Recently, we wrote about a program that Lexus is instituting at dealerships across the country that focuses on making changes to appeal more to women. Lexus found that the more female-friendly its dealerships were, the more attractive they were to Millennials and minorities as well. It’s a great step for the company, and considering the expected 90% enrollment rate, the dealers who have already done the program have had enough success to convince the rest of the country’s Lexus dealers to take part.
At the corporate level, it makes sense to institute programs to give customers a better experience, but dealerships are independently owned, and automakers don’t have complete control over the dealership experience. They can add incentives, offer training, and do their best to encourage dealers to be better, but are automakers the only ones interested in making changes? Are dealerships all intent on sticking to the same, old, broken system? There are actually a number of dealers who are making major changes and updating their business models to adapt to the changing expectations of new customers.
One of those dealerships is Gillman Honda in Houston, Texas. It allowed Laji Isac to carry out all of his negotiations over email. After they agreed on the price for a new Honda Accord, Isac then visited the dealership, took the car for a test drive and signed the paperwork. In two hours, he was on his way home with a new car. He didn’t have to worry about doing final negotiations in person, the price changing overnight, his car mysteriously disappearing out of the dealer’s inventory, or spending five hours trying to get into a new car. Gillman Honda was happy to work out a deal over the Internet, stuck to their deal, and ended up with a happy customer.
It’s not just family-owned dealerships that are embracing online negotiations either. AutoNation, one of the largest dealership networks in the country, is introducing its own version of an online marketplace called SmartChoice Express. The site allows customers to research cars and negotiate a final price entirely online. When they show up to the dealership, their keys and their paperwork are ready and waiting.
Rob Cochran, the owner of a chain of 20 dealerships in the Pittsburgh area, likes the direction that the Internet is taking his business. He’s happy to work with websites like TrueCar and Edmunds because it increases his efficiency. He even has kiosks installed in his showrooms that allow customers and salespeople to look up what a car has been selling for and what those third party sites say that car should sell for.
“We’re inviting the data, and the response has been tremendous,” Mr. Cochran told The New York Times.
Taking the traditional approach may have led to more money on some sales, but he’s seeing significant increases in traffic. The added volume more than makes up for the money that he’s potentially not making on individual sales. Plus, with happier customers come more referrals, and that cuts down on the work that he and his salespeople have to do to get customers in the door.
The biggest changes may be happening out in Seattle though. Brad Miller, the owner of several Honda and Toyota dealerships, was inspired by Apple’s success to completely change the way that he does business. With a young, tech-savvy customer base to cater to, Miller decided to make his dealerships as much like an Apple store as he could.
To do so, he introduced no-haggle prices and no-haggle financing. Not only are prices exactly as advertised, there’s a chart on the wall that shows interest rates based on credit scores. Transparency gives customers the feeling that they can trust their salesperson without being taken advantage of, and it also allows them to easily figure out what their monthly payments would be without having to jump through hoops. The customers also get to choose which salesperson they work with, encouraging them to feel like they’re more in control of the car-buying process.
These dealerships are not the only ones making changes to keep up with technology, but they’re certainly proof that people want a better experience. Despite Tesla’s success, the dealership model is going to be around for a while. As long as cars continue to be sold through dealerships though, there are changes that can be made to make them better and more competitive.
Ultimately, customers want transparency, and they want to be treated with respect. That means treating them respectfully, dealing with them honestly, and valuing their time. People don’t want to spend a full day at a dealership trying to buy a car they already know they want. They don’t want to deal with someone trying to pull a ruse on them, and they especially don’t want to be made to feel like they aren’t welcome or don’t belong.
Part of what makes Miller’s no-haggle financing model so brilliant is that it completely removes any chance for discrimination. If a woman and a man both have the same credit score, they both get the same interest rate on their loan, and they both know what it’s going to be because it’s on a chart that they can see. Just like with no-haggle pricing, age, sex, race, sexual orientation, or political affiliation has any effect on who pays what price. It simplifies the entire process, and for people who are worried about being discriminated against, that kind of transparency builds trust.
Having a single employee handle the sales process as well as the financing probably won’t become widespread for for a while, but email negotiations are quickly becoming the rule, not the exception. A dealer who won’t quote a price on a car over email is probably a dealer who’s not worth dealing with. Even the price on the car is lower than what you can get from the competition, that’s the kind of dealer who is probably going to try the same kinds of tricks that earned dealers their bad reputations in the first place.
Luckily, for customers who want a better dealership experience, there are options out there, and the number of options is growing. Dealers are coming around to the idea that they need to change, and while there are definitely dealers out there who continue to act like nothing has changed in the last 25 years, they’re not the only ones who exist. The more car buyers who refuse to deal with dealerships that attempt to jerk customers around, the more quickly they will be forced to change their practices. Otherwise, with their customer base dried up, their businesses will quickly head into bankruptcy.
Conversely, the more dealers who are rewarded for their honest, transparent business practices, the more likely others are going to be to get on board. Consumers have the power to choose, and while great car dealers are rare, they are out there.