Car salespeople are
often unfairly portrayed as only slightly more
wholesome and reliable than members of Congress.
Talk about defamation. Nonetheless, the seller
of vehicles is a direct descendant of the horse
trader.
In our culture, we
have few opportunities to practice bargaining.
We live in a sticker price society, and most
of us don't attempt to whittle down the price
of a TV any more than we would bicker with the
electric company to get a lower power rate. We
take a package of light bulbs up to the checkout
line and never think to offer the clerk 25 cents
less than the sales sticker price.
Most of us are forced
to bargain only on the big-ticket prices. Because
the cost of not bargaining for the price of a
house or car can be thousands of dollars, most
of us attempt to bargain for those items. But
we do a pretty poor job of it.
You walk into a dealership
and the salespeople begin immediately to "qualify" you,
as they call it. Innocent questions such as "What
do you do?" are far from innocent. They're
figuring out how to maximize the sale. If you
seem stubborn about getting the lowest price
for the new car, they'll be a bit stub-born,
but yield if necessary. No problem; they can
probably make up that loss by jacking up the
cost of your financing and giving you a low-ball
price for your trade-in.
On the other hand,
if you're one of those people who has no idea
what the dealer's cost is for the car you're
buying, but think that your trade-in is worth
a lot of cash, the salesperson can handle you,
too. If you focus on getting a high trade-in
price, they can slip in all kinds of unnecessary
costs like stripes, undercoating, "prep," upholstery
guarding, rustproofing, you name it. And they
can also hike the finance costs. Get it? They
can raise whichever of the four main costs of
buying a new car you aren't emphasizing in order
to give you a "deal" on what seems
to pull your chain. The four main costs are:
trade-in, new car price, financing, and the "extras" (undercoating
and all the rest).
And this kind of
manipulation is only the tip of the selling strategy
iceberg. You haven't heard anything yet!
Getting a blank check
The greatest thing
about buying your car online is that you can
avoid the negotiation phase of purchasing the
car. Before you set foot on the dealer's lot,
you've already researched the value of your trade-in
and decided the precise money you'll pay for
the new car (and the exact accessories you want),
and you even have a blank check in your pocket
because you got the loan from an online finance
company.
Where'd this blank
check come from? You fill in a small form on
the Internet, and the company sends you an answer
in minutes via e-mail. If you qualify for the
loan, the finance company sends you a blank check — one
of us got ours the next morning via Air Express.
The company tells you to fill in the check for
any amount up to a maximum (it allowed several
thousand more than we asked for). The check is
blank because you may want to add a CD changer
or something at the last minute. And the loan
rates are usually excellent.
Jump In and Try Getting
a Price Fast
Do you like the idea
of a nice, crisp blank check arriving at your
house tomorrow morning? Want to omit haggling
from your next car purchase? Then briefly visit
a cyber salesroom.
Throughout this section,
you can find descriptions of various popular
and successful online "showrooms" you
can visit, with names like cars.com, carsdirect.com,
autoweb.com, CarPoint, and many others. To give
you an idea of what virtual salesland is like,
go to carOrder (www.carorder.corn) for a few
minutes. To get there, follow these steps:
1. Fire up your browser
and type www.carorder.com into the Address text
box. (If you're using Netscape, type it into
the Location text box.)
2. Press the Enter
key. You arrive at the main entrance to carOrder's
site.
Notice that this
site offers several features on its home page:
- Financing
- Research
- Leasing rates
- Insurance
- Order tracking
- A chat feature where you can interact with a live
person — so much more efficient than the alternative
- Testimonials
- Saved specs (the "virtual garage")
- A 360-degree Exorcist-cam where you can view the
entire interior of the car you're interested in
- Purchasing
- A toll-free number you can call, also presumably
featuring a live person
3. Scroll down to
the bottom of the home page (or press the PgDn
key).
4. Click the Build It link.
You see the first specifications page, where you describe
your location and the make, model, and style of the
car you want. Choose whatever car you're interested
in.
5. Click the Configure
link.
You see the invoice price, the MSRP (manufacturer's
suggested retail price), and the price you can pay
at carOrder. You also see how much your monthly payment
would be for a purchase or a lease.
On this page, you
can choose the interior and exterior color schemes.
You can also choose to save this car to your "Virtual
Garage" — that way, everything you've
done is stored so that you can return to carOrder
in the future and resume where you left off.
You don't have to retype or reselect options
when you visit the site again.
6. Click the Pick
My Options link.
On this page you can register yourself if you want.
If you choose to register, you'll go through several
pages, then resume with Step 7 when you've finished
the registration process.
7. Click the Continue
button.
You're asked to fill in contact information (name,
password, e-mail address, and ZIP code). The ZIP code
is used to figure out local taxes and fees like vehicle
registration.
8. Fill in your contact
information and click Create my Account.
A new page pops up asking you to specify your city
and county.
9. Choose your location
and then click the Save these changes link.
You're sent an e-mail message confirming your account.
You also see the page where options are listed, taxes
and any rebates are described, and the cost of such
things as the destination charge or title certificate
is disclosed.
You're now registered,
and you can return to the site any time you want
and pick up where you left off. The car prices
quoted are guaranteed for a week, but you can
always return to the "garage" or "showroom" and
change your specs or start a new purchase.
Congratulations;
you've just cybershopped for a new car! In a
matter of minutes, you can receive a price quote.
Try doing that in the real world of dealerships
made from brick and mortar. Nothing against salespeople — many
of them are personable, outgoing, even charming.
But they do have a job to do, and it generally
doesn't involve giving you a final price quickly
or offering a particularly low price, either.
What's Down the Line
Online?
One of the best things
about buying and selling things on the Internet
is that you can eliminate the middleman (and
the money the middleman adds to th cost).
This can mean that:
a factory outlet is actually the factory (not
some mall that calls itself a factory outlet);
that a warehouse sale actually sells stuff from
a warehouse; and that "wholesale direct" is
just what it says.
When buying a new
car on the Internet, the middleman you eliminate
is the car dealership.
Local dealers providing
online quotes
Of course, there's
a big difference between buying a book or shirt
online and buying a truck. For one thing, the
truck can't be sent by overnight FedEx.
However, the problem
of distribution is being solved in several ways.
Most online car-purchasing services function
as dealer-referral services. You describe your
wants on the Internet, and then one (or several)
local dealers make offers — either sending
you e-mail with price quotes or getting in touch
with you over the phone.
The important differences
between this approach and the traditional car
purchase process are that you get price offers
without having to drive around to visit different
dealers and you don't have to haggle.
Dot-com distribution
down the road?
Another tactic that
may have a big impact in the near future is the
possibility that dot-corn car-selling sites may
create their own network of dealerships around
the country. Several online organizations are
currently reported to be contacting automobile
manufacturers requesting approval of dealership
acquisitions. The owners of some dealerships
have apparently already agreed to sell to Internet
companies. Online companies face few problems
raising financing — many dot-com companies
are awash with cash. We wouldn't have imagined
that AOL could buy Time-Warner!
Clearly, this trend
toward online companies' ownership of local dealerships,
if it develops, would shake the long-established
auto sales industry to its foundations. However,
the Internet has a way of reshaping almost every
commercial venture — from travel agencies
to booksellers. Only a couple of years ago, many
people were regretting the trend where local
bookstores were being put out of business by
mega-stores such as Borders and Books-a-Million.
Now the mega-stores tremble as online book sales
increasingly eat into their bottom line. Where,
oh where, will it all end?
As a result of the
empowerment we customers are now getting from
information we can gather on the Internet, many
car dealership owners have, as the English put
it, their pants in a twist.
Naturally, classic
dealerships often seriously resent the intrusion
of the Internet into their tried-and-true sales
systems. Buyers walking into a car showroom knowing
what the dealer paid or, worse, already having
received a firm price have removed one of the
important points of negotiation that traditionally
favored the dealer. In the past, salespeople
could use the price of the new car as a useful
selling point. Increasingly, though, the selling
price is no longer a variable that can be fiddled
with during the sale.
Now the very ownership
of car showrooms is perhaps in doubt. Manufacturers
can refuse to award a dealership for reasons
ranging from inexperience selling autos to inadequate
financial backing. Manufacturers have always
had broad discretion in the awarding of dealerships.
Why resist reality?
As someone wise once
said, it's impractical to resist reality. And
all signs point to the Internet as the wave of
the future. If one or more online car-selling
sites manages to set up a dealership network,
you could arrange your financing, the car price,
and every other element of the car purchase entirely
online. If you're like most people, you would
prefer not to have to undergo the tedium and
strain of the sales struggle at the dealership.
The car dealership
of the future may well resemble a simple warehouse
rather than the glass-and-gloss showrooms of
today. Here are the steps that direct online
dealers can take to drive down the cost of a
new car:
- Eliminate salespeople
and their commissions
- Drop newspaper
advertising (it costs around $300 per car!)
- Set up a warehouse
in a low-cost rural area
- Avoid having to
build a fancy showroom
- Stock cars on an
as-needed basis (a car sitting on a dealer's
lot runs up around $300 per car in finance payments
before it's sold, on average)
All these moves cut
the cost of a car. Choose a car online and it's
driven to your door from that low-rent country
warehouse sitting out there between your town
and the next town. Of course, this system of
cybersales does leave out the important test
drive, where you see if you are actually comfortable
in the real-world vehicle. But there are ways
around this limitation: perhaps a trial period
to see if you feel right or a simple trip down
to the local traditional dealership to kick the
tires and take a test drive around town. |
