier to train someone the right way than to have to untrain someone.
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I bought my 2001 Camry V6 Collector Edition 'the traditional way' at an excellent price -- after some bargaining back and forth with the dealer. Knowing what I know now from the Internet, I probably could have done better, especially with financing and extended warranties. Well, live and learn! :-)
I will definitely buy my next car on the Internet. It's an easy and convenient way to get all the info you need, especially dealer's invoice and True Market Value (fantastic tool at Edmunds). When you contact the dealers they know you're a no-nonesense buyer who's done his homework and who can take his business anywhere he wants! It's a totally different ballgame!
If you still prefer going to the dealer, it would be a good idea to at least 'research' on the Internet and take your print-outs with you. That would save you some of the dealer's tricks and techniques we all know about! ;-)
I have never mde an offer over the internet, but I have bought three cars over the phone, which I guess is pretty much the same thing. I would call up, make an offer, they accept, we go there and give them a check, and we drive the new car home.
I would call that 'no nonsense', and I think that is what a lot of internet buyers are hoping to do.
I been doing internet sales at my store since August last year and some days I feel burned out. After 5 or 6 e-mails it gets old. The ones that do come into the store have no idea what they are buying. I can say with certainty that for the last 3 months about 80 percent of the ones I sold had no idea about the differences in trim levels between a Camry, Corolla, or Avalon. Their main motivator was gasp! PRICE! Needless to say I been given license to pardon my french "whore" everything out! I spend a lot less time with my previous customers and lot traffic and I just hope it will get better. I don't want to lose my selling skills and become an online order taker. ; ) Mackabee
Reading the previous messages, I just wonder why is it that some dealers are against Internet buying? Is it because they lose the power to pressure/manipulate the customer like in the showroom sales? or the competition with other dealers that works to the customer's advantage? or simply because they don't make as much profit from those savvy buyers in comparison to the walk-in regular Joes?
Violinist, I think you are playing the right tunes.
I think people like sales because they enjoy getting customers to behave like they want them to. They entice customers to buy their products, and get a good profit from the deal.
Over the internet, all they get to do is answer questions and take orders. Not the same thrill as selling in person.
That's my guess, anyway. I could be wrong. I doubt very much that I could ever do a sales job.
I think there are two things going on - one of them kind of sick and the other very understandable. The 'sick' thing is what you're addressing, and you don't need to look far to find it. Whether it's an argument on one of these threads or a car deal, the need to 'win' the negotiation (negotiation twisted into a contest) becomes such a huge thing that everything else gets lost. The other thing is what I read into Mack's post above - the loss of interpersonal interaction, which is genuinely important and satisfying to many people. There are lots of folks just like him, who simply love dealing with people; and I can see how net business would become very dry and unsatisfying. The parallel that comes to my mind is people religious - the monk with a vow of silence and the minister not content away from the flock. Either can perpetrate great good or great ill.
I agree with what you said. I wasn't refering to Mack in my message. I'm sure he's a good person who misses the human interaction element in his everyday work. Besides, he's a Toyota guy like myself! :-)
On the other hand, to be honest I have to say that some buyers are incosiderate. Some don't even want the dealer to make any profit! Others keep negotiating when they have no intneion to buy!
I still prefer to buy on the Internet, but I'm in the minority. Most people still do it the traditional way. Well, we'll see if that changes in the coming few years as the Internet becomes an integral part of everybody's life.
I don't think dealers dislike the internet but the whole concept has some flaws that need to be addressed before the internet becomes a major force within the retail world...
most studies show that the gross profits on internet deals are a little higher than a traditional showroom sale, not enought to get excited about but a bit higher.....
1. internet sales take alot longer to wrap up than a traditional showroom sale. 2. the closing ratio on showroom customers is around 25% and internet consumer is 10% 3. huge numbers of bogus/phony price requests. 4. too many request out of the dealers marketing area (allocations issues) 5. internet lead sources keep going out of business. 6. can't test drive on the internet 7. can't appraise the trade on the internet 8. people don't buy cars on the internet. they research on the internet 9. It cost dealers more money to sell a car to an internet buyer than traditional showroom buyers.. based upon the IT costs, lead source costs and time to close the sale.
the internet didnt bring anything new to the car buying world that people couldnt get before the internet...it has made information alot easier to gather but the facts of the information are sometimes in question....I love a truly informed buyer, everybody wins!! the hardest sale in the world is the internet buyer who is loaded with half truths or outright fictional information. gee cletus, I got the info on the internet, it must be true. hahah
I'm with you on the internet and about the existence of inconsiderate customers.
The but:
My take is that the idea that customers don't want dealers to make any profit is far too simple. I think the vast majority of customers mistrust dealers - for a very good reason; the lack of parity in negotiation. Even the biggest spirited dealers start getting mean and deceptive when you start pinning down the sources of profit in a car deal. Most people hate being deceived in the 1st place and expecially hate it when they need to negotiate on the basis of bad info. Shucks, folks buy stuff all the time knowing there's considerable profit in the price - all without resentment and mistrust. Because, I'm convinced, price is not set through a process of negotiation without parity.
Sorry for the long rap, but I think that's why internet shopping goes so well - the reduced need to negotiate without parity. There's less negotiation in the 1st place, and the buyer has access to more info.
You bring to light one of the obstacles to dealers using the internet effectively...they are too much rooted in the old way of selling cars and not open to change
4. too many request out of the dealers marketing area (allocations issues)...why are there allocation issues? is that something imposed by the manufacturer? shouldn't manufacturers being looking at nation wide selling in the 21st century?
5. internet lead sources keep going out of business....the dealer does not need them. If they setup an effective website and a good internet dept they should be able to handle their own leads
I understand what you are saying as you have the experience in the business, but sometimes it takes an outside view to develop real change.
Unfortunately a lot of what i have brought up would be detrimental to dealers and would be more along the lines of the customer buying directly from the manufacturer. Dealers and dealer associations in every state have fought that and have had laws implemented to make it illegal for the customer to buy direct from the manufacturer, to protect themselves.
Gateway stores are a good example of how this works. Some buyers know enough to just order over the internet. Others want to touch the products and ask a salesman questions. All of the orders still go to Gateway, there is no third party in the middle to increase costs. Manufacturers could follow this same model. I know others have said this has been tried and it failed. I do not know all of the details of that, but it seems like it would work fine to me. I am sure the dealers were fighting this experiment tooth and nail.
Like I said, alot of these innovations would cut the dealer out of the picture, so I can see where they would be loathe to go along with it. But progress should not be stymied by those old schoolers. When the car was invented and finely caught on, alot of wagon and saddle makers were put out of business or had to adapt their business. Should we still be riding around on horses just because a few businesses closed and their workers had to be retrained for a new market?
I agree with you that you can't buy a car internet only. If nothing else, test drives are needed. And, it's been so long since I did a deal involving a trade-in that I almost forget that side of it. But, I get that trading-in is part of it for many buyers.
The lead source thing strikes me as dumb, dumb, dumb. As a buyer, I don't want to mess with an intermediary. Give me a functional website with an inventory search function and a quote request form, and I'll be completely satisfied. Dunno why the quote request forms are so vague, but that could be fixed easily and save everybody a big source of hassle by forcing a shopper to specify model, trim line, options, color, etc. I should think that would cut down on the frivolous shopping also. My guess is that some 'marketing genius' has decided that specificity at the quote request stage would cut down opportunity to sell up and has decided that plenty of bad traffic is the more desirable path.
The informed buyer thing? That's a dealer/industry look in the mirror problem, IMHO. Soooo much deception is practiced in the name of marketing that it's no wonder buyers have unreal expectations.
I have some appreciation for the spot of the salesman in all of this, but I think the real sources of difficulty lay in the industry. And, I think most of these problems will be fixed by the industry as more and more of the business goes net.
Have you ever wondered what it would be like if Japanese design and manufacture, Saturn sales practice, and an emphasis on internet sales were combined?
I'm not sure but I think there may be a way to buy directly from the manufacturer. A few years ago a friend of mine bought S500 from MB in Germany. He made the payment through a contact bank in Germany, they shipped the car and he got it in a month. I don't know how much he paid, but it was around dealer's invoice + shipping.
I guess it's like buying air tickets from a travel agent or from the Airline itself.
on the subject of buying cars on the Internet, if anyone is interested, I came across these sites :
Just when I thought all was lost an internet buyer restores my faith again! I had been e-mailing a prospective buyer for three days! First he sent in a request for a price on a Corolla S without the sport package (alloys and spoiler) I have none in stock so I sent him a price quote on one with the sport package which I have several in stock, and also a price quote for one without the sport package and make it clear I will have to dealer exchange one if he decides to go that route. It was a very competitive price, about 300 over invoice. He responds that it's too much and can I send a price quote on an Le. I send a price quote on an LE and he responds that it's over his budget. By this time I'm beginning to get frustrated and e-mail him back and tell him that maybe we should be looking at a Ce and ask him point bland just what his budget is. He e-mail me back and says "Mr. Mackabee all I want is the price quote for the Le." Now one thing about e-mail and it shows here on these threads is that words sometimes convey the wrong emotions. After I e-mailed back the price on the Le I figured I would never hear from him. Well LO AND BEHOLD! today around 2pm I'm sitting at my office and a colleague comes up and tells me I have a customer out on the lot. I get up and head out to the lot and this couple in their mid 30's are waiting around their car. I go up and introduce myself and they do the same and tell me the husband has been e-mailing me for the last couple of days and they are here to look at the cars we've been talking about. "Great! Thanks for coming in!" I say. "I have the sport model right over here" I tell them as I point towards the car. Lucky for me the Le I had quoted them a price on is just 5 cars away also. The wife asks me about the price again and I tell her "I don't remember right off the top of my head but I have them written down on my planner and also I can pull up the e-mails I sent you, would you like to drive the cars?" I ask. "I haven't driven them but my husband has. And yes I would like to drive them." she says. I write down the stock numbers for the two cars and excuse myself to get the keys. I come back and send them off in the sport model first. When they get back I can tell right away he likes the sport model but she is leaning towards the Le because of the lower price... : ) Mackabee
I then put them on a test drive on the Le and tell them I would normally go with them but I have another customer waiting on me. (Sometimes they all show up at the same time!!) They leave and about 15 minutes later come back and the wife decides they will go with the LE. I check the mileage on the car and lead them to my office to write up the deal, on the way in they tell me they have been pre-approved thru their credit union at 5.9% for 60 months..I tell them that we have 3.9 for 60 months thru TMCC and I can save them some money if they qualify. We go to my desk and I get all my paperwork together and fill out a credit app and good news! Their score is high enough to qualify. After they do the title work in F$I they are back at my desk and we call their insurance company to add the vehicle to their policy. Well come to find out, the vehicle they are currently driving is under the wife's father's name and they are not on the policy. I tell them that they have to get their own policy and can't take the car until it is fully insured. So we get on the phone to her dad and we find out they have to get their own policy but we can't get her dad's agent on the phone. "Why don't we call USAA or GEICO" I suggest. (no plug intended) but since he is a fellow USN active duty member I try to help out. So I get on the phone with USAA and can't get a human being to talk to me so we try Geico. The quote he gets for the car is too high. I try USAA again and finally get someone to help us. After 30 minutes or so they end up putting her dad's car and the new car on a new policy for a lot less than the original policy on her dad's car. I have USAA fax me a copy of the binder and their new insurance cars and finally lead them out to their new Corolla. They are too eager to leave as they have now spent close to 4 hours at the dealership and are ready to go home and so am I. I tell them this will only take a few minutes and I do a thorough explanation of all the features in the car. After I'm done and they are ready to go, the wife says to me "Mr. Mackabee, you have been very professional and I really do appreciate all the time you took with us. No one has ever done this for us, not only did you save us a lot of money on the car but also on the insurance policy. Thank You, I will make it a point to tell all my friends and relatives about you." : ) Mackabee p.s. Customers like these is what makes it all worthwhile.
Sounds like a good CSI in the making...let us know!
Had an interesting comparison of internet vs traditional yesterday. I took an "up", a couple who were in desperate need of a new car. They had no idea what they needed, so I proceeded to interview them. They had an old Subie GL/Turbo that took a quart of oil to go around the block, and wanted to see the Outback-Legacy-Forester for comparison.
At 4 o'clock on a Saturday, I didn't want to take too much time, so I had them try some cars on for size in the showroom. We talked about the models, and it became apparant price was a major factor for them. Also, the Mrs. was on the petite side, so seats were the second most important item. I was able to rule out the Lecacy due to seating, then the Outback over price, in five minutes. We focused on the Forester, and I offered a test drive.
Another fifteen minutes and they decided on the Forester as the car of choice. Now came the hard part-price.
It took us over an hour to work out a deal with the sales manager that I would have offered to an internet customer immediately. It was fun working the deal the "old way", but boy, is it time-consuming!
Thanks for your stories. I'm glad to hear the experience from the dealer's point of view.
One thing I'm curious about: you haven't told us what 'extras' you offered your customers such as extended warranties, alarms, paint protection, accessories, etc.; at what price, and whether they bought or not?
In my case extended warranties, mop & glo, gap insurance,is offered at the time of signing the contract and dmv paperwork. I always try to discourage customers from getting aftermarket alarms as they create major electrical problems that could void the factory warranty. It's best to pay a little more for the OEM and have peace of mind. : ) Mackabee
Not sure how they do it in CA, but in the good ole south you cannot buy a new car period without going through a dealer. Its the law. As far as I know, it is the law in every state, or people would just buy direct from the manufacturers in the states that did not have dealers and pocket the savings. Not sure what your friend did, but I bet a dealer was involved somewhere. I have heard of factory pick up programs like that for MB and BMW, but they all start at a dealer.
Was my statement true that all states have laws that consumers can only buy from dealers?
I believe what you said above, but that does not make any sense. They sell thousands of cars to dealers at invoice. They have built their price structure around selling to dealers at invoice. Why not sell to the buyer at invoice too? They make the same profit and do not have to pay me any holdback or sales incentives, so more profit. I can see if they are trying not to hurt dealers they are competing against, but selling at MSRP only while dealers sell for hundreds or thousands less gives me no incentive to buy from the manufacturer direct. In that environment I can understand why direct sells has always failed in the past. It will always fail with that kinda dumb pricing.
Now if the manufacturer wants to sell to me at invoice, no negotiation, I can see where that would work better. But then it undercuts dealers in the area.
With all due respect, that is a very simplistic view of the subject.
I don't know about state laws but I do know that dealerships exist in many different countries around the world. I doubt that Louisiana state law is why dealerships exist in Australia.
You want dealerships to disappear? Along with your car's warranty? Without a factory supported dealership who will do warranty work? What about parts? I guess Pep Boys jobber parts will have to do. I doubt that manufacturers will want to absorb the added cost of opening parts and service centres just so they can make the same money selling the car.
What about everyone beyond the 26 knowledgeable Edmunds posters? Who's going to explain the towing capacity of an F-150 vs. an F-250? Again, I doubt that the manufacturers will be interested in setting up their own showrooms with all the resulting overhead just to sell a car for the same money as they do now.
MSRP vs. invoice? If you could buy directly from the factory only, there would be no distinction between the two. There would only be "the price." And with no competition for the same types of car, what incentive would there be for "the price" to be set lower rather than higher?
Life without car dealerships remains a fantasy of anti-social internet dwellers and members of the new Victim class but I have yet to see any viable plan that would work.
I had the same thought, that we're not near to dealer dispensability - given the need for service departments. The lore seems to be that the service department is the major profit center for a dealership, anyhow; but the point is that the need for manufacturer certified service and parts networks is still real. Looking at the maintenance sched for my new Honda, however, I wonder if that need is as long lived as Landru suggests. There's not a single thing on that maintenance schedule prior to mile 110K that I cannot easily do myself; and, while that doesn't mean I won't need brakes or something like an alternator/waterpump/some other fix, it does suggest that the need for a readily available factory sponsored shop may be waning. As reliability increases and service intervals lengthen, the time is bound to come when the current roadside assistance bundled with some cars now expands to all makes and includes major repairs. A car breaking down would happen so seldom that it would be feasible to have a Honda (for example) wrecker show up, drop off a loaner, haul the disabled car to a manufacturer megashop, and then return within a week to exchange the fixed for the loaner car. That's basically what happens with some 'puter service plans now, and it takes more time and hassle to transfer software than car junk.
Loss of dealerships in the current form > loss of price competition? Nope. There will still be competition between makes and price sensitivity to market conditions, just as is currently the case with 'puters.
thanks for the comments and you bring up some very good points....I am not anti dealership and I understand the need for the service depts
I was just saying that if the manufacturers set up factory direct programs at MSRP they are setting themselves up for failure if they are in competition with dealerships selling closer to invoice. What would you rather pay, $8,000 to the seedoo dealer or $10,000 to seedoo? I haven't done a poll, but I bet the majority of people would say the seedoo dealer.
It has been said before and this thread is about the discussion of it: most dealers are not using the internet effectively. IMHO it is because they are afraid of it and are too engrained in their old sales ways. I do not believe we will see the day soon that brick and mortar dealerships go away because of internet sales, but I think dealers could do a much better job of providing info, pricing and services through their websites.
Internet buyers will expect lower prices. That is just a fact. How many internet buyers have emailed you that they want to come down and pay MSRP for that Taurus? Dealers need to get out of the mindset of trying to get full price for every car they sell and negotiating down from there. They can increase their volume by lowering prices upfront. This gives the same total profit and maybe more if they reach volume selling goals.
I heard a good example of this on the radio yesterday. They were discussing the Easy corporation. The owner's selling philosophy is instant demand pricing. That means pricing is based on demand at that second. In their rental car company sometimes you can rent a MB for $9/day. His rental rate is like 98% compared to regular car rental fleet rates of 60%. He is using all of his assets at their full potential, and making plenty of money.
very good point, but it also depends on sales capacity
This is just hypothetical but lets say your dealership has 10 salesmen that work 40 hours per week, 8 hours a day. Each salesman can comfortably sell and process one vehicle per two hours, given they have a buyer sitting at their table when they are through with the previous buyer. This gives a total of four vehicles per salesman per day. This is a total of 40 cars per day for the dealership.
But in reality because the price starts at msrp and it takes a while to negotiate and some buyers leave looking for lower prices, each salesman only sells 2 cars per day. The dealership is still paying each salesman 40 hours per week. The salesmen are not being used to their full capacity. This is similar to what I said above about the Easy corporation. They have adjusted price down to allow for full capacity of their product. If the dealership did the same they would double their sales with the same staff they have there already.
Of course if the sales staff is at full capacity (which I doubt) then you are correct there would be additional cost to increase volume as in hiring more staff, etc.
I know there is a lot more that goes into selling cars than what I said above, but like they said about engineering I try to look at the numbers side of things. I am a chemist by degree.
Comments
Have you made a purchase that started with a net quote?
I'm also curious. Do you think there's any difference between quotes you receive from dealers nearby vs. dealers further away - say more than a 100 miles away?
Regarding pricing and distances of dealership- good question as I have not really thought about that. So far, I have not seen much difference in the numbers. Maybe its because when I fill in my profile to request a quote for a car, I only leave accurate information with regards to my internet address as I don't want phone calls or mailings to come to my house until I am sure I will buy from that dealer.
If a dealer knew you lived close to them, would that benefit you on pricing?? You might say, yes it would, thinking that the dealer would know they would not only be selling you the car, but also getting your business in service since you live close to their dealership. You might say no, because the dealer might think, "I am the closest dealer to him, they will most likely buy from me even if I charge a higher price for the car". I guess it could swing either way. What are your thoughts??
The pattern seemed to be better quotes from dealers further away, but that was skewed a little by a local guy running an ad. Even so, the net factor showed up in the courtesy and "I wanna talk on the phone" areas. Further away seemed to bring better acceptance of the net venue as well as slightly lower quotes. A couple of dealers 200-300 miles away even offered to deliver the car.
I used a straight city location on my requests and either skipped street address or put in an obvious fake (when the net form required an entry), so 'twas clear I was wanting to net.
FWIW, I did no purposeful gaming with the requests; and I think that helped elicit straight replies.
FWIW II, there was some gaming at pick up on the dealer's part; thus, getting the deal was only getting 1/2 way home.
I think there is room for a "Doityourself Priceline" type of business to generate some part time income.
After all you do have the time on your hands.
I'm not being sarcastic at all. I don't think there is a viable business model there where you could have full time employees, but a couple part timers working out of their homes could easily generate an extra grand a month or so....
Let me reitterate. At first from reading your posts I thought you were pretty clueless and basically just a ship disturber. After reading your last couple posts I realize where you're coming from.
Please - don't give me a TY
Actually, I know a guy who makes his money buying cars for folks; but it's mostly in-person style; and occasionally you see stuff about car 'brokers'.
In my town, public transport sucks; most everybody needs a car; and some large %age really hate the experience of buying a car. IMO (observation), most love having a new car; but a lot end up feeling confused, with a vague feeling of having been ripped off, and with a financial problem.
Well, duh! My best friend is paying almost $400 a month on a compact PU he rushed out and bought, and my ex is driving herself broke in a SUV she 1) can't afford and 2) paid too much for. Just examples from my life, but not rare.
You don't have to read far on these boards to find consumers who oughta confine their shopping to the grocary store and leave the car buying to someone else. You also don't have to read far to find bizguys/gals taking great joy in a customer's, anybody's customer, getting fleeced.
So, I am a boat rocker - but with a point. This buying-of-a-car need not be so confusing or destructive. Dumb, greedy, and ill tempered consumers? You betcha. Carbiz hooey, greed, and scam? You betcha, too!
Where's the fix? On both sides, obviously. I put a lot of my attention on the biz, though, because . . . that's where the pro's are.
That's a long winded reply, but I agree with you that there's a living to be made buying cars for folks, especially via the net.
Not meaning it all as a slam, but I think it's telling and ironic that we can even say this about an industry with such a high investment in sales and marketing.
What kind of an actual salesman would use such sophomoric, layman terms?
Sounds like a layman to me.
"Documentary Fee" - Is that what it costs to make a documentary on PBS????? Not bad.
I hope that "Drive Away Sticker" has anti-lock brakes, it's a jungle out there.
Of course, you never know in the carbiz 'till you do the deal.
I found it interesting that while neither guy had flawless command of grammar, the most articulate was the least willing to shoot straight. A case of walking the walk vs. talking the talk is what I thought.
What a lot of dealers miss is the time spent on the internet lead can be a lot less than the walk-in, and the cost per unit sold tends to be less.
Ed
Thanks!
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I will definitely buy my next car on the Internet. It's an easy and convenient way to get all the info you need, especially dealer's invoice and True Market Value (fantastic tool at Edmunds). When you contact the dealers they know you're a no-nonesense buyer who's done his homework and who can take his business anywhere he wants! It's a totally different ballgame!
If you still prefer going to the dealer, it would be a good idea to at least 'research' on the Internet and take your print-outs with you. That would save you some of the dealer's tricks and techniques we all know about! ;-)
Tony
actually, make that the last two paragraphs
LOL
Ed
I would call that 'no nonsense', and I think that is what a lot of internet buyers are hoping to do.
; )
Mackabee
Tony
I think people like sales because they enjoy getting customers to behave like they want them to. They entice customers to buy their products, and get a good profit from the deal.
Over the internet, all they get to do is answer questions and take orders. Not the same thrill as selling in person.
That's my guess, anyway. I could be wrong. I doubt very much that I could ever do a sales job.
I think there are two things going on - one of them kind of sick and the other very understandable. The 'sick' thing is what you're addressing, and you don't need to look far to find it. Whether it's an argument on one of these threads or a car deal, the need to 'win' the negotiation (negotiation twisted into a contest) becomes such a huge thing that everything else gets lost. The other thing is what I read into Mack's post above - the loss of interpersonal interaction, which is genuinely important and satisfying to many people. There are lots of folks just like him, who simply love dealing with people; and I can see how net business would become very dry and unsatisfying.
The parallel that comes to my mind is people religious - the monk with a vow of silence and the minister not content away from the flock. Either can perpetrate great good or great ill.
I agree with what you said. I wasn't refering to Mack in my message. I'm sure he's a good person who misses the human interaction element in his everyday work. Besides, he's a Toyota guy like myself! :-)
On the other hand, to be honest I have to say that some buyers are incosiderate. Some don't even want the dealer to make any profit! Others keep negotiating when they have no intneion to buy!
I still prefer to buy on the Internet, but I'm in the minority. Most people still do it the traditional way. Well, we'll see if that changes in the coming few years as the Internet becomes an integral part of everybody's life.
Tony
most studies show that the gross profits on internet deals are a little higher than a traditional showroom sale, not enought to get excited about but a bit higher.....
1. internet sales take alot longer to wrap up than a traditional showroom sale.
2. the closing ratio on showroom customers is around 25% and internet consumer is 10%
3. huge numbers of bogus/phony price requests.
4. too many request out of the dealers marketing area (allocations issues)
5. internet lead sources keep going out of business.
6. can't test drive on the internet
7. can't appraise the trade on the internet
8. people don't buy cars on the internet. they research on the internet
9. It cost dealers more money to sell a car to an internet buyer than traditional showroom buyers.. based upon the IT costs, lead source costs and time to close the sale.
the internet didnt bring anything new to the car buying world that people couldnt get before the internet...it has made information alot easier to gather but the facts of the information are sometimes in question....I love a truly informed buyer, everybody wins!!
the hardest sale in the world is the internet buyer who is loaded with half truths or outright fictional information. gee cletus, I got the info on the internet, it must be true. hahah
I'm with you on the internet and about the existence of inconsiderate customers.
The but:
My take is that the idea that customers don't want dealers to make any profit is far too simple. I think the vast majority of customers mistrust dealers - for a very good reason; the lack of parity in negotiation. Even the biggest spirited dealers start getting mean and deceptive when you start pinning down the sources of profit in a car deal. Most people hate being deceived in the 1st place and expecially hate it when they need to negotiate on the basis of bad info. Shucks, folks buy stuff all the time knowing there's considerable profit in the price - all without resentment and mistrust. Because, I'm convinced, price is not set through a process of negotiation without parity.
Sorry for the long rap, but I think that's why internet shopping goes so well - the reduced need to negotiate without parity. There's less negotiation in the 1st place, and the buyer has access to more info.
You bring to light one of the obstacles to dealers using the internet effectively...they are too much rooted in the old way of selling cars and not open to change
4. too many request out of the dealers marketing area (allocations issues)...why are there allocation issues? is that something imposed by the manufacturer? shouldn't manufacturers being looking at nation wide selling in the 21st century?
5. internet lead sources keep going out of business....the dealer does not need them. If they setup an effective website and a good internet dept they should be able to handle their own leads
I understand what you are saying as you have the experience in the business, but sometimes it takes an outside view to develop real change.
Unfortunately a lot of what i have brought up would be detrimental to dealers and would be more along the lines of the customer buying directly from the manufacturer. Dealers and dealer associations in every state have fought that and have had laws implemented to make it illegal for the customer to buy direct from the manufacturer, to protect themselves.
Gateway stores are a good example of how this works. Some buyers know enough to just order over the internet. Others want to touch the products and ask a salesman questions. All of the orders still go to Gateway, there is no third party in the middle to increase costs. Manufacturers could follow this same model. I know others have said this has been tried and it failed. I do not know all of the details of that, but it seems like it would work fine to me. I am sure the dealers were fighting this experiment tooth and nail.
Like I said, alot of these innovations would cut the dealer out of the picture, so I can see where they would be loathe to go along with it. But progress should not be stymied by those old schoolers. When the car was invented and finely caught on, alot of wagon and saddle makers were put out of business or had to adapt their business. Should we still be riding around on horses just because a few businesses closed and their workers had to be retrained for a new market?
Lets get with the third wave.
Just my take -
I agree with you that you can't buy a car internet only. If nothing else, test drives are needed. And, it's been so long since I did a deal involving a trade-in that I almost forget that side of it. But, I get that trading-in is part of it for many buyers.
The lead source thing strikes me as dumb, dumb, dumb. As a buyer, I don't want to mess with an intermediary. Give me a functional website with an inventory search function and a quote request form, and I'll be completely satisfied. Dunno why the quote request forms are so vague, but that could be fixed easily and save everybody a big source of hassle by forcing a shopper to specify model, trim line, options, color, etc. I should think that would cut down on the frivolous shopping also. My guess is that some 'marketing genius' has decided that specificity at the quote request stage would cut down opportunity to sell up and has decided that plenty of bad traffic is the more desirable path.
The informed buyer thing? That's a dealer/industry look in the mirror problem, IMHO. Soooo much deception is practiced in the name of marketing that it's no wonder buyers have unreal expectations.
I have some appreciation for the spot of the salesman in all of this, but I think the real sources of difficulty lay in the industry. And, I think most of these problems will be fixed by the industry as more and more of the business goes net.
remember guys, this isn't rocket science
Have you ever wondered what it would be like if Japanese design and manufacture, Saturn sales practice, and an emphasis on internet sales were combined?
I'm not sure but I think there may be a way to buy directly from the manufacturer. A few years ago a friend of mine bought S500 from MB in Germany. He made the payment through a contact bank in Germany, they shipped the car and he got it in a month. I don't know how much he paid, but it was around dealer's invoice + shipping.
I guess it's like buying air tickets from a travel agent or from the Airline itself.
on the subject of buying cars on the Internet, if anyone is interested, I came across these sites :
www.where-can-i-buy-a-car-online.com
www.car-buying-strategies.com
www.beatthecarsalesman.com
www.carbuyingtips.com
Tony
: )
Mackabee
: )
Mackabee
p.s. Customers like these is what makes it all worthwhile.
Had an interesting comparison of internet vs traditional yesterday. I took an "up", a couple who were in desperate need of a new car. They had no idea what they needed, so I proceeded to interview them. They had an old Subie GL/Turbo that took a quart of oil to go around the block, and wanted to see the Outback-Legacy-Forester for comparison.
At 4 o'clock on a Saturday, I didn't want to take too much time, so I had them try some cars on for size in the showroom. We talked about the models, and it became apparant price was a major factor for them. Also, the Mrs. was on the petite side, so seats were the second most important item. I was able to rule out the Lecacy due to seating, then the Outback over price, in five minutes. We focused on the Forester, and I offered a test drive.
Another fifteen minutes and they decided on the Forester as the car of choice. Now came the hard part-price.
It took us over an hour to work out a deal with the sales manager that I would have offered to an internet customer immediately. It was fun working the deal the "old way", but boy, is it time-consuming!
One thing I'm curious about: you haven't told us what 'extras' you offered your customers such as extended warranties, alarms, paint protection, accessories, etc.; at what price, and whether they bought or not?
Appreciate your feedback...
Tony
No VIN etch, rust & dust, etc.
: )
Mackabee
Maybe some dealers can comment.
EVERY time it has been done, the cars were priced at MSRP. No negotiation.
I believe what you said above, but that does not make any sense. They sell thousands of cars to dealers at invoice. They have built their price structure around selling to dealers at invoice. Why not sell to the buyer at invoice too? They make the same profit and do not have to pay me any holdback or sales incentives, so more profit. I can see if they are trying not to hurt dealers they are competing against, but selling at MSRP only while dealers sell for hundreds or thousands less gives me no incentive to buy from the manufacturer direct. In that environment I can understand why direct sells has always failed in the past. It will always fail with that kinda dumb pricing.
Now if the manufacturer wants to sell to me at invoice, no negotiation, I can see where that would work better. But then it undercuts dealers in the area.
I don't know about state laws but I do know that dealerships exist in many different countries around the world. I doubt that Louisiana state law is why dealerships exist in Australia.
You want dealerships to disappear? Along with your car's warranty? Without a factory supported dealership who will do warranty work? What about parts? I guess Pep Boys jobber parts will have to do. I doubt that manufacturers will want to absorb the added cost of opening parts and service centres just so they can make the same money selling the car.
What about everyone beyond the 26 knowledgeable Edmunds posters? Who's going to explain the towing capacity of an F-150 vs. an F-250? Again, I doubt that the manufacturers will be interested in setting up their own showrooms with all the resulting overhead just to sell a car for the same money as they do now.
MSRP vs. invoice? If you could buy directly from the factory only, there would be no distinction between the two. There would only be "the price." And with no competition for the same types of car, what incentive would there be for "the price" to be set lower rather than higher?
Life without car dealerships remains a fantasy of anti-social internet dwellers and members of the new Victim class but I have yet to see any viable plan that would work.
Loss of dealerships in the current form > loss of price competition? Nope. There will still be competition between makes and price sensitivity to market conditions, just as is currently the case with 'puters.
I was just saying that if the manufacturers set up factory direct programs at MSRP they are setting themselves up for failure if they are in competition with dealerships selling closer to invoice. What would you rather pay, $8,000 to the seedoo dealer or $10,000 to seedoo? I haven't done a poll, but I bet the majority of people would say the seedoo dealer.
It has been said before and this thread is about the discussion of it: most dealers are not using the internet effectively. IMHO it is because they are afraid of it and are too engrained in their old sales ways. I do not believe we will see the day soon that brick and mortar dealerships go away because of internet sales, but I think dealers could do a much better job of providing info, pricing and services through their websites.
Internet buyers will expect lower prices. That is just a fact. How many internet buyers have emailed you that they want to come down and pay MSRP for that Taurus? Dealers need to get out of the mindset of trying to get full price for every car they sell and negotiating down from there. They can increase their volume by lowering prices upfront. This gives the same total profit and maybe more if they reach volume selling goals.
I heard a good example of this on the radio yesterday. They were discussing the Easy corporation. The owner's selling philosophy is instant demand pricing. That means pricing is based on demand at that second. In their rental car company sometimes you can rent a MB for $9/day. His rental rate is like 98% compared to regular car rental fleet rates of 60%. He is using all of his assets at their full potential, and making plenty of money.
The costs to sell 100 cars will be hugely different than selling 10 cars. If the amount of revenue is the same then obviously profits will be less.
This is just hypothetical but lets say your dealership has 10 salesmen that work 40 hours per week, 8 hours a day. Each salesman can comfortably sell and process one vehicle per two hours, given they have a buyer sitting at their table when they are through with the previous buyer. This gives a total of four vehicles per salesman per day. This is a total of 40 cars per day for the dealership.
But in reality because the price starts at msrp and it takes a while to negotiate and some buyers leave looking for lower prices, each salesman only sells 2 cars per day. The dealership is still paying each salesman 40 hours per week. The salesmen are not being used to their full capacity. This is similar to what I said above about the Easy corporation. They have adjusted price down to allow for full capacity of their product. If the dealership did the same they would double their sales with the same staff they have there already.
Of course if the sales staff is at full capacity (which I doubt) then you are correct there would be additional cost to increase volume as in hiring more staff, etc.
I know there is a lot more that goes into selling cars than what I said above, but like they said about engineering I try to look at the numbers side of things. I am a chemist by degree.
Tony