Car Dealers vs the Web: GM Shifts Toward Online Purchasing 160
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."
I was just thinking about this since... (Score:5, Interesting)
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
Military-Industrial (Score:4, Interesting)
GM will continue to survive until it is forced to compete in real capitalism.
Never. Going. To. Happen.
GM will compete and be productive, but it will also be propped up by DC for decades beyond its viable life because it is a critical American manufacturer in terms of raw industrial output. And raw industrial output wins almost any prolonged non-WMD war.
Re:This just in... (Score:4, Interesting)
But hey, I'd rather car-shop online, and if that is EVER going to happen, law-makers have a vested interest in the success of GM (an "american" institution). Not so much in Tesla.
Everybody car shops on line. They read the specs, pick the model, look at prices, and maybe get a few quotes. Very few people actually order on line. (Women tend to do this more than men, but then women buy more than half the vehicles sold in the US).
I'm not willing to spend 25 or 50k on a strictly on line purchase. If I bought a Tesla I'd do the same on line shopping but I'd STILL go find a showroom/service center. (I'd have to drive to Seattle). I'm Not dumping that kind of money on the net, and having it show up wrong, dented, or what ever with out a local-ish resource.
Re:I was just thinking about this since... (Score:2, Interesting)
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 originally going to buy it for. Only later did he find out that all dealerships in our town are owned by the same individual through a complicated corporate scheme thanks to an investigation by the local news.
Re:This just in... (Score:5, Interesting)
Heh, unless you work for a GM dealership, you have NO idea how bad GM is at IT. Their dealer-side website still does not officially support anything other than IE8. Business reporting relies on ActiveX integration with Excel, and only works properly with Excel 2000 and 2003. It can be made to work under 2007, but they don't support anything higher. Parts of the service-related workbenches still use VBScript. It used to be accessible only over a super-slow satellite link, but they changed that a few years ago, thank god.
To be fair, though, Toyota's web back-end, Dealer Daily, is even worse. IE-only, accessible only through a dedicated T1 which may not be used for anything else (but which you still pay full price for, of course). Blank page under anything other than IE.
Come to think of it, a lot of dealership stuff is locked on IE. Dealertrack (intentionally locks out non-IE browsers), Dealersocket CRM (featured-limited under non-IE browsers). ADP is the biggest supplier of dealership management software in the US and most of their stuff is entirely reliant on IE.
It's a pathetic state of affairs.