How Do Car Dealers Keep Pace In An Everchanging Market?

Your Turn To Drive asks How Do Car Dealers Keep Pace In An Everchanging Market?  Vinadvisor CEO Jim Dykstra, Shawn Ryder of D2C Media and Kristy Elliot of Sunshine Chevy discuss how dealers could best brace themselves for the change taking over car dealerships.

Jim: How do dealers keep pace with this changing market? The Federal Reserve’s decision to raise the prime rate by 25 basis points this morning (Thursday March 16, 2017) is a shot across your bow. We’ve seen record sales and strong profits over the last few years, but the truth is that without big grosses from F&I most dealerships have challenges they need to address immediately to insure a profitable 2017.
Whether it’s a rise in interest rates or slower job growth, even a small dip in the economy will quickly remind all of us how easy it is for consumers defer buying a new car. A dip in sales drives up new car inventory and just then all those off lease cars we’ve been hearing about for 2 years will cause a traffic jam in your local auction shuts. Down go used car prices and profits. Black may be the new orange, but black ink that turns red is painful.
 
So where do you start? New and used car inventories. What’s your days supply of each? How does your total days supply of new compare to the other same make dealers in your district, zone and region? Getting a handle on the mix is critical as tomorrow’s dealer trades can wind up making a big difference to you as soon as next month! Any water on the used car lot? Time to get lean. I sat in lots of statements with many a dealer but never heard one yell about too much cash. Getting a head start on new car inventory means reassessing your front end gross strategy because you can’t run new cars through the chutes. Being low on new car inventory when everyone else is long gives you options and control. Worse case, your district manager will love you because he’ll be long on cars and short on buyers.     
 
Shawn: Visiting dealers and talking about day to day business, must say that I hear "know we need to change" but often the actions are slower moving than the statement.
 
There is now technology for every aspect of the dealership - including looking for wholesales buyers of a vehicle before even bringing it on trade. Have a buyer for a customer vehicle before even closing the sale, take pictures, post on an app and have a dealer buy before the customer picks up their new ride.
 
When it comes to marketing - the key is measuring results, but not with page views on the VDP. The key is to measure how much a lead costs to acquire - but ultimately, how much an internet leads costs per sale. While some spend on traditional marketing - TV, Radio and Print - all great for awareness, but now customer begin the process online and using marketing dollars allows for measurable results, while keeping all parties honest. Dealers know how much cost per lead when working with Vendors, but even if leads are generated and the cost of sale is not in line with trends - dealers know their sales process may need a review as well.
 
Kristy
First – focus on the basics….people and processes.  If you have great people working for you who follow the strict processes that you have in place – for example, as mentioned by Jim, a strict used and new car aging process -  then you are prepared for practically any fluctuation in the market.  
 
Jim: There is an old saying about technology’s impact on business, “it’s impact is overrated in the short run and underrated in the long-run.” How do you keep pace today? You lead. Where do you start? With the number not on your operating report that drives every other number on it, salesperson turnover. Over the last 3 record years of new car sales, salesperson turnover in new car dealerships has averaged an unstainable 60%. No need to brainstorm about who to hire until you address the time it takes to sell a car. Salespeople average 10-11 cars/ month because it takes 3+ hours to sell a car. Until your salespeople can average 15+ cars per month, churn won’t improve much. No way to average 15 cars/month at 3+ hours per sale. Time to spend less on leads and more on a purchase experience that makes it easier to buy.
Ask yourself why 50% to 60% of your leads never respond to your calls, emails or texts. Consumers don’t fill out lead forms, they ask questions. How many questions do you answer? Response time means nothing if you don’t answer the question. Consumers buy a car every 3 to 5 years, but they buy online all the time. Amazon’s 30m prime members pay $99/year specifically to avoid lead forms, emails and phone calls. They find sites that inform so they can buy. Amazon.com is designed to make it easy to buy, new car dealer sites are designed to generate leads…in 2017. Hmmm. Want to lead in 2017? Do the unthinkable, make your site more transparent to make it easier for consumers to buy from your dealership.
Is it really time? If this sounds like nothing more than semantics, ask yourself this, “if you were booking a trip online, clicked to buy a ticket, and instead of a confirmation number like you expect, you get a message saying “a representative will call you shortly,” what would you do? You’d go dark, just like all those leads. Where to start? How offering a Car Buyer’s Checklist to your web site? Give consumers a tool that saves them time and money and you’ll be rewarded.    
 
Shawn: Average spending on incentives by automakers rose to $3,600 in February from $3,000 in January. General Motors accounted for the highest amount spent among big automakers with an average spend of $5,125 per unit (with 91 day average on inventory).
This shows that the OEM is really focusing on moving metal as opposed to generating profit for the dealership - meaning, sales is key once the customer hits the dealership. This can include offering additional services to the customer once they have agreed to purchase the vehicle - warranty, insurance and other ways to protect their investment.
The online process is streamlining the purchasing of vehicles - customers have done their homework, apply for the financing to have in place before arriving and then just need to take the vehicle for a spin to finalize the purchase.
The sales equation is based on people - however we need to remember that people begin the process online, so make it easy and ensure they can become excited about the vehicles you have on your lot.
 
Kristy
Secondly, expense control by spending as if in a recession and questioning every expense.  For example, is a marketing product really working for your dealership or do you even know how to evaluate it?  As our business continues to evolve and compress our ability to earn gross, we have to continue to take expense out of our business and now is the time to do it.  It is easy to cut expenses in good times when you have the cushion of time to evaluate every dollar you spend.  Can you renegotiate contracts with your floorpan provider and other longstanding vendors?  Should you examine your pay plans and make changes now?  Look at your advertising spend.  Are you holding onto too much tv, radio and print because it feels good even though we all know that today’s “foot traffic” exists primarily in the digital space?  Now is the time to evaluate your expenses across the board.   While times are good.  When – not if – we have the next downturn, dealers that have already “cut the fat” will be in the best positions to not only withstand a downturn, but actually excel during it.

Your Turn To Drive's latest episode takes on several car dealer challenges with the latest episode - what steps can dealers take to improve competitiveness in 2017?  Jim Dykstra of Vinadvisor,  Joe Webb of DealerKnows Consulting, and Scott Larrabee of New To Sales discuss several interest points.

New car dealers are fast approaching a crossroads. Check out Joe Webb’s practical steps on improving salesperson proficiency to lower the 60% turnover dealers suffered last year. Scott Larrabee hones in on the rarely discussed state of dealership web sites, which can increase returns without big investments of time or money. The Fed’s increase today of 25 basis points to the prime rate is a shot across the bow of dealer profitability. My friend Dale Pollak has been warning dealers for the last 10 years about what even a 1% increase in the prime rate can do to dealership profits. 

The biggest step forward a dealer can make this year is recognizing that they don’t just compete with other dealers. Consumers entering the market for the first time in 3 to 5 years expect a more contemporary purchase experience. They expect car buying to less like last time and more like their other complex purchases. They certainly don’t expect 17 hours online, 20 different sites visited and 3 to 4 hours in a dealership per Google’s Auto Study. It’s really this easy. Until buying a Chevy Cruze is transparent, efficient and assures consumers a fair price like they find when they buy $25,000 of GM stock at ETRADE, dealers face more risk than ever before.

Here are some of the highlights:

Jim: While the speed of change in auto retailing continues to accelerate, the core drivers to your profitability are more constant. The primary determinant of profitability for every franchise dealership is new car sales. Not just total new car sales, but more importantly, new car sales effectiveness. Growing local sales in your primary market area (PMA) is the surest way to grow sustainable profits.  
 
The first step I’d recommend any dealer take is to determine what percentage of your new car ad spend geo targets your local market. Don’t get caught in circular discussions about whether to spend more TV or digital, direct mail or radio. Your most important metric is total dollars spent exclusively in your PMA. If your goal is to sell 100 new cars each month and you want 70 of them to come from your PMA, spending 60% of your new car ad dollar’s market wide won’t get the job done. Pump outs will rise and local share decline. The new car business is still a local business. Beware chasing short term gains in sales volume – even when chasing stair step incentives – as the long-term price you pay is lower service retention and repurchase loyalty.
 
Don’t get ad $/car tunnel vision. Take a deeper look and quantify where your spending your money, then consider which mediums to choose and test.  
 
Joe:
So, Jim, you mentioned a few key elements that I want to touch upon. Let me say, though, I am worried too many dealers focus their attention on ad spends and driving traffic when the effectiveness of their sales floor is poor. If dealers haven't trained their teams to be cutting edge at the basics, then no amount of money will fix the profit leak.
With that said, you talk about capturing business from your local market. As tech grows, you're able to find and target in-market shoppers so much easier than you were before. Don't to, not just their location, but their interests and search history. Dealers need to leverage their websites to increase engagement, online/paid search to increase their traffic, and video to increase their brand more in 2017 than ever before.
The ONLY way they should be investing money in multiple digital channels is if they're truly keyed in on the latest attribution insights offered today. If you don't know what part of your ad budget is working for you, there is no use spending more. Instead, you'd be better spending it on making your sales and service teams more effective.
 
Scott:
Joe, I think that's exactly right, personally I believe dealers that want to be more competitive in 2017 should take a hard look at what they're doing to invest in the training and development of their salespeople.
Salespeople need daily training, but they need to have training that does a couple things. It needs to empower the salesperson by giving them the full set of tools necessary to become a professional.
Secondly, training salespeople to brand themselves, market themselves, and in turn promote the dealership. Dealers who encourage the growth of their sales force will rise above the rest.
Highly trained salespeople marketing themselves and their own brand will give dealers an edge in today's selling environment. Yes it costs money to invest in platforms to get salespeople the training. But dealers needs to ask what the cost will be going forward if they don't.
 
Jim: Great points guys, and they really funnel down to the issue of digital engagement. Joe’s right, insights needed to close are in the data. Scott’s point that salespeople build value in the product, themselves and the dealership to win couldn’t be more right.
What’s common to both is the need for salespeople to understand how differently a 27-year consumer is from a 47-year old consumer. Two things to consider when engaging any prospect digitally: (1) how do they see a car? a 27-year old’s coming of age moment was most likely their first phone (device), while the 47-year old’s was his or her first car. Miss this distinction and you’re done. Own it, and digital engagement will quickly improve. (2) What is their purchase experience expectation? Start down the road to a sale with 47-year old and you have a chance. Make the same move with 27-year old and they will “ghost” you. What’s it mean to be ghosted? It’s when you’re texting or emailing back and forth when all of sudden one side just stops. No see ya, thanks or any reply…ever again. Kinda of the digital version of an “Irish goodbye” at your local bar.  
Understand what your audience expects and give it to them. If they question the price you quote it doesn’t mean you need to show them an invoice. It means it’s your job to help them understand how the market is pricing the car they have chosen. Digital natives expect succinct communications, the more you type the less effective it will be. Whenever possible, point them to online resources so a 3rd party can validate what you’ve shared.
It’s imperative salespeople and managers build a relationship in the consumer’s voice, not the dealership's.
 
Joe:
Coming from the dealership training side, the topic you touch on, Scott, of investing in both coaching and technology to make your team more self-reliant to conduct their business and serve the customer is spot on. And when Jim talks about understanding the customer's persona and, in turn, validating their need and research with third party info. That really blends together well for what I believe dealers need to focus their efforts on in 2017.
 
Reaching the customer where their head and heart is. Their mobile device. The information that it contains is priceless to them, and you need to reach them here with your advertising, your branding, your messaging, your videos, your inventory, your pricing, and open up the lines of, not just communication, but research. Connect to them through their phones with valuable information, relevant to their search, and you'll win more shoppers. This needs to happen both digitally, and in-store. Influence the content on their phones, and you influence the user.
 
Scott:
Dealers that want to be a leader in their space need to remember that even though a 27 year old and a 47 year old buy differently, according to the latest 2015 Polk Auto Buyer Influence Study, they found regardless whether it be Millennials, Gen Xers, or Boomers, they all say the internet is the most influential source leading them to the dealership.
Time shopping online has increased, because people have access to more information than ever before.
Customers want to spend less time in the dealership. I mean don't we all want hassle free buying experiences?
Our customers want a friction free process more than ever, and the more a dealer can deliver on that from internet to delivery the more success they will have.   
Dealers need to focus on creating an experience online with a well thought out and well designed website.
Customers should be able to get the information they are looking for during this crucial part of the process not click away to the competitor in frustration.
Once the customer decides on the vehicle they want, dealers know they are going to shop less than 2 stores before a sales is made.
The customer knows they want a vehicle, at this stage they are now searching for the place to do business.
This circles back to the trained sales force ready to make the process seamless. The in dealership experience should exceed the expectations the customers had from visiting your site!
Any dealer in 2017 that focuses on bringing high quality training to their salespeople, along with a strong focus on a quality online presence will do more than compete in their space in 2017, they will DOMINATE IT!! :)

Your Turn To Drive discusses How has technology changed car buying online? Jim Dykstra, founder of www.vinadvisor.net, has teamed up with Joe Webb of DealerKnows Consulting and Shawn Ryder of D2C Mediato discuss the challenges facing the car industry due to rapid digital expansion in the online auto space.

Jim – Comment 1

While the internet has simplified many of our most complex tasks and purchases, it has not had nearly the same impact on auto retailing. Turbo Tax allows 30 million people plus to accurately prepare and file their federal and state income tax returns. Online brokerages like ETRADE gives millions of consumers to data and tools they need to buy, sell and manage their own investments. Stub Hub makes it easy to buy or sell tickets to sporting events, concerts and more.

Joe Webb

The glut of consumer-facing information regarding product, process and pricing available to online shoppers has both benefitted the dealer/customer relationship and harmed it. We were once an industry built on cultivating relationships that stemmed from emotional decisions. Researched (and overly-researched) shoppers have caused it to be more transactional in nature. Online resource sites have required dealers (hopefully) to step up their game when it comes to product knowledge, merchandising, and pricing transparency. Consumers are making decisions often from their online findings rather than their in-store experiences, which requires dealers to improve themselves in two arenas now, online and the showroom floor. It's what consumers expect, and what dealers are constantly struggling to deliver.

Shawn Ryder

Joe you make a great point, as customer expectations grow, the bar keeps getting set higher for the dealership! With constant turnover with the sales team - customers enter the dealership know more about the vehicle they are coming to see than the actual salesperson does on the floor. Imagine a new hire (green pea) meeting a customer on the lot that has seen every YouTube video, spec sheet and review available on the tips of their fingers.

Now, assuming there is no trust between the customer and the salesperson - there is an uphill battle to climb.

Jim Dykstra

For all the valuable information consumers find at manufacturer, research, portal, blog and social media sites, a dealer’s site looks like a stop sign. A cluttered home page, a “live chat” box that pops up instantly (digital salesperson trying too hard) and inventory that often requires consumers pay – with their email, cell number, zip code or more – to see a price. Worse, the information shared ignites a barrage of emails and phone calls.  

Do dealers not realize consumers compare them to sites that simplify complex purchases? How would a dealer react if ETRADE required a cell # for the price of a share of Google? Then called him/her 15 times in 2 weeks? How wide is the divide between consumer expectation and dealer capacity for an efficient online buying experience? 

Joe Webb

I see the divide larger than dealers would like to admit. Consumers see it. OEMs feel it, but dealers are taking advantage of a strong economy and not spending as much time on delivering seamless online-to-showroom (or online research-to-transaction) experiences as they should. When times are good like they are now, dealers must recognize they need to spend money, attention, and energy on making sure they're meeting today's researched customers' expectations. They must invest in ongoing education for themselves and their teams, as well as ensure they're equipped with the best communication methods, the most advanced technology, and the least antagonistic sales process they can deliver. Only then can a dealership deliver an online and in-store sales experience that customers deserve.

Does Your Dealership Marketing Strategy Meet the Needs of Today’s Consumer?

COMMENT #1

JIM DYKSTRA, Vinadvisor: Franchised new car dealers spend more than $17b in car dealer marketing budgets and advertising annually. Naturally they want to see their returns on this huge spend improve. Consumers enter the market with an expectation for contemporary purchase experience. Therein lies the disconnect. Dealers compare what they offer consumers to what other dealers offer. Consumers compare dealers to Amazon.com, StubHub.com, Southwest.com and myriad others who have used technology to simplify their most complex purchases. To improve returns, their marketing will need to communicate how dealers have made car buying easier.

COMMENT #2

SCOTT MEYER, 9 Clouds: True. And they will actually have to make the process easier. We just completed our 2017 State of Automotive Marketing report. We surveyed dealers throughout North America and found that nearly 30% of dealers still struggle with under-usage of their CRM. Additionally, only 28% know the purchase or service history of potential customers who walk in the door. It's hard to share tips, like Amazon's "You might also like," if dealers don't know or track what customers have already done. A big opportunity I see to meet the customer expectations is to track customer interactions on a dealer's website and then market accordingly. No more blast emails or generic messages. It's time for dealers to personalize their marketing based on what the individual needs, just like these customers experience elsewhere online.

COMMENT #3

JIM: This brings us to every dealer’s 3rd rail, the necessity to share information. A dealer spends 5% on marketing and 95% or more lead generation. They see their dealership as their brand and believe everything other dollar is wasted unless it drives leads. To understand their reticence one need only visit a new car dealer’s FAQ page. First thing you’ll notice, dealers don’t have FAQ pages. At best, you get an About page that tells a bit of dealer history. Dealers believe more info means less sales. Instead what you are likely to find is chat bot. What you quickly realize is you only get partial answers, then a request for your phone # and/or email so someone from the store can help you. Not surprisingly, no matter the question, the answer can only be found once you visit the dealership. Consumers expect and deserve more. Millions of them use Turbo Tax to accurately prepare and file Federal and any of 50 different State income tax returns, but any question about a new Ford or Toyota requires a dealership visit? Dealers' overspend on lead gen reduces advertising ROI, and worse, service retention and repurchase loyalty.

COMMENT #4

SCOTT: Completely true. Not only does it make the customer happy, but they're going to find the information anyways. Why wouldn't you want it to be from you? We have a saying at 9 Clouds that if someone learns from you, they'll buy from you. Dealers who educate the customers will build trust and be more likely to get the sale. Better yet, dealers teach customers, they will also show up better on Google. Providing helpful information is the "secret" to SEO. Google says the average customer takes 24 steps before purchasing, and 19 of them are digital. Time to get out there! This brings up the next challenge for dealers: by the time someone fills out a form on your site, they've already decided. The average customer only visits 2.2 dealerships on average. That means that your customers are won and lost before a form. That's why forcing them to visit or call to get an answer is a guaranteed recipe to lose sales. Better to start building relationships and track what pages a customer visits instead of asking them to fill out a form. They know the dealer is going to blast them with email, so why would they? I'm curious what you recommend that a dealer should do if they are "on board" and want to communicate and build relationships with potential customers?

COMMENT #5

JIM: The great divide between consumers and car dealers is trust. The solution, market price transparency. Dealers who try a “one price” strategy quickly find out it doesn’t work. Why? Because it’s the dealer’s price, not the market’s. Imagine a customer named Lisa who plans to buy $50,000 of GM stock and a new $50,000 Chevy Tahoe in the next few days. A single click to her ETRADE account offers Lisa independent market research on GM stock and complete transparency into GM’s share price. Lisa and all those who buy GM stock today will pay the same price whether they invest $5 or $50,000. Market wide resources and price transparency allow Lisa to confidently invest in minutes. But her Tahoe shopping is altogether different. She must visit different sites for vehicle reviews and dealer reviews. As for price, some include incentives, others don’t. Some a few incentives, others incentives most are not eligible to receive. This is Google’s Auto Consumer studies detail consumers having 26 touchpoints before buying a car. With no way to differentiate price, consumers eventually drive into a dealership for a confusing 3 to 5 hour purchase experience. The truth is this legacy sales experience is costing all of us billions. Less than 30% of consumers return to the selling dealer for service or make a repeat purchase. No better for 70% of dealership salespeople turnover each year. 99% of consumers expect car buying to be a hassle, so defer even when they want a car. Dealers who learn to share more, not less, will be rewarded with more sales, improved service retention and repeat purchase loyalty that grows sustainable profitability.

Your Turn To Drive discusses Top 6 Things Car Dealers Do To Make Car Buying Difficult. Jim Dykstra of www.vinadvisor.net, James Raia of The Weekly Driver and Jaclyn Trop discuss what to watch for when buying a car.

#1

The single biggest reason 99% of consumers expect car buying (and car buying online) to be a hassle is because dealerships don’t offer consumers any real transparency. Ask a salesperson in a dealership the simple question, “what price can I buy this car for?”, and you’ll never get a simple, clear answer. It always depends on something else somewhere else…

#2

Dealer advertising is consistently confusing. They promote a monthly payment price point, say $199, but obscure not just the down payment but ignore taxes, license and even options sometimes. In other words, they advertise a price that doesn’t exist. This forces consumers to basically start over when they get to the dealership.

#3

Car buyers sometimes forget that sales people at car dealerships are sales people. They'll do nearly anything to sell you a car. They'll bring in other staff members, they try to confuse the public on occasion, because they have so many people there they're trying to wear the customer down. So why not counter that? Why not bring an advocate or two in with you when you're considering purchasing the car? There's always strength in numbers, right?

#4

Dealers have mastered negotiate pieces of your purchase. They most often separate the sales price, down payment, trade value and monthly payment into 4 distinct pieces of your price. Then they ask questions to uncover which number is most important to you. Spoiler alert, it’s monthly payment for most consumers. Once they get you to choose one, they ignore the rest to deliver on your most important “piece.”

#5

Once in the dealership, salespeople are hyper focused on getting you to buy today! Don’t wait, you’ll lose money. The truth is most new cars are oversupplied and incentives don’t evaporate if you leave the dealership. Their “leaning in” to get you to make a decision only makes it harder for consumers to say yes.

#6

There's always a lot of paperwork at car dealerships. They bring in all kinds of offers for extended warranties, or other promotions, or different kinds of paint with an extra charge, or this and that. So, when you go into a car dealership, have your price in mind. Certainly, the car dealerships know what their bottom line is and if you go in with your bottom line, all you have to do is wait for it.

As reported by TechCrunch...

Yet more developments for Beepi, the used car marketplace that had raised $150 million but then went bust: The company has completely shut down and has been sold off in parts to repay creditors. The development comes after a deal to sell itself to Fair.com, a stealth startup from car industry vets, was cancelled; and then a second deal to sell itself to Bay Area-based used car dealer group DGDG fell through, TechCrunch has confirmed with people close to the company.

With no more cash for operations, Beepi instead went through an Assignment for the Benefit of Creditors (ABC process), with advisory firm Sherwood Partners as the Assignee, the firm confirmed to TechCrunch. The Wall Street Journal first reported the assignment of Sherwood Partners to sell off the assets yesterday.

The development wasn’t a complete surprise. After we initially reported in December that Beepi, out of money, would be sold to Fair.com, we’d been trying to hunt down the latest on the situation, when we noticed that the sale announcement was marked as “cancelled” on Crunchbase in January (now mysteriously turned back again to "pending"); and we started to receive emails from people saying that the site had completely shut down and was not processing any sales, or refunds for sales.

No one asked for home delivery

Beepi raised hundreds of millions of dollars on a huge addressable market (TAM) size and clear need to improve car buying online (and selling). What Beepi underestimated were the physical constraints associated with buying, inspecting, servicing and selling cars. What killed them is an average unit cost of $25,000, weight of 4,000 lbs. and expectation vehicles be moved by truck 2, 3 or 4 times more than traditional dealers. All that said, don’t bury the lead. Consumers loved the service and were willing to pay for a better experience.  

By the way, the future of auto retailing will not be built on home delivery. Consumers never asked for it and know it adds cost. What they want is a contemporary, online purchase that simplifies a complex transaction. Turbo Tax made it easy for consumers to accurately prepare and file tax returns online, it didn’t send a tax guy to their house with a calculator. Consumers are more than ready to buy and sell cars online.  

If interested you can read more of my take on Beepi's failure at the vinadvisor blog.

[youtube https://www.youtube.com/watch?v=3R7Y3kZIDVg]

Your Turn To Drive discusses Top 6 Things Car Dealers Do To Make Car Buying Difficult.  Jim Dykstra of www.vinadvisor.net, James Raia of The Weekly Driver and Jaclyn Trop discuss what to watch for when buying a car.

Car Dealers Price People

Jim Dykstra, Vinadvisor
What's the number one way that dealers make car buying difficult? They price people, they don't price products. You can't just walk into a dealership and say, "How much for this car?" They'll look at the car, they'll look back at you, and then they'll ask you some deflective question, talk about rebates, trade-ins, your kids. It's hard to get a straight answer, 'cause their goal is to have you sit down, relax and then determine how they gain the most profit on the sale of the new car, your trade-in, financing and any after-market products. Nothing wrong with it, except it's extraordinarily inefficient in a world where everything is purchased online and efficiency has improved. So, time to change that paradigm.

Car Dealer Advertising

Jaclyn Trop
Dealer advertising is consistently confusing. They'll promote fixed monthly price point, say $199, but they'll leave out the cost of the downpayment and they don't tell you how much you can expect to pay for taxes, license and other options. In other words, the price that they're advertising doesn't really even exist. This forces the consumer, basically, to start all over again, once they get to the dealership.

Car Dealerships Sell Cars

James Raia
Car buyers sometimes forget that sales people at car dealerships are sales people. They'll do nearly anything to sell you a car. They'll bring in other staff members, they try to confuse the public on occasion, because they have so many people there they're trying to wear the customer down. So why not counter that? Why not bring an advocate or two in with you when you're considering purchasing the car? There's always strength in numbers, right?

Car Price Transparency

Jim Dykstra
So how else do car dealers make car buying difficult? Well, understand they price people rather than products. The biggest challenge is they try to get a different price for the same product from each person who walks through the door. If you walked into McDonalds and four people walked up to the line at the same time and each of them said, "I want a number two value meal," imagine how frustrating and time-consuming it would be if each of those four registers tried to price people differently, a different price for every number two value meal. So the most important thing to understand, to take that away from the dealer and then put the control back into your hands, is to get prepared. Have an idea of what the fair market transaction price is for the car you're buying, new or used, and for your trade-in. You can find that online: Kelley Blue Book, vinadvisor.net, Edmunds. And then, most importantly, be prepared. Be prepared to make the first offer. Negotiating with a car dealer is a lot like playing a game of tic-tac-toe. The player to move first, doesn't matter whether it's an X or an O, has a 71% chance of winning or tying. Get prepared, make the first offer.

Car Dealer Pressure

Jaclyn Trop
Once inside the dealership, sales people are hyper-focused on getting you to say yes. "Don't wait," they'll tell you, "You'll lose money." The truth is, most new cars are oversupplied and the incentives that you're offered don't evaporate once you leave the dealership. Their enthusiasm to get you to make a decision only makes it harder for consumers to say yes.

Car Dealer Paperwork

James Raia
There's always a lot of paperwork at car dealerships. They bring in all kinds of offers for extended warranties, or other promotions, or different kinds of paint with an extra charge, or this and that. So, when you go into a car dealership, have your price in mind. Certainly, the car dealerships know what their bottom line is and if you go in with your bottom line, all you have to do is wait for it.

Your Turn To Drive's panel of experts discuss What Does It Mean To Have A Vehicle Recall.  In this video, Jim Dykstra of www.vinadvisor.net, Joe Webb of www.DealerKnows.com and Shawn Ryder of www.D2CMedia.ca talk about it.

Jim
My take is that we address where to find info and how to understand it, when and how to get it fixed and what responsibilities we have to disclose if we sell our car.
The first thing you should is to check for open recalls on your car. Visit the NHTSA Recalls to check the status of your vehicles. Their 3 definitions are:

1. No Open recalls: no open recalls; can mean none or car already fixed.
2. Incomplete – no remedy: your car has an open recall but there is no approved fix or repair yet
3. Incomplete – there is an open recall and a fix, you should take your car to the dealership

Now you can begin to consider what it means when you have an incomplete recall of any kind.

Joe
An owners' initial thoughts regarding a vehicle recall is usually centered around questions such as:
                •              How severe is it?
                •              Is there a safety risk for me/my family?
                •              Will the dealership cover all of the costs?
                •              How long will it take to fix?
                •              How will I find the time to take care of this?
If the issue is large, the owner may be less likely to stay with the brand. Conversely, the dealership can restore faith in a brand by giving them a solid recall repair experience.

Shawn
When it comes to recalls - from a customer perspective:

• How long will this take?
• Do they have required parts in stock? If they knew it was coming, would be prepared, right??
• Will it mean more than one visit? Can I visit any dealer or where I purchased it?
• What if I had a bad experience at the _____ dealership? Do I need to go there?

Jim
My next point:
 There are a few questions we consistently hear from consumers regarding recalls, especially those that appear to be minor, is do I even need to bother fixing it?
It will best serve you over the long-haul to fix all open recalls.
Make a point to get your next LOF at the dealership so they can repair any open recalls.
Why do I need to?
Don’t assume. What may appear minor to you at the time could be consequential

Your family’s safety. How would you feel if ignoring a recall contributed to an accident somewhere further down the road?
Risk. If you have been notified about the recall & don’t fix it in a timely matter, you could expose yourself to expensive litigation if you are involved in an accident or sell the car and the buyer has an accident.

Joe
Many dealers miss the opportunity to position themselves as a trusted source for this type of information. By doing so, they can strengthen customer relationships while building their marketing efforts as well. Core marketing elements should be part of their activities, such as:
                •              Easy access to recall notices/info via blog pages or NHTSA links
                •              Recall Videos
                •              CRM/email announcements/follow-up campaigns
                •              Lead magnets on their website to help build their marketing lists EX: "Get notified if your vehicle has a recall" (Great for non-customers)
                •              Simple social notifications via FB or twitter - new recalls/recall updates

Shawn
From a dealer perspective:

• Will the parts be easily available?
• How long will they take to repair?
• Is it something that will cause customers to be upset? or even irate over the issue? (that we have no control over)
• How can use the recalls to build rapport with customers? ultimately how sell required services?

2017 is off to an interesting start as potential disruptor Faraday Future at CES revealed their flagship electric car, the FF 91.  Faraday joins Tesla, Elio and others with an eye to toward the future.  Not only are these vehicles attempting to improve efficiencies through improved mileage or alternative energy, but they are also conducting business through new channels.  While ahead to car buying in 2017 with our three-part series we have already asked our panel of auto experts about obstacles to car buying and the first stop for car shoppers.  Today our question is a bit more forward looking ?

Vinadvisor CEO Jim Dykstra still thinks the status quo is too strong:

Dealers. Tesla is a red herring, to achieve scale capital constraints will require franchised dealers. The bigger question is who will make online car buying easy.

That is a great point.  Is is about the place you buy a car or making the path to purchase easier?  Here is what our experts had to say.

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Ian Beavis
Chief Strategy Officer
AMCI Global
Everyone will be selling online in 10 years. You should know that 93% of used car buyers will not buy a car without first driving it so 100% online has its challenges.

James Green
CEO
Magnetic
Mostly I think that car buying will diminish dramatically over the next 10 years as autonomous vehicles and ride sharing apps eat the world. Already where I live (NYC) vanishingly few young people own cars. They, Zip, Uber and Lyft everywhere. Once cars are self driving the economics of ownership will diminish further. In that environment, the biggest sellers of cars will be manufacturers and tech companies. Tesla has led the way and although traditional brands are entrenched in the dealership model, cars will go the way of everything else: sure, you can buy an Apple computer from a reseller, but mostly they are bought in owned and operated stores or online. So shall it be with cars.

Chris Baccus
SVP
Caruso Affiliated
Dealerships. If someone asked me this question 20 years ago, I would've said someone other than dealerships, but there is a strength dealerships have that people often overlook. They are the place you go to service your vehicle. It's the place to test drive. It's the place to experience the brand. They play an important role. It's not like buying a book online.

Philip Zelinger
President, CEO
Ad Agency Online, LLC
Today's first choice sites for online car shopping, such as AutoTrader, Edmunds, etc., will soon shift to next generation offerings from Amazon, Google and probably Facebook as they capitalize on their extensive customer base and search engine data enabling them to direct consumer shopping habits.
After all, what are friends for.

Nick Huie
National Manager
Toyota North America
The answer is yet to be determined, but if you look at the current regulatory environment, history of the US automotive retail sector, and consolidation of dealerships you would have to believe that some of the large dealer groups have the resources and strategic foresight to shift vehicle purchases online or at least partner with a technology company that can facilitate it. OEMs may also play a large role, but it may ultimately be determined by the large dealer groups because the fragmentation of "mom and pop" dealers may be too fragmented to coordinate.

Chad Pelliccioni
Founder
Hype Media Group
Amazon and similar sites.

Jill Ciminillo
Automotive Editor
Sinclair Media Group
That is a tough one. Ten years from now, I think everything might be sold online. But I will say that Asian automakers or newer car companies like Tesla seem to have the most flexible and fluid sales methods. Currently, automakers like Hyundai and Toyota have a leg up in online sales. Toyota first ventured into selling cars online with its Scion brand through the Pure Pricing Plus program, which gave buyers the opportunity to spec out a car and get a guaranteed price through the website. Hyundai is now following suit with its Ioniq “subscription” plan that it announced at the 2016 LA Auto Show. It’s starting out as a trial in California, and consumers can log on to the website, spec out an Ioniq EV and get all-in pricing that includes maintenance, dealer fees and charging. All the buyer has to do is go to the dealer and pick up the car.

Eric Miltsch
Co-Founder
DealerTeamwork.com & AutoOutletsUSA.com
Great question. I believe Tesla will be selling more cars online. Amazon should also be included as they recently introduced their own car buying research tool. The next logical progression is for Amazon to start selling vehicle online. Large dealer groups may also sell more online as significant industry consolidation is likely during the next 10 years. The solutions and technology used by the likes of Amazon, AutoNation or BHA may even be driven by acquisitions of other platforms such as Carvana or TrueCar.

Shiraz Ahmed
Reporter
Automotive News
Manufacturers

Joe Overby
Senior Editor
Auto Remarketing
Dealers. They certainly have the numbers (population-wise) and infrastructure in place. Plus, I don’t see states’ laws prohibiting direct-from-manufacturer r car sales being overturned anytime soon. Tesla’s success, however, is an interesting case. I think the tech companies have been fascinating to watch and they’re incredibly innovative. Some of the sharpest people I’ve ever interviewed. I just think with tens of thousands of car dealers, should they decide to ramp up online car sales, dealers have the sheer numbers.

Andrew Fails
Photographer/writer
Jalopnik
Dealers will sell more, just because of the used car market, but it will be fewer traditional dealerships, and more things like Beepi, Carvana, Carzumer, etc. Not sure if you're considering those tech companies or dealerships. I called them dealerships because they still need a dealership license (I believe). I think Manufacturers will sell more new cars though.

Ed Brooks
Sr Digital Media Rep.
Cars.com
While Carvana has gotten off to an early lead in the race to sell cars online, I think, in ten years this will be much more commonplace with the big dealer groups embracing this wholeheartedly. So I would say look to AutoNation, CarMax, Berkshire Hathaway, Sonic, etc. to be in the lead in 10 years

Philip Reed
Writer
NerdWallet
It's amazing to consider how much retail has been changed by the internet and how little it has affected car buying. So, in 10 years there will probably be less change than we anticipate. But the manufacturers might have found a way to bypass dealers or at least let people shop online. If not, then the dealers might have found a way to finalize the sale online and deliver cars to people's homes or offices.

Nick Roshon
Nick's Car Blog
That's a great question, especially as Amazon has recently entered the car space and start-ups like Beepi are taking off, not to mention Tesla blazing their own path selling direct. Once autonomous cars became more mainstream, the need to test drive a car in person is less of a necessity as the average consumer thinks of cars more as an appliance. Enthusiasts will always prefer the in-person experience, but the average shopper will want to go online and have less stress, confrontation, and haggling. I think dealerships will continue their dominance though regardless of whether online or offline, both due to regulatory issues preventing manufacturers from selling direct in many cases, and their current foothold of the market means as technology solutions like Beepi grow and become a threat, dealership conglomerates like Autonation and Penske will buy these start-ups and integrate into their offering.

Craig Fitzgerald
NPR's Car Talk
The dealers, no question about it. You have to understand the lock dealers have on the retail automotive market. The National Auto Dealers Association is one of the largest trade groups in the country. In any given state, the NADA-supported state auto dealer associations are, too. They are fiercely protective of dealer franchise laws in those states.
Tesla has managed to circumvent the franchised dealer model a bit, but if it plans to ramp up to any kind of volume, it's really going to have no choice but to work within that model, instead of outside it.
The reason the dealer model worked from the get-go was because as powerful as the manufacturers were, there was no way to build the thousands of stores they needed at the local level.
That's still true today. Even the most successful volume manufacturer couldn't possibly invest in all the brick-and-mortar stores required to service the products they sell. Look at it this way: Home Depot has 2,275 stores in the US. GM alone has 4,355. There is simply no way GM has the financial wherewithal to run that many stores. I don't see that changing much in the next decade.

Ralph Paglia
ADMP
Dealers. 10 years may sound like a long time, but in the car business, where everything that happens today determines what is being sold next year on this day, it is not as far away as you may think. In answer to your question, as far as the USA goes there is an entrenched franchise based dealer distribution system that has taken 100 years to build and has many billions of dollar invested in its efficient and effective operation. Contrary to what some people may believe or hypothesize about, American consumers genuinely like and reward this very same franchised dealer distribution and retail system... They currently prove their satisfaction over 17 million times a year. So, my money and opinion is on the ever evolving, responsive and entrepreneurial American car dealer. Do dealers currently sell cars online? Yes, they do and the number is far greater than typical reports and sales charts reveal.
Manufacturers, less certain disruptive upstarts, are generally prohibited from competing with their franchised dealers in most states, so it wont be OEM's making the majority of sales in ten years.
Tech companies like to think they are smart enough to sell cars direct and bypass the franchised dealers system, but unless you consider Tesla a tech company, none of the current population of tech companies have demonstrated ANY ABILITY TO SELL CARS IN ANY WAY, SHAPE OR FORM. They may provide an entertaining and interesting distraction from the car people that actually do sell cars ten years from now... But, to sell more cars than the franchised dealer network? I highly doubt it.

Joe Webb
President
DealerKnows Consulting
There will be countless changes to automotive retail sales over the next decade. I can see ride-sharing programs cutting into vehicle ownership, as well as online transaction tools becoming even more commonplace. As time progresses, auto makers will focus on technological advancement to speed up (and in some cases only virtually connect) the customer's research, test drive, and purchase experience.

Bill Soule
Founder
Digital Video Syndicate
Online banks. It’s hard to see the franchise laws going away so I’ll go with a platform that enables a car shopper to view content, reviews, loan offers and send an offer to a dealer on their platform. I think the loan is the key element. Car dealers will take offers from anywhere, so why not BoFi or SoFi?

Neil Feuling
Senior Director - Auto E-commerce Strategy and Business Development
LeEco US
Fleet companies with the logistic capabilities (I include Uber, Hertz, Avis, Enterprise, National and other larger rental players here) to enable semi autonomous ev infrastructure) will play an outsized role in global car sales and it may or may not involve retail / consumer ownership / shared ownership / ride hailing and car sharing. CarMax will have a 360 evolution hiring top tech talent from silicon valley and will achieve astronomical growth with a portfolio business model approach to car sales with their strong brand trust to carry a ton of weight to achieve their goals.

Mark Dubis
CEO
Carfolks
Unless franchise laws change, auto dealers will still be selling the majority of new cars purchase online and in the traditional fashion. That being said they will be utilizing third party technology
that incorporates 3D and Virtual Reality technology to experience a more realistic “test drive” and experience all the telematics offered by next generation vehicles.

Ben Tesler
Founder
FairRose LA
I think the model Tesla uses will become the standard in the auto sales market. You don't need sales men at the dealership. People can go there but I think the car will come to you. You'll choose what you're looking for online and it will show up at your house for a test drive. Virtual Reality could even provide an experience with a virtual showroom. There's even a chance we won't be driving in 10 years as driverless cars get more and more popular.

lpsos Automotive
Only franchised dealers can “sell” new vehicles to consumers.
a. Dealers- there are very strict state franchise laws in the US that protect the rights of car dealers to sell new vehicles in their designated communities. These laws enforce the manufacturer “franchise agreements” that these dealers have with their various OEM’s. For these reasons, no new vehicles are sold “online”. Vehicles can only be “sold” at dealerships ( within the majority of states). So you can see a new vehicle at an auto show or a mall display but the transaction to sale must be done at a physical dealership to comply with the majority of state laws. Aside from these facts, consumers benefit from taking possession at a dealership because of the assistance dealers provide to educate buyers on the operation and capabilities of their new vehicle. Tech features on new vehicles alone require assistance from professionals so customers can enjoy all the benefits their new vehicle provides.
b. Manufacturers – OEM’s will continue to send new vehicle “leads” to dealerships from their websites and other promotional activities so dealerships can assist customers directly with the sale and servicing of their new vehicle.
c. Tech companies -must comply with state franchise laws or challenge them like Tesla has done with their “showroom” concepts. This will probably become a larger issue if more tech companies decide to first, sell new vehicles and secondly, utilize a direct to consumer model and be willing to spend the money to challenge existing franchise laws in court. Existing dealer franchise laws in a lot of states are very strong and will take significant efforts to challenge them. Remember that local dealerships are very often the largest tax payers and among the top employers in their communities and have been for many years.
For a tech company to acquire a “franchise agreement” from an OEM, they would have to build a bricks and mortar facility including sales, service, parts and used vehicles. Tech companies may not want to make these physical investments across the country to be able to provide their buyers with access to service nationwide without the assistance of a dealer body. Tesla does not the level of national support that other OEM’s can provide to their customers. There are additional costs to Tesla owners who do not live in close proximity to a Tesla showroom for servicing their vehicle.

Ricky Patrick
BDC Manager
Richard Kay Superstore
Dealers. Specifically dealers who have embraced transparency and are currently developing a positive online reputation.

Maddy Low
Community Manager
DrivingSales
I think dealers will still be selling the most cars in 10 years.

Kyle Reyes
Founder
The Silent Partner Marketing
I believe it will still be dealers - albeit fewer of them. It'll be dealers because there's still going to be a tremendous value proposition of relationships and relationship marketing MERGED with convenience.

Scott Meyer
9clouds
Dealers will still sell the most in quantity because they have the law protecting them. Also, tech companies will increase the percentage of vehicles in the market, but they might sell direct (online) or use existing dealer networks.

Matt Stoffel
9clouds
Honestly, it's impossible to know right now. We're seeing Amazon in the early stages of selling cars online, and as driverless cars transform the way we look at transportation we can expect more changes. The safest bet is that customers will buy vehicles from whoever makes the process easy for them. People don't often have a favorable opinion of dealerships, and they like shopping online. But the successful dealerships are actively working to overcome stigmas and shortcomings while modifying their models to suit changing market demands.

Quincy Armstrong
Director of Marketing
Rusnak Auto Group
Really depends on the brand. Some mass-market brands the transaction might be almost 100% online, but for a Porsche customer for example, a majority are still going to want to experience the car and have a personalized buying experience that connects them to the Porsche community.

Kurt Stephan
Dealer Marketing Magazine
In 10 years, I expect the traditional dealer model to still be predominant, even for online vehicle sales. Both the OEMs and progressive dealers have been key early adopters in technology, and combined with them having established, proven brands plus a many-decade head start in marketing and selling cars, I expect they will remain the primary buying source for consumers, even a decade down the road.

Josh Crouch
Quora
Excellent question- here is what will happen. Companies will pop up that offer “more convenient” selling solutions but manufactures will always keep new car dealers in business- So yes dealerships will always outsell internet companies. Now here is what the car dealers will do- (or at least the ones that want to stay at the top of their market). They will adopt some of the principals of the “convenient internet companies” - you will literally be able to purchase a vehicle from your home from a new car dealer- from A-Z without leaving your home or office in the next 2–4 years. It will be a VIP experience for the regular consumer. From going to the dealers website- selecting your sales rep, then selecting the vehicle, selecting date time and location for the vehicle to be delivered to you for a test drive - then finally E signing all of your documents you will be able to do from home… now depending on how they can verify your identity you might have to visit the store to sign your final documents but 99% of the process can and will be done from outside of the store. It will become the standard here soon.

Technology and digitalization have significantly changed the way businesses operate nowadays. Consumers expect businesses to offer a website with detailed information about their products and services.  New car shoppers most often turn to portal sites for the new-car pricing, advice and information they need to buy a new ride. The problem is that most of these websites don’t provide the complete price transparency you need to make a $20,000 to $60,000 purchase. So how do you determine the Fair Market Value for a new car?

Determining the Fair Market Value (FMV) for a New Car

Let’s take a look at the online resources that can help you determine a car’s fair market value. The most commonly used pricing resource for new and used cars is KBB or Kelley Blue Book. The site examines invoice price, holdback, factory-to-dealer incentives, advertising fees and any number of hidden variable costs necessary to figure out the “real price” for a vehicle. Another resource is The National Automotive Dealers Association (NADA) Used Car Guide Book which provides detailed pricing for new and used vehicles. Their guides are used by consumers and dealers alike to determine the fair market trade value for your car or truck.

Car Shopping with Multiple Sources

It is important to remember that you should check multiple sources to determine the FMV of a new car. One strategy is to send email requests for price quotes to dealers to establish a range for the FMV of a new car. (Note: the price from the dealership furthest from you is most likely to be the lowest They know you won’t make the trip unless they offer you the lowest price possible.)  Dealerships’ reticent to share a total purchase price are making clear they do not competitively price their products.

Let them know you plan to compare the sale price and all available incentives. Gather these prices and compare to 3 party site generated prices to determine a FMV price range. Remember Econ 1, if there is a shortage of the car you want the price will be higher. An abundance and price declines.

Market values fluctuate depending on sales volume, inventory and planned production. This requires you recheck prices when you get close to buying. Any market will have some customers paying a bit more and some a bit less for the same vehicle. Being prepared to understand the FMV price and what drives it will save you money on your next purchase or lease.  Best of all, it will shorten the time it takes to negotiate your final deal.