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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:
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.