Many a member of TTAC’s Best and Brightest have publicly pined for the day when they can order their new car over the internet, bypassing those son of a bitch bastard dealers [not paraphrasing]. Our contacts within the Chrysler Listens consumer advocate board report that the three-headed marketing mavens are sounding out the possibility of losing all those pesky middle men and women eating into their [theoretical] profit. Not one, not two, but three polls sound out the possibility of online ordering or, to use their phrase, “reservation.”
The first question: “Would you reserve your Dodge Caliberor Jeep(R) Patriot via an online reservation system?” Then, “What size downpayment would you be willing to provide online in order to secure your resveration?” And finally: “How willing would you be willing to wait to receive your new custom order?” While the B&B may utter a huzzah, I don’t think Dodge/Chrysler/Jeep dealers will be too happy about that this train of thought is warming-up at the station . . . .
Finally. I have seen good dealers and bad dealers. And in all that time I can only think of one example where they provided a value-added service (helping a friend assume the lease on a Lexus, at a very good rate, from someone leaving the country). Apart from that, nada.
On the other hand, if you can find a reputable dealer of used cars, that is worth gold.
Dealers suck.
The automakers produce vehicles, that they then ‘sell’ to dealers. Dealers are always looking out for their best interests, not the corporation that produced the vehicle. So, the customer gets screwed royal by the dealer, and all they see is the GM/Ford/Chrysler on the building.
The question they’re not asking…
“How many of you would be willing to buy [insert car here] without test-driving it, or even being able to sit in it?
That question alone makes the dealer a necessary evil unless you can somehow work out another method to evaluate a car prior to buying.
While I do like the idea of being able to get what I want without having to fight with a dealer who seems mainly focused on selling me something I *don’t* want for more than I want to pay, I don’t think that the majority of people are ready to move to virtual car purchases.
Maybe if it was sort of like the old Gateway computer stores, where they don’t have any stock except a few demos, and then the sales people aren’t actually commission, they just help you enter your info into a website to order what you want. But… I know people who hated a car in one color or with one particular option, but loved it with some other configuration. It’s an emotional thing, and people can’t necessarily visualize the alternative to make a decision on something so expensive. Do you risk losing the sale in those cases, or do you have to stock every conceivable configuration?
Is it going to be like other online distribution channels, where if it doesn’t fit, you don’t like the color, or otherwise just changed your mind, you can send it back for a full refund? Given the immediate depreciation of titling a new car, I can’t see how that business model would work unless you’re absolutely certain that 99% of your customers would be absolutely happy with your product. It’s not like you could expect a customer to pay a restocking fee that would cover that depreciation.
Also, would you be willing to go across the board to no-haggle MSRP (less rebates and incentives) pricing? That one’s probably easier to fix, assuming a fair price is set, but it may be a deal-breaker for those who are used to “winning” the negotiation for the price of their car to get “a good deal”.
I’m no huge fan of Chrysler, but it is nice to see an automaker doing some research in this area.
Despite our current environment of antiquated state dealer regs, there is absolutely no doubt that an online delivery channel will eventually be the preferred way to buy a new vehicle. The market will demand it (if in fact it isn’t already doing so) and someone, somewhere will find a way to do it.
People just don’t have time for the mumble-jumble of haggling with a dealer, just as they no longer have time to sit on the phone with a travel agent.
The trade in’s could get a bit tricky, esp with the variable from dealer to dealer in trade in appraisal values that literally swing +/- $5,000 in some instances.
Who does the warranty work?
I think a master franchise mothership store is more realistic. For instance Ford has one mega dealership in DFW market, and the surrounding stores that loose their franchise ability to sell new Fords can have the option to sell parts and be factory authorized warranty repair points.
If you wanted a test drive, you could rent one. (very easy to do with a Chrysler product) All kidding aside, that’s what I did when I bought my new Toyota. My dealership rents new Toyotas and I actually paid for an “extended testdrive”. Much better than riding around the block with some salesperson and I really got a feel for the car after 500 miles or so. It could work.
Chrysler wants all of the new car profits that their dealers are making? Now that is funny!
I agree with Jwolfe but would add that the dealer would be owned by the automaker not Joe blow’s insert band. The only expectation would be that you would not have to have the other dealers if the mega dealer would offer a loner for the day. The automakers still have to get around those pesky franchise laws though.
With trade-ins, warranty service, and such, I just don’t see the end of dealerships as we know them.
I do, however, see more dealerships moving to a more customer-friendly “no-haggle” pricing format, with one salesperson who takes care of the whole deal. Good-bye to the “I’ll have to run it past my manager” routine, good-bye to the “financing guy who will try to sell you $3,000 of worthless crap.” So long as the “no-haggle price” is around the Edmunds TMV price in your area, that’s not such a bad deal for a lot of people.
The only possibility for Chrysler to surrive is with a government bailout. We all know that.
IF they get it, then they do need to change the way they do business. This seems to be a interesting idea.
I know about 25 or 30 yrs ago Chrysler did some research into selling cars without a dealer. Having stores in malls where you would sit and order a car there, and have it delivered to you a few weeks later. I don’t really recall the details.
But the problem is that Chrysler has no product. And no matter what happens won’t have any product for at least half a decade. No interesting marketing idea will change that.
Ummm… just thinking out loud here… but what if the nearest dealer is the agent that actually comes to your home/work/whatever to do this transaction? It is not stated in any of the questions that Chrysler would use North American to drop off the car at the door with a COD request.
Most likely Chrysler is just trying to make it so you can avoid showrooms and negotiate/price/finance everything online with button clicks instead of sitting opposite a guy with slicked hair.
If there was another system that would work it would have already happened. The “fatory” doesn’t want the expense of tending the retail garden. The brick and mortar aspect is not to their liking. If you think dealing with dealership personel is tiring, you should speak to some of the “factory reps”.
There’s no reason to dread dealing with new car dealers anymore in the internet age. When I bought my last three Nissans, I had print outs of edmunds’ TMV for the new vehicles, as well as kbb’s value of my trade-ins. The salesmen didn’t like it, (too bad,) but I made it clear if they strayed from those numbers, I was walking out. It takes the haggle out of the transaction. And I like knowing there will be a factory representative available when there is a problem with the vehicle.
If chrysler is thinking of either reducing or eliminating dealers on a massive scale, there is only one way they can get there in our life time. Bankrupcy, must be the other side of this study, as the legal battle waged dealer by dealer and class action would be endless. Since cerebus put no money into chrysler, they won’t lose much pulling the plug. Of course, they want uncle sam to be there to pay off the debtors etc. A taxpayer structured bankrupcy is what would be desired. This way Cerebus gets back more of the company to start out fresh with. We the people get to see “jobs” and another defense contractor to build tanks, trucks etc for the next war.
I would not buy a new car on line. There is too much variation in assembly to trust it.
Misaligned body panels are common. While many people don’t notice it, I know I will hate looking at it for the rest of the time I own the car.
And come time to trade or sell, the buyer likely will spot it too.
::sigh:: here comes all the “I hate dealers” posts. I’m tired….
Ya know, it used to be possible to order the car you wanted from the factory with the options/color/engine/etc you wanted, rather than have to settle for something less from dealer stock. If the custom order is part of this equation again, I’ll consider it.
Here’s the alternate-universe plan:
There’s a small dealership with a couple of each model they sell – low-end and high-end, so you can get a feel for the difference between cloth and leather seats, upgraded stereo, sunroof, etc. Those are demos only, and are not for sale. The dealer has no inventory at all.
You go in, test drive and select the car you’re interested in, then sit down and select options from a menu. Want a sunroof but delete the stereo? That’s cool. Stripper but with leather seats? No problemo. Each option can be had separately and while there are packages available nobody is forced to buy anything they don’t want.
Then just tally up the cost for the menu items, apply any coupons you cut out of the Sunday paper, and there’s your no-haggle price. Your car will be delivered to your house with a full tank of gas in 4-6 weeks. You’ve got a 2-week/500 mile no-questions return period if you’re not happy with the car.
So this keeps dealers in place, eliminates the need for huge lots full of cars they can’t sell, guarantees them a certain amount of profit on a car, and makes the buying experience much, much better for the customer. The banks providing floor plan financing might not be thrilled, but who really cares?
If you’d rather buy the car online, that’s fine. You get the same price, service, and delivery. It would be nice if you mentioned the dealer where you took the test drive so we can throw them a bone for the trouble, but hey, we sold you a car you want either way.
Just think how much money would be saved on excess inventory and incentives for cars that absolutely nobody wants. With the technology and manufacturing capabilities we have today, this should be a no-brainer.
Just reading the 17 posts above this one outline several different and viable ways to change the way we purchase automobiles and all are for the better.
While it’s nice that Chrysler is looking at this, too bad it’s Chrysler looking at this.
dpeppers :
March 24th, 2009 at 4:27 am
If there was another system that would work it would have already happened.
Current franchise laws basically prevent any other sales avenue from happening. Get rid of those laws and lets see what people favor.
Manufacturers have tried that before…Ford (I work for a Ford dealer) tried it in the nineties and everyone of their corporate stores failed. They wanted to basically have a showroom and then have all customers direct order their cars.
With the advent of internet, it was predicted that the car saleman would disappear…Initially, a lot of customers tried that, but now we have customers using the internet to do research and then they are still coming in to test drive. I have found that often those customers are the easiest to deal with as they are already closer to knowing what they want.
The problem isn’t really the business model of a manufacturer using a dealer network…it comes down to the quality of the dealer, and I admit that many, many dealers and their employees fail in this endeavor.
We work things differently at my dealer, but I recognize that we tend to be the exception rather than the rule. We really want repeat and referral business and our owner and management recognize that business needs to be conducted in a win-in type of fashion.
WEGIV :
March 23rd, 2009 at 8:55 pm
The question they’re not asking…
“How many of you would be willing to buy [insert car here] without test-driving it, or even being able to sit in it?
That question alone makes the dealer a necessary evil unless you can somehow work out another method to evaluate a car prior to buying.
———————————————–
Ever heard of Consumer Report?
I have no problem of buying a Camry, or a Fusion, without a test drive. That is, if the cars has sufficiently many red CR dots.
It’s hard to believe that anyone is taking this seriously, Chrysler surely knows that 50 separate state franchise laws will prevent them from shutting down dealers and/or competing directly with them via the internet.
C’mon guys, don’t act like this is the first time someone brought up overhauling the retail chain as a key strategic element of any turnaround.
Secondly, there is currently a big lawsuit underway in Indiana where a dealer group is charging that GM unlawfully withheld rebates and used GMAC to drive them out of business.
Dealers are big sales and payroll tax drivers for states, don’t you think that these same states will do whatever possible to protect dealers even if at the expense of manufacturers?
I can imagine that buying a car on-line (or even through a mall retail outlet) would be like buying furniture online (like from Potterybarn, which I have done).
Which would go something like this…
You have already paid for the car or arranged for the financing. So it’s just a waiting game to see how long it takes? The manufacturer’s fine print on their web site told you four to six weeks, or “depending upon availability.” Well hopefully it won’t take that long!
A delivery company ends up calling seven weeks later with the option of several delivery dates (Monday through Friday, only) next week for when they’ll be in your area. They tell you that they’ll call you at 7 am that day to let you know if it will be a morning or an afternoon delivery, either 9 am to 12 pm, or 2 pm to 5 pm. You have to be home to receive the car of course, and certainly you don’t want your wife to do it for you! If you miss the delivery truck they warn you, then they’ll have to reschedule you for “some other week”. No pressure there!
When the delivery truck shows up just minutes before 5 pm, the guys are a bit rough and their probably making $8 an hour, if that you figure? They don’t work for the manufacturer and they really don’t care about your purchase, that it’s your dream car, or whatever. They only really care not to get yelled at for a scratch on the paint, a feature that you thought you ordered that didn’t show up, or backing over a bush in your yard. All they could care is that it’s the right make, model and color, and that you sign the delivery slip so that they can go home to their bachelor apartment, cold pizza and cheep beer.
They then unload the car, carefully, as one guy reminds the other not to run over a bush as had happened at the previously delivery that got them chewed out by a cranky old guy.
So now you have a few minutes to go over your new car before you sign for it. It starts okay, sounds great and much better then it did online through your computer’s speakers! One of the delivery guys impatiently taps his pen on his clip board while the other drips of sweat hoping to God that you accept it so again he can go home and get drunk. You then examine the fenders, sides and the bumpers which look shinny and very nice. The inside is clean and smells like a new car. The tires look kind of cheap like you’ll be replacing those in 20,000 miles! But not a big deal.
“Oh no,” you curse! After all this, there is a quarter-of-an-inch fine scratch on the hood! You’ve taken the day off to wait at home for your new baby, and have been excited for weeks! You didn’t even sleep much last night not wanting to miss the delivery call with the scheduled time! You ask yourself, should you just accept the car and let the poor guys go home? Or do you yell at them as it might have been their fault? Or should you call the manufacturer and yell at some customer service representative that earns even less per hour that may not even speak English?
Well you sigh, and you go ahead and sign for the car, and to ease your mind you figure that the car will have a chip in the hood within the next month anyway.
Something like that… :-)
thoots
It would be nice to get a Ford dealer in the Detroit Metro area to even acknowledge what Edmunds TMV is. Their basic response is “we subtract your A/X/Z plan and rebates/incentives from MSRP and add tax/title/plates. We’re not allowed to give any other discounts without being penalized by the manufacturer.”
What a load of hogwash. No wonder those I know that have dealt with Metro Detroit Ford dealers walk away laughing or cursing.