Web could make buying a car fun
By BILL VIRGIN
P-I COLUMNIST
Seattle Post-Intelligencer, October 25, 2007
The following story was posted online at www.leasetrader.com.
For an industry that thrives on selling whatever is the newest and flashiest, the automobile retailing industry has, in appearance and practice, done very little modernizing itself.
The curve of the fender or the amount of chrome on the bumpers may change over the years, and the showrooms themselves may get periodic remodeling.
But someone familiar with a car dealership in 1957 or 1967 wouldn't, upon walking into a dealership in 2007, find much that was unfamiliar, right down to the balloons and pennants flying over the cars on the lot and many of the emblems on those vehicles.
What they'd find most familiar, if not particularly comforting, is the method of buying a car, with the sticker price being merely a suggestion of the actual price that buyer and salesperson will settle upon after hours of dickering and a few rounds of "Let me check with my manager."
People have been complaining for decades about how cars are sold, which has proved to be as effective as griping about the weather. Says one observer of the industry: "Bargaining has been the nature of the business for years. But that's why consumers don't like buying a car."
If that sounds like yet another bit of grousing from yet another frustrated customer (one who still wound up buying), it could well be. In this case, though, it happens to be a quote from Sid DeBoer, chief executive of Medford, Ore.-based Lithia Motors Inc., as quoted in the trade publication Automotive News.
Lithia, which owns 108 dealerships (including 12 in Washington, among them BMW Seattle, Chevrolet of Issaquah and Hyundai and Chrysler-Dodge-Jeep outlets in Renton), is launching several assaults on the fortress of traditional car retailing.
Lithia already has introduced a new retailing brand for used cars, L2, which offers Web-based inventory search and financing combined with bricks-and-mortar outlets (as yet none have been announced for Washington) and, most significantly, "negotiation-free" pricing.
Beyond that, Lithia plans to roll out negotiation-free pricing at all its dealerships over the next three years. Says DeBoer in that Automotive News interview, "No-haggle is where we need to go."
None of this is exactly new. Customers have been for some time able to use retailers' Web sites to seek out the cars they want. Furthermore, no-haggle, fixed-price car retailing has been tried before, at individual dealerships and by some larger ownership groups such as AutoNation and even an entire brand (Saturn).
So if people hate new-car haggling as much as they say they do, why hasn't it caught on everywhere?
One answer, at least from Lithia's perspective, is that haggling is so entrenched in the car-sales culture that it's been nearly impossible to dislodge.
The other reason may be that customers didn't have many alternatives. A few intrepid souls might call around to find the car they wanted at the price they were willing to pay; most would-be buyers don't feel up to that.
As it has in so many other sectors, the Internet is changing the dynamic. It's far easier for a buyer to search not just the models, but also where specific cars with specific features are, then send out e-mails with bids and wrap up a deal in much less time and with far fewer headaches than with the traditional approach.
Savvier dealers have figured out that far from threatening their position, the Internet can far more efficiently dispense information to potential buyers and bring in sales leads.
Another trend that may work in dealerships' favor: The increased interest on the part of the car-buying public in alternative-fuel vehicles, be they ethanol, biofuel, gas-electric hybrids or electric vehicles. James Hammond, executive director of the Puget Sound Auto Dealers Association, says alt-fuel vehicles will be a major feature of the Seattle International Auto Show, which starts next week.
Hammond says the obituary for the auto dealership has been written before, at least once by the industry's own national trade group, which predicted a significant contraction in the number of outlets. The Detroit automakers make frequent rumblings about wanting to contract the number of dealerships -- but they and their European and Asian counterparts continually introduce new brands, which in turn means new dealerships.
Combine that with the region's population growth and it's not surprising that the Puget Sound group says it has seen two dozen or more new dealers in its territory (Bellingham to Olympia) in the past decade.
That's not to say dealerships have little to worry about in terms of existence. Nationally, there has been a drop in the number of dealerships, as well as consolidation of ownership among those that remain. Amazon.com doesn't currently offer to send you a car that you order online in an overnight box -- but its Web site does have an "automotive" tab for accessories and parts. How hard would it be to someday affiliate with a new-approach car retailer to make it as easy to get that new hybrid in your driveway tomorrow as it is to order a book or DVD?
If Lithia is right about changes in the car-buying public, and right about the ability and willingness of the car-selling industry to change and adapt, dealerships will still be around in five or 10 years, but how they sell a car will be dramatically different.
The pennants and balloons can stay, though -- they're still a nice touch.
---------------------------------------------------------------------------------------------------------
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com