If you want to take a trip down memory lane, walk into a car dealership and buy or lease a new car. If the TV series “Mad Men” has taken us back to the world of 1960’s Madison Avenue and three martini lunches, buying a car today from a traditional dealership harkens back to the era of Willy Loman.
Many companies are on their way to radically changing this process (e.g., BMW – see a recent WSJ article: http://on.wsj.com/SFUNhI). Tesla has pioneered a new direct-to-consumer model that utilizes showrooms where the customer places the order online (partly due to state dealer franchise laws). Autotrader is also consulting with dealers on how to bring their marketing and sales capabilities into the 21st century and maintain relevancy with a new generation of car buyers who have never seen a “stick shift.”
However, let me describe my experience last week. Before walking into the dealership, I configured a vehicle over the internet and emailed this to the dealer. In the space of a week, my previous “relationship manager” had resigned, so I met with a different salesman who did not have our records, forcing us to start from scratch. You might ask why we went to the dealership in the first place, but given the continuous changes to car color combinations, we wanted to verify that the physical appearance matched what was presented on the website (after a surprise in a previous transaction).
I proceeded to fill out a paper form with my basic information, which the salesman took and then entered into the computer. I couldn’t help but think that even with my moderate typing speed, this would have been much faster if I had just entered my information directly into his computer for him. Once the information had been entered, we selected the configuration for the vehicle using the same web-based solution that I had used from home, which is excellent.
Once we “built” our vehicle, we arrived at an MSRP, and the salesman left to talk pricing with the manager. Meanwhile, the original salesman with whom I had interacted the week before left messages for me on my phone (I’m not making this up) and texted me a counteroffer (now that’s using technology), as he apparently had landed at a dealership across town for the same brand. When the salesman returned to the office, he presented me with a price that’s $50/month higher than the rate quoted over the phone (and to which I subsequently received in writing via a text message). When I used this to negotiate a lower price, he again left the office to “check in” with his manager. When he returned to match the price, we had a deal (which means I should have asked for more…).
As I was telling this story to one of my friends who has bought more cars than I and is also a better negotiator, he remarked that he never goes into a dealership. He buys a car (new or used) only over the internet and phone. The “showrooming” concept in retailing is certainly about to extend to car purchases, and BMW and Tesla are heading down this path.
We talk so much about how the buying process has changed for many industries, it’s almost becoming cliché… but in this case, it certainly rings true. When I went along with my father circa 1980 to buy a new Pontiac, it was old-school selling and negotiation, where the dealer had most of the information and leverage (assuming you really wanted a specific brand and model). With compliments to Johnny Van, I expect to see auto sales change dramatically over the next 5 years – matching the radical changes in the vehicles themselves, both of which will be a benefit for consumers.