Well, I suppose some explanation is in order. After all, I’ve been gone for nearly 6 months! CAUTION: I’m going to talk about work. Yes, it’s about cars too, but mostly some abstract observations and venting. Read at your own risk! 

Anyway… Those of you that know me in the “real world” know that I took a position back in the retail automotive arena with a large local dealer that recently opened a new location. Actually, this is the same dealership where I got my start in sales what seems like so very long ago.  This latest stint back on the retail side of the fence really opened my eyes to some unfortunate truths about the automotive industry. Chiefly, and this may come to a surprise to some of you, people generally dislike car salesmen and the car buying process! Go figure!

The reason for this is due to the fact that automobile dealers, for the most part, are still peddling their wares like it’s 1970!  Now, I can only surmise as to how people bought things back then as it was a good number of years before I was born, however, I’ve done some reading on this era, leveraging the knowledge of ages past recorded in big dusty ancient history books. Now that I’ve made anyone over 40 feel very, very, old, I’ll now continue… 

Back then, people NEEDED salespeople. Salespeople were one of their few sources of product information and knowledge. Consumers didn’t have many options with regard to product information, comparisons, or even pricing. They had to go around and basically collect all of their information by word of mouth from, wait for it – salespeople.  Now, as a salesperson, you know that you’re the “authority” on your given product or service, and that for the most part, you are in complete control of the consumer.

Knowing this, you’re aware that you can get “creative” with your pitch and pricing to, well, line your pockets a bit thicker! Go figure! You would sell your little heart out, making sure that Plymouth Cricket was just as appealing as that shiny Imperial that was sitting on the other side of the showroom. Actually, you would convince a person that they’d be better off buying the Cricket for a similar payment as on the Imperial as it was a bit more modern and fuel efficient. They’d be getting more car for the money! A bunch of B. S. I tells ya! A savy buyer would know better! Well, actually, no, they wouldn’t…

You see, there were no internet, forums, or even magazines out there at that time that broke down pricing and options for a given product. As consumers, we were flying blind. We had no choice but to depend on the salesperson for the information that would guide our decisions. The consumer would have to make some risky judgment calls to determine what and who to trust.  

Now, you, I and the dog all know that there’s a new fangled thing called the internet out there. It’s a neat little gem. A sort of encyclopedia in your TV, if you will. You get the point… It’s a tool that can be used for research and information gathering needs when you’re not watching middle aged men get hit in the plums with whiffle-bats on YouTube. You can even use this internet thing for shopping! 

You can sit in your jammies at three in the afternoon shopping for just about anything you could ever want without EVER seeing a salesperson. You can compare features, benefits, and of course pricing. You can make sure that the 75 cents you’re paying for those spiffy rainbow shoelaces is indeed the best price out there. What a wonderful tool! 

You can even compare car pricing! You can see what other people are paying, and even, now this scares the hell out of a dealer, see the invoice! YES! The mysterious invoice. The document which all dealers hold dear as their ace in the whole, secret decoder ring level, it really doesn’t exist, document. The little piece of paper that tells you, basically, what a dealer paid for the car to be in their inventory – more or less! So, you know that you can haggle on the selling price of a car and that the object is to get as close to that magic invoice number as possible, or even below it! The thing is, the dealership doesn’t care! They’re still going to try and pull the same old tricks and convince you, despite all your research, that EVERYONE is paying $800 per month for their Yaris, and that if they discount it one more nickel, that the entire store will go up in flames, and your salesman Gil, will be out on the streets living in a dumpster! Do you see where I’m going with this?

The concept behind the automobile dealership, and well, car salespeople is nearing its useful end!  Remember Saturn? That was the crazy little car company that GM started that sold cars the way WalMart sells just about everything. They didn’t care where you went. The price you paid for the car in Topeka, KS was the same that you’d pay in Walla Walla, WA. Pricing was fixed, there was no haggling, and consumers loved it!

Now, Saturn did “fail”, and if you’ve kept up with my blogs in the past, you know my stance on that. Shame on GM! The Saturn model was BRILLIANT on so many levels. We all know how much fun shopping for a car and dealing with salespeople is. Personally, I’d rather remove a tattoo with a rusted cheese grater!

Realizing this, Saturn dealerships focused on eliminating all these preconceptions about buying a car, focusing strictly on consumer experience. They were practically cult like in their actions. When you signed on the dotted line, they’d announce it to the whole store, they’d all clap, sometimes sing a little song, shake your hand, and give you a crown and ceptre. OK, I made that last bit up. They’d take your stinkin picture of you leaning on your new shiny Saturn and hang it on their wall of fame though, AND give you a copy to take home… Oh, there were cookies too, they ALWAYS had free cookies.  It was a beautiful thing! Everyone was happy in these joints. The salespeople were down right giddy! To top it off, they were making money hand over fist!  

The model used by most dealerships, these days, is all about the bait and switch, get them in the door, confuse the hell out of them attitude. With the dawn of the information age, consumers are empowered to make their own decisions and simply go to the path of least resistance. Buying from whoever’s cheapest, regardless of location. Shipping a car’s pretty cheap, after all! An educated consumer, and the number of them out there is growing at a phenomenal rate, will be aware of their options!

 With that being the case, consumer demand is going to switch. People simply won’t tolerate the old “games” that dealershis have played for decades. They simply want to get a decent value for their money, and a fairly pain free purchase process. This is the second biggest purchase you make in your life, and it’s an absolute nightmare!!! Some dealerships are being innovative and establishing no haggle pricing policies, and are doing great! It turns out, people will actually pay a bit more for the convenience! The salespeople are paid on a per unit, rather than gross profit basis, and can actually be consultative in their methods, focusing on product rather than price. After all, the price is fixed at these stores!

 Don’t believe me? Go to a CarMax store! CarMax is the ONLY automotive group that during this automotive carcopolypse that has actually grown, and didn’t suffer any sort of downturn! Being the auto industry fanatic that I am, I think much of what’s been happening with the “survival of the fittest” mentality coming back from the manufacturer is preparing for just that. As a matter of fact, Ford is currently running some tests down south in certain regions doing just this! Flat rate pricing, just to see if it will work. So far, so good!

 Being that most dealerships are independent organizations, the manufacturers can’t force any one of them to sell a certain way, however, they could build a very good case, citing examples of how this new model makes the most sense, and will allow them to still make money. Make money in a predictable fashion! 

As I made my 42 mile each way commute, and spent 60+ hours a-week at the store, I was shocked to see how little had changed in the years since I had left. When just about every other industry and organization had evolved, to some extent, this organization had de-evolved! Rather than embrace consumer trends and sell the way people want to buy, they got more “creative” in their advertising, and became more elusive in their conversations with customers. Customer service was an afterthought. Sales people would spend an entire day with a customer haggling and fighting for a deal, to simply earn a $50 mini deal when all was said and done. Later, to have a customer slam them on the all important MFG survey due to the length of time it took to buy the damn car! I was a bit insulated being on the management team, of sorts, but the pain was no less present higher up in the food chain!In a market where reputation is everything, ours was looking at the septic tank thinking that it’d be a nice place to be some day! It was that bad!!!

 Anyway… This really opened my eyes to the reality of things. Dealerships simply aren’t equipped, nor are they being rewarded for innovation. I’d almost be willing to bet that the expensive model of retail dealerships is something that the manufacturers would like to do away with all together, opting for a direct from the manufacturer approach. Sound goofy? Keep an eye on Geely automotive. Thems is the guys that recently bought Volvo from Ford and are drooling over the prospect of selling cheap little Chinese cars in this vast market of ours.

Every press release and indication from them is that they’re going to keep Volvo, Volvo, but are looking to introduce Chinese products through a factory direct retail chain. Who knows, you might be able to buy your car from Costco!

They’ve already indicated that for products in their particular segment, dealerships just don’t make sense! This whole concept could really shake things up for the market here in the US. This has been the case in Asia for years! As a business owner, why wouldn’t you want to reach out to your target market in a manner which was most appealing to them?  

Well, I suppose this concludes my vent session for today. Not the usual banter about rare an beautiful rolling art, but rather a look at the means by which we acquire our conveyances. I think that when all is said and done, moving to a more progressive and honest model of selling automobiles, not the smoke and mirrors that is currently the case, would go along way! Wouldn’t you rather have it be that the biggest worry you have in purchasing your next auto be whether or not you can still get that lovely shade of monkey-puke green with a mango interior?