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Car Dealers vs the Web: GM Shifts Toward Online Purchasing 160

Posted by Soulskill
from the do-you-see-which-way-the-wind-is-blowing dept.
cartechboy writes "Car dealers may be in for a new battle, and it turns out existing car manufacturers are joining the fun. Tesla Motors began the rebellion by trying to sell electric cars directly to buyers. Car dealers have fought that effort state-by-state and even complained to the DMV about Tesla's website. But things just got a little more interesting. General Motors announced plans to expand its new web-based shopping tool (aka a shopping web site) that allows customers to bypass showrooms when buying new cars. The idea is to use the Web as a giant test platform to see if the automaker can better target people who use the web to buy things. The catch is that the web app, called 'Shop-Click-Drive' will allow users to do almost everything they'd do at a dealer: customize the car, get pricing and financing and even arrange for delivery. But then when you push the button, your "purchase" will be routed to GM's network of 4,300 dealers, so you still have to visit a local dealer to sign on the dotted line. Even with this limitation, the move is still making dealers nervous. GM dealers aren't required to participate in the web-based test, and company officials say they have had some dealers turn it down."
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Car Dealers vs the Web: GM Shifts Toward Online Purchasing

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  • by MacTO (1161105) on Tuesday October 08, 2013 @08:09PM (#45076829)

    I hope that GM and other manufacturers go all of the way with online sales. Car dealerships consume an absurd amount of commercial realestate, and it is frequently prime commercial realestate.

    • by malignant_minded (884324) on Tuesday October 08, 2013 @08:15PM (#45076871)
      I just bought a car after driving several. How would online options really help with determining what has good feel/performance for a customer. Some people like to feel the road others like a smooth ride. The terrible blutooth integration with my purchased car (though I dont think many cars support Google commands/Siri) makes me wish I played with it more at the dealership instead of just trying to make a call. Colors look different in daylight. Some plastics feel cheaper than others, the list goes on and on. You must have bought something online, opened the box and went "ugh I thought it looked different" So why would you want to put down so much on a car only seen online?
      • by houstonbofh (602064) on Tuesday October 08, 2013 @08:21PM (#45076919)
        I am with you. I am 6 foot tall, and all torso, no leg. So some cars I just do not fit in. At all... The only way to know is a test drive, and that does require a lot of some kind.
        • by DaHat (247651)

          I'm 6'5" and plenty of both... as currently my wife requested brochures on a number of vehicles and trying to sell me on this feature or that... I remind her that regardless of any other facts or features... my primary deciding fact is which do I fit in comfortably, everything else is secondary.

          I've spent a lovely 10 years with my Pontiac Aztek... and fear the day that it dies (or requires more to keep running than I could buy something new(er) for)... as I've found few things that are not full size SUVs th

          • by Anonymous Coward on Tuesday October 08, 2013 @09:02PM (#45077173)

            So YOU are the one guy that bought it!

          • Hear hear.

            I explain it this way .. "one size fits all" is a lie. And they don't make full size sedans like they used to. I'm currently driving a 94 Mercury Grand Marquis because I cannot fit in most other vehicles comfortably. Any smaller car, and my head is in the ceiling.

            The 2 door Speck that most people can fit in looks like a clown car next to me.

        • Re:Good riddance ... (Score:4, Informative)

          by MasseKid (1294554) on Tuesday October 08, 2013 @11:42PM (#45078215)
          You realize apple already does this right? They have a show room, in fact lots of show rooms. Where I can go and see their products, test drive, try, and see if I like. Then I can either buy it there or if I want something that's not quite off the shelf, configure one online either in store or online exactly how I want it.

          Being able to buy it online doesn't mean you can't buy it in person or see it in person.
      • You must have bought something online, opened the box and went "ugh I thought it looked different" So why would you want to put down so much on a car only seen online?

        Agreed.

        I do like to identify a car online - find one of the make and features that I want. My favorite used lot lets me do that on their site, pretty much. But then I do need to go try it out.

      • by nelsonal (549144)
        Car dealers aren't going away anytime soon, they are exceedingly influential in local politics limiting auto manufacturers ability to side step them and earn fat commissions. Were it possible, no doubt around 1,000 apple store like super stores would replace most dealers for test drives/car fitting, warranty work, and help anyone who desires it with ordering.
      • Re:Good riddance ... (Score:4, Informative)

        by R3d M3rcury (871886) on Tuesday October 08, 2013 @09:05PM (#45077177) Journal

        How would online options really help with determining what has good feel/performance for a customer.

        Depends on how much the customer cares about feel/performance. There are people out there who want basic transportation and aren't all that concerned with the other stuff. When I had a short commute, I didn't really care. When I had a long commute, I bought a new car because if I was going to spend an hour-and-a-half somewhere, I was going to enjoy it.

        That said, I agree. However, look at Tesla--they have showrooms [teslamotors.com] where you can check out the cars. They do test drives, though you might have to arrange it in advance--I'm not sure you can just walk in and say, "Hey'd I'd like to test drive a roadster!" So they keep a model or two around for the test drive. You don't need acres and acres of land to park a bunch of cars that you hope to sell.

      • For the feel of the car, you don't need a dealership with hundreds of cars sitting around to make this work. Let GM open a test drive center where they have that same number of cars. You get rid of the dealerships for many miles around this location, and just use this as your "look and feel" test platform. If you want the car, you can get one through this location, but it's mainly for people to see what they're offering.

        For the colors, I've found that dealerships tend not to have available all of the color

    • Oh, and often a prime source of income for the municipality in which they are located (property and sales taxes...)
    • by icebike (68054)

      I hope that GM and other manufacturers go all of the way with online sales. Car dealerships consume an absurd amount of commercial realestate, and it is frequently prime commercial realestate.

      That's an odd objection, since realestate is one thing we don't really have a shortage of.

      What would you put in those so call prime commercial realestate? More outlets to sell costume jewelry, handbags, and shoes?

      Seriously, most car dealerships take up room, but even in densely populated areas, there is still plenty of space.

  • your car and healthcare combined.
  • by Anonymous Coward

    I tried to buy a new car at a dealer recently and ended up walking out after being messed about and insulted with bait-and switch. Anything that gets rid of dishonest dealing and shoddy sales practices is a good thing. I say bring on direct purchasing ASAP.

    • I have driven to a dealership that did that to me. In my new car that they did not sell. The sales manager still did not care. Until I asked how to contact the ownership...
  • by jonwil (467024) on Tuesday October 08, 2013 @08:26PM (#45076939)

    Even though you have to buy from a dealer, this new GM website means you get exactly the car you want with the extras you want at a price that is set before you even set foot on the dealer lot. No negotiating and no up-sell.

    Which is exactly why some dealers dont like it.

    • They have literally millions involved in major businesses and don't want to be cut out of the process, just to run garages with nicely uniformed "technicians". So they have a lot of interest in making Internet sales focused on THEM, which is why they flood Craigslist and other sites, to also do what GM can't do--> deliver today.

      If you can wait and circumvent what's been a tawdry sales process, so much the better. If you need alternate financing, delivered-today variety, someone to guide you without chatt

      • by profplump (309017)

        GM currently doesn't do same-day delivery, but that's not a limitation of a central sales model -- they could easily stock cars in warehouses around the country ready for immediate delivery if they thought the sale advantage was worth the overhead.

        • by i.r.id10t (595143)

          They could even convince other businesses to form, buy or lease large swaths of land, and warehouse that inventory for them. Heck, these new business may even pay for the privilege But then... maybe someone really does want the feature set that the marketing folks thought 68% of the car buying public would want (or what the marketing folks wanted them to want....). Maybe these storage/delivery/prep businesses would be willing to try and convince someone to buy a particular car in storage, convince them th

    • by ShakaUVM (157947)

      >No negotiating and no up-sell.

      Which is why I *won't* use the website.

      Negotiating generally will knock off 10-20% on the price of a new car. The website will undoubtedly use MSRP for a variety of reasons, and maybe allow the nationwide promotions they run to discount the price. But it'll still be quite a bit more than your local dealer.

      It's not hard to say no to the up-selling. "No thanks, I'll pay in cash." "No thanks, I don't need a warranty." And so forth. *Always* negotiate based on the "out the door

      • by azadrozny (576352)

        I am a bit split on negotiating. In my experience dealers seem to bundle the options on their cars so that the most desirable options come with a lot of extra, unrelated junk. So the DVD system only comes in models with leather seats. Or the hands free calling is only available with high performance tire/wheels. Yes I can talk them down 10%, but we are starting 20% higher than I expected. If I could choose only the options I want, and save the time/hassle of "let me talk to my manager", that could be a

        • by ShakaUVM (157947)

          Bundled options are *far* cheaper than customized options. It's one of the reasons American car companies have been getting their asses kicked.

          We're talking like $2,000 vs $5,000 here.

    • by tlhIngan (30335)

      Even though you have to buy from a dealer, this new GM website means you get exactly the car you want with the extras you want at a price that is set before you even set foot on the dealer lot. No negotiating and no up-sell.

      Which is exactly why some dealers dont like it.

      Some dealers might not like it, that is. Selling cars is not a big source of income for a dealer - the dealer markup is often quite low because people know what the dealer paid, so the profit can be just a couple of thousand dollars on a veh

  • by sootman (158191) on Tuesday October 08, 2013 @08:55PM (#45077119) Homepage Journal

    ... playing just for the middlemen.

    • Sounds like one of those posts rooting that Microsoft will die.

      Amazon.com and EBay have tried to do this for 15+ years. But very few people are going to make a $20-$50 thousand dollar purchase online.

      Wanting something to be true and successful won't make it so.

      Most people looking for a car end up going to several different dealerships to do research to determine what they want to buy. How can they do that online?

      What you want would be perfect and I agree, but the crappy truth is like Soylent Green:
  • by Kagato (116051) on Tuesday October 08, 2013 @08:56PM (#45077131)

    This isn't all that different from existing car buying websites (outside the GM lock-in). Most sites like Edmunds, Autotrader, Cars, etc have features like inventory search, pricing, options, suggested market pricing. These sites connect you with dealers. The dealers pay the web sites to the leads. In return the sites get sales pricing data (which is one of the ways sites like Edmunds figures out TMV). I'm sure GM has a charge for the dealers for the leads. Perhaps slightly less than independent sites.

    All GM is doing is pre-qualifying the financing, which mean the leads are slightly higher quality than Joe Blow internet.

    If you wanted to get a better deal but don't like the art of the sale, Costco Auto is the better route to go.

  • by Strudelkugel (594414) on Tuesday October 08, 2013 @08:59PM (#45077143)

    I bought a new car recently. I try to keep my cars as long as possible, but the old one was causing me to wonder how long it would last without another expensive repair. That meant a trip to the dealership, knowing quite well that I was about to have the worst category of retail experience known. It doesn't matter if you are buying a cheap car or an expensive one - dealers treat all customers the same way. Haggle, make you wait while the sales person "I will try to get my manager to accept your price, but he is going to beat me up..." talks fantasy football with his manager as you wait. (If you are trading in a car, they will take your keys to look at your trade-in. You will not be getting them back any time soon, so be sure to bring an extra set of keys you can drive off the lot while they are playing this game to wear you down.) Make them wait while you enjoy a sandwich or read a book in the coffee shop across the street.

    After you endure that nonsense, you get to talk tot he "finance manager" who will try to get you to by an insanely overpriced extended warranty contract. If that doesn't work for the dealership, they will be happy to offer you very high rate auto loan. Think of what is happening: The sales rep is telling you how great the car is while you are looking at it, then the finance person is telling you an extended warranty is really needed because the car will probably have a major repair after the warranty period is over. Be sure to ask the finance person if they think you should tell the sales person you will not be buying the car since he or she just told you it really isn't a very well made car.

    Car dealerships are really parasitic IMHO. They use their intermediary status to extract as much as possible from customers, and in doing so alienate the customers from the manufacturers. The manufacturer spends a huge amount of money establishing a brand, designing cars they hope will appeal to the public, taking capital risk, and managing production. Think of the extended warranty pitch - it totally undermines the manufacturer since it implies the car really isn't very reliable. My previous car was a high end brand, but I detested the sales and service department at the local dealer so much I vowed to never buy another model of that brand, even though I really liked the car. But none of this is new to anyone who has purchased a car from a dealership, new or used.

    Given the above, and manufacturers know all of it, I am surprised that Ford and Chrysler aren't jumping on the direct sales model, too. They probably will though; the dealership model makes far less sense now that consumers can learn more about a car online than most car sales people will ever know, since that is not what they care about. Before the internet, it was necessary to go to a dealership to look at a car, maybe get a brochure and see what the car actually looked like. Of course the buyer still has to test drive the car, but there is no reason manufacturers can't follow the Tesla model. This is a bit of a simplification, since Tesla cars in high demand and people are willing to wait for one. There is also a lot to be said for having inventory on a lot since it simplifies distribution and might help close a deal. But... I think every manufacturer would clamp down on the pathetic treatment of customers their dealers engage in if they were selling directly.

    A friend of mine is thinking about buying a BMW M3, but I told him he should drive a Tesla first given that the two models are similar in price. The BMW might be a good car, but he dislikes the dealership experience as much as anyone. Why support the dealership business model if there is a choice? My thought is that my next car will be a Tesla not only because it is a great car, but also because I know my money won't support the jerks who run auto dealerships.

    Given the intermediary advantage the dealer has when approached by a customer, it is no wonder they are fighting the direct sales model. They have a license to steal, and don't want to give it up. We hav

    • (If you are trading in a car, they will take your keys to look at your trade-in. You will not be getting them back any time soon, so be sure to bring an extra set of keys you can drive off the lot while they are playing this game to wear you down.)

      I had this happen once. Fortunately for me, it was a fairly busy day, with a dozen other customers in the showroom. I went to the manager's office, and told him to either return my keys, or I'd go out in the showroom and very loudly complain about this particular tactic.

      I got my keys back (and was escorted out of the showroom) in under 2 minutes...

    • by jhealy1024 (234388) on Tuesday October 08, 2013 @10:06PM (#45077633)

      Bought a car a few years ago, and found this non-profit that had a great strategy:

          http://www.checkbook.org/auto/CarBargains_Secrets.pdf

      You can never know what the dealership is getting from the factory in terms of kickback, so it's next to impossible to negotiate a deal all by yourself. The sales rep is never going to lose money on the car (despite what they may tell you); they'll just walk away. So even when they cry and tell you you're keeping them from feeding their family just know that they're making enough to cover their expenses. Your best bet is to put your purchase out to bid to multiple dealerships and let them fight it out. We did this and saved $2500 off the "invoice" price that Consumer Reports said we should be "aiming for" to get a good deal.

      Let me say it again: make them bid; it's the only way to keep them honest.

      As a side bonus, you don't have to deal with crazy add-ons, haggling, or waiting for managers to "approve" your deal. You e-mail the dealerships, tell them what you want, and ask for their final, out-the-door, all-fees-included price. Pick the winning one, print out the e-mail so you have it in writing, and go to the dealership to pick up your car. If they try to add anything on, just point to your e-mail and invite them to throw it in for the included price you've already committed to (we got "free" floor mats and locking wheel nuts, probably because they didn't want to bother to take them off).

      Note that you have to be willing to contact multiple dealers, wait for responses, and follow through. If you want to buy the brand-new 2014 model whatever, in hot pink, and you need it TODAY, then this isn't the strategy for you. If you're willing to be patient to save a couple grand, try it out.

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        To put more bite in your tactic, you really need to make sure that the dealerships are not owned by the same person or group. A friend of mine tried that and the bids came in pretty similar and didn't move much. He was driving by a nearby county seat (about 30 minutes away) just to see what they would do, they came back $500 cheaper than the email. He told them he would think about it. All of a sudden, he had a real bidding war in the emails. He ended up getting it for $2000 less than what he was origi

      • by pesho (843750)
        I have used this tactic to buy three cars over the past 10 years and it works like a charm. There is the added bonus of seeing he dealers try and fail at a series of lies, pressure tactics and bait-and switch moves, which often work when you are in the showroom, but fail miserably when you have the option to check the facts, think things over and delay your response indefinitely. The key is never to get in face-to-face contact with the dealer before they commit to a price in writing. E-mail works best. Phon
      • by bazorg (911295)

        Wow. That looks really complicated. So far I've bought 3 used cars after shopping around on eBay and at used car lots. If that's the kind of effort that is needed, I'll stick to used cars...

    • by HiThere (15173)

      My experience was a lot different, but then I knew exactly what I wanted...a used Toyota Station Wagon. And I wasn't interested in anything that wasn't a cash down deal. Perhaps that made a difference.

      I went into two dealerships that didn't have what I wanted. The third did. I bought. I didn't haggle for the best price, but I let them know ahead of time that I wouldn't, and if the price they offered wasn't satisfactory, I'd check somewhere else...I'm pretty sure I didn't also indicate what I though wou

  • I will not—repeat—NOT buy a car unless I have driven it first. So, I will test drive it, then go online and see if I can get it from GM for less. If I and others can, GM will put its dealer network out of business. How are they going to sell cars then? They'll have to open a series of GM stores as the dealers get put out of business, something which will probably get the remaining dealers into Federal court fast. And if GM ultimately wins and you can only buy a GM car from GM, I'm not certa

    • by _merlin (160982)

      I can guarantee you that it will not be the same as visiting the local Apple Store.

      You say that like Apple Stores are pleasant. In my experience, they're great if you want to fawn over the products on display, but terrible if you want to actually buy anything or get support. The "geniuses" are unknowledgeable, arrogant twats with condescending attitudes. Staff are always too busy to help you, or assure you that someone will come to look after you then no-one does. Unless you need something on the day, y

    • by gl4ss (559668)

      ..look man, where the effing fuck do you think the dealer buys their GM cars from? think mcfly think!

      aanyhow, how about they bring the car for a test drive over to your house?

      what you would be losing with the dealers(as dealers) out of the picture is HAGGLING. I fucking hate haggling. and the price you're haggling about is the dealers cut, GM has a set price for the car..

  • We're so used at looking at reviews and videos of stuff and ordering on the Internet. We even order clothes on the Internet without having a way of trying them on, so why not cars? Even grocery shopping can be done over the Internet these days.
    • IN most states you have X number of days to return a car before the sale is "final". Buy it, if you don't like, return it.
  • Good idea, but isn't Best Buy and other retailers complaining about the "showroom effect?" How's that going to work when car dealers are just giant test drive outlets?

    That said, wow, the ability to drop the stupid haggle dance with your typical slimeball car salesman would be awesome. I'd pay more for the privilege. I can't stand haggling over a few hundred dollars, and actively dislike all salesdroids.

    One factor they have to take into account is that car dealerships actually don't make much money on the ca

    • by pesho (843750)

      Good idea, but isn't Best Buy and other retailers complaining about the "showroom effect?" How's that going to work when car dealers are just giant test drive outlets?

      They also get payed for servicing the sold vehicles (my local dealership for the brand I drive has excellent service department and absolutely disgusting sales people). The current practice where the dealers are incentivized to gouge the client on the sales price, useless options and on financing, is cutting into the potential profits for the manufacturers and is doing horrible damage to their brands. I am surprised that the car makers together with online merchants have not pushed harder at the dealers. I

  • I would have given anything to accomplish this feat with Nissan last year. I figured out what car my wife and I could settle on (2 year process), and then tried to get one. Alas the last of the 2011's were already sold. So then I waited a few months and tried to get a 2012 vehicle. Alas those were delayed due to the flooding that also hit the nuclear plant and made much news. When I finally got a dealer to ship me one from 1200 miles away, I still didn't get all the exact options that I wanted. Most n

    • by Quirkz (1206400)

      I tried shopping for a Honda a year and a half ago, and the dealer didn't even have a model in stock to test drive because of first the Japanese tsunami and then some flooding in Thailand(?). They keep their manufacturing chains so tightly optimized that just a few missing parts derails the entire delivery process, and they were without anything to demonstrate at all.

  • Welcome to Mini Cooper a la 2006.

  • Recently purchased a new Mustang. I wasn't sure this time what I wanted and had a list of possible choices including the Camero, FR-S and Challenger. Many of the local dealers don't want to order a vehicle. Few had base models on the lot. Anything under 30k wasn't on the lot. Some dealers didn't even have a car I could test drive.

    Step 1 is actually forcing dealers to keep updated inventory. I don't know how many times I went to a dealership or called and a vehicle had been gone for weeks.

    If GM improve

  • Step 1.
    Make a simple web site where I build the car that I want to buy and tell me what the MSRP should be. If I want the purchase agreement can be signed digitally on the Internet and I all I have to do is go pick it up.

    Step 2.
    Allow me to have dealers in a range I am willing to travel bid on selling me the car I spec out in step 1. Any participating dealer can submit a bid for what they will sell the car for. Once the bid is accepted I sign digitally on the Internet and all I have to do is go pick it up.

    Th

  • I don't like buying from a dealer, but I don't like paying MSRP either. If dealing with the dealer means I save a few thousand dollars and not pay MSRP then I'll gladly sit through the upsell process and constantly say NO for an hour or so to various options they try to sell me. I have done that a few times by now and I think I have mastered it.

  • It's going to be interesting, but there are still a few key functions the local dealer provides

    1. A place to test drive the car. I don't know about you, but i'm not spending 30k on a car without test driving it. This is going to require some kind of showroom/test drive area which has to be staffed. Now maybe, the manufacturers like Tesla set these up on their own and get rid of the middle man. Or maybe people get used to not test driving it.

    2. Service. Some people have a higher degree of trust for the deal

  • I can tell you that the only reason the company hasn't imploded is because there are physically not enough seconds in the known universe with which to schedule all the conference calls needed to schedule the conference calls needed to round up the list of people needed to hold conference calls about who knows fucking what about anything. It's a company that in reality runs on its own through sheer inertia. There may not even BE anyone in charge and it wouldn't matter anyway.

  • by BVis (267028)

    GM dealers aren't required to participate in the web-based test, and company officials say they have had some dealers turn it down.

    Their business model relies on being able to screw over the customer on the price, and if the customer is walking through the door with a price that's guaranteed, then they can't screw them over (as hard, I'm sure they'll find a way).

    The whole dealership paradigm needs to die. Open "service centers" instead of dealerships for the maintenance and sell over the web. Put all thos

  • I have yet to find a dealer that I *want* to visit. Every time I've bought a car (four times in four years) I get *argued* with when I come in for a specific feature set.

    It's been like this since I bought my first car in 1990.

    I want these features offered, some favorite responses.

    You can add AC later (In Kansas, where six of the months of the year are >90 degrees)

    You don't need four wheel drive

    You don't need a high performance option, here, take the four cylinder model.

    GPS? No one needs that

    Adaptive c

  • Has anyone ever wondered why we buy cars the way we do? If you wanted to buy a banana, you wouldn't go to a banana store. You would go to a grocery store and pick from a multitude of different fruits. Yet with (new) cars, there is no grocery store equivalent. Why is that? Well the reason is that in all 50 states dealerships have established a legal monopoly which basically prohibits this.

    Planet Money did a podcast on this very issue. [npr.org]

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