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Jared Hamilton
From: Jared Hamilton
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Amit Maheshwari

Amit Maheshwari Vice President, Corporate Strategy and Development

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Quoting Payments Online: Do it well or don’t do it at all

Dealers and dealer service providers pay a lot of attention to pricing online inventory correctly and competitively. Makes sense. In today’s Internet based shopping culture, a consumer wants to know that they are getting a good deal. But we also know that a consumer buys based on what they can afford monthly. “Why not get the car that I really want if I can do $289 a month?”

Almost all dealer website companies now provide a manual payment calculator. Unfortunately, the jury is out on whether they measure up to consumer and dealer expectations. Here’s a sampling of what I found in a competitive metro market for a similar CUV from two competitive websites: Dealer 1: Internet price approx. $24,000 – quoted monthly payment $447. Dealer 2: Internet price: approx. $24,000 – quoted payment $292! I looked into DealerTrack’s PaymentDriver service that uses up-to date lender programs and found that the best tier monthly payment for that vehicle was $357 in that zip code. To do this, I used Dealer 1’s terms and cash down assumptions. One might argue that Dealer 1 undersold their vehicle and Dealer 2 came in too aggressive. In either case, the consumer experience and therefore the Dealer’s competitiveness or reputation suffered.

It’s easier said than done - calculating real payments online is mind-boggling (putting it mildly) due to the variables involved – mfg. rebates and incentives, consumer’s credit, trade-in, lenders that the dealer does business with, term, retail vs. lease etc. etc. The good news is that help is on the way through some innovative products and data.

In talking to several respected dealer principles related to quoting payments online, the following best practices tend to emerge:

  • Let my consumer search by payment
  • Automate my offers and specials
  • Provide a real loan vs. lease payment, including available incentives
  • Link payments to inventory, trade and financing online
  • Make sure that all of this can be controlled by me

In this age of low interest rates and competitive lease payments, we should revisit that payment calculator we have on our websites and decide if we are missing out on an opportunity to make it a great lead tool. There are also some dealers that would prefer not to provide payments online at all. Ultimately, it is the dealer’s choice on how they want to do business. However, if we do choose to quote payments, we should do it well.

Jock Schowalter
Taking more and more of the pricing transaction online is the way of the future. When it comes to selling vehicles, the dealers who know how to present and negotiate the purchase with all the variables on-line will have a huge competitive advantage against the dealers who still demand that the customer drive down to the showroom to get the information they need. Consumers are too busy and will flow to the Dealers who can provide the most user friendly way to buy. We've been able to show dealers how to do this effectively without giving up gross. DrivingSales members can order a free copy of the book "Online Negotiation is Now a Reality". Just email info@widestorm.com Post comments if you have any questions.

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