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Car Dealers vs the Web: GM Shifts Toward Online Purchasing
cartechboy writes "Car dealers may be in for a new battle, and it turns out existing car manufacturers are joining the fun. Tesla Motors began the rebellion by trying to sell electric cars directly to buyers. Car dealers have fought that effort state-by-state and even complained to the DMV about Tesla's website. But things just got a little more interesting. General Motors announced plans to expand its new web-based shopping tool (aka a shopping web site) that allows customers to bypass showrooms when buying new cars. The idea is to use the Web as a giant test platform to see if the automaker can better target people who use the web to buy things. The catch is that the web app, called 'Shop-Click-Drive' will allow users to do almost everything they'd do at a dealer: customize the car, get pricing and financing and even arrange for delivery. But then when you push the button, your "purchase" will be routed to GM's network of 4,300 dealers, so you still have to visit a local dealer to sign on the dotted line. Even with this limitation, the move is still making dealers nervous. GM dealers aren't required to participate in the web-based test, and company officials say they have had some dealers turn it down."
GM is functionally incompetent when it comes to the internet. Tesla is new, small, agile, and responsive to the market. GM is still stuck on the couch with its hand in the chip bag, bitching about how easy kids have it these days.
Get off the couch GM, lose 50 pounds, and divorce yourself from the idea that you're owed something. Keep it up and this new generation that seems to have little interest in cars, preferring to bike everywhere and sees no particular status in owning a new car will put your fat ass outta business.
#fuckbeta #iamslashdot #dicemustdie
I hope that GM and other manufacturers go all of the way with online sales. Car dealerships consume an absurd amount of commercial realestate, and it is frequently prime commercial realestate.
your car and healthcare combined.
I tried to buy a new car at a dealer recently and ended up walking out after being messed about and insulted with bait-and switch. Anything that gets rid of dishonest dealing and shoddy sales practices is a good thing. I say bring on direct purchasing ASAP.
People won't pay more than they have to.
Great plan for lazy idiots with more dollars than sense.
Even though you have to buy from a dealer, this new GM website means you get exactly the car you want with the extras you want at a price that is set before you even set foot on the dealer lot. No negotiating and no up-sell.
Which is exactly why some dealers dont like it.
I won't miss dealerships at all. Useless middleman money.
The cost of a car should be exactly the same no matter who you are. It pisses me off that those with relatives who worked at car manufacturers many years ago pay thousands less than me for the same exact product. It makes me not want to buy a new car, period.
Charging a flat, consistent rate is smart business. Fuck dealerships.
Ask and ye shall receive!
Would you buy a house online?
What if you have a trade-in? How can you do that online?
How do you know if you want to buy versus lease a car?
Only 2% of people buy cars online and almost without exception these people are brokers.
There have been plenty of "no haggle" dealerships in the past, present and future --- but generally it doesn't work because few people are willing to spend $20,000 to $50,000 without trying out the merchandise and there are always a variety of incentives. And this ignores the entire issue of trade-in values for someone's current vehicle.
No one buys houses online or rents apartments online because it is a major purchase.
And for most people buying a car is 2nd biggest purchase they will make. Buying a computer or a vacuum cleaner is one thing --- but a major purchase with a 5 year loan or 3 year lease costing 30% of one's annual salary after taxes isn't something anyone will take lightly.
Priest: "Universe from nothing, no laws of physics, sped up time"+ huge discrepancies. Creationism? No. Big Bang Theory
Hilarious that there's another thread today about how increased mechanization is destroying the job market, so let's see.. self driving cars/trucks replacing all the professional drivers, manufacturing robots taking over the factories that haven't already moved to China, car dealerships doomed so there goes the jobs AND the thousands of small businesses and their local taxes.. tell us again how this is all good and the displaced workers will all go into software consulting, robot repair and get engineering degrees and we'll all have well paying middle class lifestyles. Go on, I'm waiting.
Buy your next house on the web! Free delivery to your vacant lot! Need land? We'll sell you some! With free delivery!
You have narrow vision. People will do the exact same thing they do with electronics and appliances. You go to the dealership, use their physical resources to decide which model you want, then go and buy it cheap online. So, people WILL buy cars online, they just won't do it your way.
most things online you buy with a credit card
with cars most people have to apply for a loan tied to the specific car. i'm sure banks will love to pay for cars without the verification procedures now in place at lots of dealers
... playing just for the middlemen.
Dear Slashdot: next time you want to mess with the site, add a rich-text editor for comments.
This isn't all that different from existing car buying websites (outside the GM lock-in). Most sites like Edmunds, Autotrader, Cars, etc have features like inventory search, pricing, options, suggested market pricing. These sites connect you with dealers. The dealers pay the web sites to the leads. In return the sites get sales pricing data (which is one of the ways sites like Edmunds figures out TMV). I'm sure GM has a charge for the dealers for the leads. Perhaps slightly less than independent sites.
All GM is doing is pre-qualifying the financing, which mean the leads are slightly higher quality than Joe Blow internet.
If you wanted to get a better deal but don't like the art of the sale, Costco Auto is the better route to go.
I bought a new car recently. I try to keep my cars as long as possible, but the old one was causing me to wonder how long it would last without another expensive repair. That meant a trip to the dealership, knowing quite well that I was about to have the worst category of retail experience known. It doesn't matter if you are buying a cheap car or an expensive one - dealers treat all customers the same way. Haggle, make you wait while the sales person "I will try to get my manager to accept your price, but he is going to beat me up..." talks fantasy football with his manager as you wait. (If you are trading in a car, they will take your keys to look at your trade-in. You will not be getting them back any time soon, so be sure to bring an extra set of keys you can drive off the lot while they are playing this game to wear you down.) Make them wait while you enjoy a sandwich or read a book in the coffee shop across the street.
After you endure that nonsense, you get to talk tot he "finance manager" who will try to get you to by an insanely overpriced extended warranty contract. If that doesn't work for the dealership, they will be happy to offer you very high rate auto loan. Think of what is happening: The sales rep is telling you how great the car is while you are looking at it, then the finance person is telling you an extended warranty is really needed because the car will probably have a major repair after the warranty period is over. Be sure to ask the finance person if they think you should tell the sales person you will not be buying the car since he or she just told you it really isn't a very well made car.
Car dealerships are really parasitic IMHO. They use their intermediary status to extract as much as possible from customers, and in doing so alienate the customers from the manufacturers. The manufacturer spends a huge amount of money establishing a brand, designing cars they hope will appeal to the public, taking capital risk, and managing production. Think of the extended warranty pitch - it totally undermines the manufacturer since it implies the car really isn't very reliable. My previous car was a high end brand, but I detested the sales and service department at the local dealer so much I vowed to never buy another model of that brand, even though I really liked the car. But none of this is new to anyone who has purchased a car from a dealership, new or used.
Given the above, and manufacturers know all of it, I am surprised that Ford and Chrysler aren't jumping on the direct sales model, too. They probably will though; the dealership model makes far less sense now that consumers can learn more about a car online than most car sales people will ever know, since that is not what they care about. Before the internet, it was necessary to go to a dealership to look at a car, maybe get a brochure and see what the car actually looked like. Of course the buyer still has to test drive the car, but there is no reason manufacturers can't follow the Tesla model. This is a bit of a simplification, since Tesla cars in high demand and people are willing to wait for one. There is also a lot to be said for having inventory on a lot since it simplifies distribution and might help close a deal. But... I think every manufacturer would clamp down on the pathetic treatment of customers their dealers engage in if they were selling directly.
A friend of mine is thinking about buying a BMW M3, but I told him he should drive a Tesla first given that the two models are similar in price. The BMW might be a good car, but he dislikes the dealership experience as much as anyone. Why support the dealership business model if there is a choice? My thought is that my next car will be a Tesla not only because it is a great car, but also because I know my money won't support the jerks who run auto dealerships.
Given the intermediary advantage the dealer has when approached by a customer, it is no wonder they are fighting the direct sales model. They have a license to steal, and don't want to give it up. We hav
Imagine how much harder physics would be if electrons had feelings! -Feynman, maybe
GM has tried time after time to be innovative like the experimental car shell thing where you could go to a GM dealership and get a new car design whenever you like. It didn't workout but it was interesting. They did innovate a lot with safety systems and such but they are very corporate and too scared to try something new when dealerships already work. But people are used to buying stuff online, and nobody likes talking to a car dealer. Innovation means risk and risk means the possibility to lose a lot of money. Just wake me up once I can order cars on Amazon using my prime account for free 2-day shipping. kthnxbye!
At least women can't buy shoes online. No Ma'am!
While Tesla has no dealers, they have show rooms. That takes care of half the equation, the whats it look, feel like. Ideally the rental/try before you buy/short term lease is the best next step. I would rather pay $50 to rent a car, for the weekend without pressure than pay thousands to have a person pressuring me to buy (wont be the exact car, but close enough.) Then closing the deal online vs a shake of the hand makes no difference to me. I would love to do that with a house as well (practically what I did do.) Research the houses, load them all in the GPS, go look at them. The last step would be the only change, instead of calling a relator, meating at the hose, filling in paper work, waiting days, then meet up a month later with lots of paperwork without time to comprehend. Been much cheaper, and better all around if I could have just click my offer, get the counter, click a couple times for that last step.
i have done nearly this. We decided which car we wanted, but went to a dealer to test drive it and check for comfort , fit , etc. We told the salesman what our plan was, so he just gave us the keys and told us to check it out. A few weeks later we made the decision, had a deal in hand, and went back to the guy that treated us right and told him the deal we had. Let him know that if he could match what we had, or give us reason for something better, then the sale was his, and that we returned only because he had treated us right on the first day.
Customer service can still win a sale, because as you say, there is a need for the consumers to actually see and touch the car in many cases.
Ford lets you browse the dealer's specific inventory and make you r deal without setting foot on the lot. When I bought the car it was parked out front waiting for me. I took a quick test drive, handed them the check I had ready and drove it home. That was 8 years ago. Now they'd have just delivered the car to my house, that would have been even better!
I will not—repeat—NOT buy a car unless I have driven it first. So, I will test drive it, then go online and see if I can get it from GM for less. If I and others can, GM will put its dealer network out of business. How are they going to sell cars then? They'll have to open a series of GM stores as the dealers get put out of business, something which will probably get the remaining dealers into Federal court fast. And if GM ultimately wins and you can only buy a GM car from GM, I'm not certain I want to buy a GM car from them. I can guarantee you that it will not be the same as visiting the local Apple Store.
It's really quite a simple choice: Life, Death, or Los Angeles.
We're so used at looking at reviews and videos of stuff and ordering on the Internet. We even order clothes on the Internet without having a way of trying them on, so why not cars? Even grocery shopping can be done over the Internet these days.
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I work for a company that is branching into online only car sales, we are about to launch our trade in program. It isn't that hard, and the lease/buy stuff is a lot easier when we can show you the difference and let you customize the deal in a way that works for you.
The test drive is hard to get around, but we have a no questions asked return policy. So we recommend you use that as a test drive.
GM will continue to survive until it is forced to compete in real capitalism.
Never. Going. To. Happen.
GM will compete and be productive, but it will also be propped up by DC for decades beyond its viable life because it is a critical American manufacturer in terms of raw industrial output. And raw industrial output wins almost any prolonged non-WMD war.
I know someone who won't buy a Tesla because there are no nearyby dealerships. When it breaks do you take it to a Prius mechanic, or pay the $500 to ship it where it can be fixed.
I think Tesla is making a big mistake with their plans. In the long run it won't matter, unless someone else does the same thing and gets dealerships everywhere quicker. Tesla also may not be able to floor plan the inventory for dealerships, where Tesla owns the car for the first 90 days they sit on a lot unsold, which may be one of the major reasons they are not doing it.
I buy a lot of things online. With something as long term and expensive as a car I want to drive it first. In addition I want someplace to have it maintained and repaired. Shop, click, drive - No way. Last time I bought a car and researched online. There were cars I thought I wanted but once I drove them I didn't like them. If my car has a problem I take it to the dealer, they fix it and I can trust them. I drive a Toyota btw not a GM. The experience at the dealership is actually pretty good.
The 192.168.1.3 on the fast fiber.
Tesla Motors hopes to open Va. dealership http://www.washingtonpost.com/business/capitalbusiness/tesla-motors-plans-to-open-tysons-corner-dealership/2013/10/08/03547620-3020-11e3-9ccc-2252bdb14df5_story.html Bonus Nikola Tesla link: http://news.nationalgeographic.com/news/2013/10/131003-nikola-tesla-surprising-facts-statue-museum-science/
Good idea, but isn't Best Buy and other retailers complaining about the "showroom effect?" How's that going to work when car dealers are just giant test drive outlets?
That said, wow, the ability to drop the stupid haggle dance with your typical slimeball car salesman would be awesome. I'd pay more for the privilege. I can't stand haggling over a few hundred dollars, and actively dislike all salesdroids.
One factor they have to take into account is that car dealerships actually don't make much money on the cars themselves (unless you pay MSRP.) They make money on the sleazy stuff like:
- Financing. People who come in and say "I can pay $X/month." OK, here's an 11-year loan at 14% interest...
- People with bad credit
- Useless options/warranties/accessories they try to push on you at the last second
- Leases -- leasing is an awful deal unless you can completely write off the lease payments as a business expense.
So this new system would just have to funnel your order to a random pick of the Glengarry Glen Ross guys at Joey Barbarino Chevrolet, and they would get a flat fee for processing your paperwork. Not as lucrative as all the other stuff they can push on you...
I would have given anything to accomplish this feat with Nissan last year. I figured out what car my wife and I could settle on (2 year process), and then tried to get one. Alas the last of the 2011's were already sold. So then I waited a few months and tried to get a 2012 vehicle. Alas those were delayed due to the flooding that also hit the nuclear plant and made much news. When I finally got a dealer to ship me one from 1200 miles away, I still didn't get all the exact options that I wanted. Most noticeable is that my wife complains about the lighter interior upholstery.
Why should I have to spend months trying to order something that should be so simple as: Middle of the road trim level, brown, with dark upholstery. Honestly I don't understand why I couldn't get those three things together in one vehicle after searching 15 some states.
I had driven several of the vehicles and knew we liked it...just couldn't get it without fancy doodads that we didn't want. I bet straight internet orders wouldn't get jacked up by the dealerships quite as bad.
Who is this that even the wind and the waves obey Him? Surely this computer must submit also!
Welcome to Mini Cooper a la 2006.
There are 0x40000000 types of people: those who understand 32-bit IEEE 754 floating point, and those who don't.
Recently purchased a new Mustang. I wasn't sure this time what I wanted and had a list of possible choices including the Camero, FR-S and Challenger. Many of the local dealers don't want to order a vehicle. Few had base models on the lot. Anything under 30k wasn't on the lot. Some dealers didn't even have a car I could test drive.
Step 1 is actually forcing dealers to keep updated inventory. I don't know how many times I went to a dealership or called and a vehicle had been gone for weeks.
If GM improves this process and it works for them, perhaps we'll see better service from all the automakers. I'm all in favor of that both as a consumer and computer programmer in Detroit.
MidnightBSD: The BSD for Everyone
If we could subscribe to cars like how we pay for cable or pay for cell phones, your idea would work.
And it would be optimal --- why should we buy instead of lease --- ideally! Then again, some people would argue we should all rent instead of own homes. What is the answer? Only the future can know that!
But you raise great points!
Priest: "Universe from nothing, no laws of physics, sped up time"+ huge discrepancies. Creationism? No. Big Bang Theory
Step 1.
Make a simple web site where I build the car that I want to buy and tell me what the MSRP should be. If I want the purchase agreement can be signed digitally on the Internet and I all I have to do is go pick it up.
Step 2.
Allow me to have dealers in a range I am willing to travel bid on selling me the car I spec out in step 1. Any participating dealer can submit a bid for what they will sell the car for. Once the bid is accepted I sign digitally on the Internet and all I have to do is go pick it up.
The entire point is to allow people to purchase a car and sign the contract without ever interact with a dealer. Importantly by signing the contract over the Internet with GM you don't have to worry about the dealership pulling something once you show up or backing out.
The dealership experience is so bad that most people would rather get a root canal than deal with a salesperson. Allow people to buy a car without worrying about getting ripped off because they are female, black, immigrants or whatever else.
I don't like buying from a dealer, but I don't like paying MSRP either. If dealing with the dealer means I save a few thousand dollars and not pay MSRP then I'll gladly sit through the upsell process and constantly say NO for an hour or so to various options they try to sell me. I have done that a few times by now and I think I have mastered it.
They are still buying it from a dealer, it is just now GM is the dealer.
I bought a car online, and I am not a broker. No big problem.
I have wondered how to make borrowing/sharing more fluid. IE I need access to a truck a couple days a month. I need access to a 5 passenger vehicle 6 times a year or so. I need a daily driver for 20 miles each way trip. I want a camper 3-4 times a year. So I have a quad cab pickup that takes care of all these roles. Much cheaper than trying to maintain insurance, license, tires, etc for multiple vehicles. Difficult to share something like this because people all expect a different level of care, and you can't rent and expect to have it reliably have a working everything I need. IE above average battery for the camper, or above average tires for pulling a boat from a lake in marhc... But ideally with the right level of trust, I would be willing to have a complete inventory and state of everything I own in a databse ready to share with the community in exchange for access to the same. Save the neighbor I never met from driving to the store for a wheelbarrow, save me from having to buy a planer for that one project...
Well ... what you can do ... rent a 5 passenger vehicle for $50 a day or rent a camper.
That is what the rental places are for --- I came to your same conclusion a long time ago. We don't need to own everything we ever use.
Priest: "Universe from nothing, no laws of physics, sped up time"+ huge discrepancies. Creationism? No. Big Bang Theory
Perhaps you bought a Zune, a Surface RT and really like the new Blackberry phones too!
Or maybe you are a market of one.
By the way, what car did you buy online and what price did you pay --- I mean, why withhold details for a true story if you see what I say?
Priest: "Universe from nothing, no laws of physics, sped up time"+ huge discrepancies. Creationism? No. Big Bang Theory
Even though you have to buy from a dealer, this new GM website means you get exactly the car you want with the extras you want at a price that is set before you even set foot on the dealer lot. No negotiating and no up-sell.
Which is exactly why some dealers dont like it.
You can already do this, at a dealer. And it will still take just as long to have your exact or custom vehicle delivered and ready to go. I see this as another attempt by GM to use tracking cookies, or some type of analysis tracking to figure out why people aren't buying certain cars and or why they are not buying brand new models.
The BBC and NPR have been running stories over the fact that brand new or newer cars aren't selling, and interviewing IT firms, and the makers themselves and they admitted they're trying to figure out why, and employing new tactics as to how or why sales are dropping off among younger drivers.
And the only real question I have over this, is are you going to still have to haggle with a dealer over the final price. Or is it a "final price" the moment you hit the "buy button". I want to see the "term of service" and "terms of purchase" from the web site directly to see if GM is just doing this to create there own pool of direct analyst?
I was in the market for a Toyota and I could customize my car online and go to the dealer to finalize things.
Interestingly, Apple let you do the same thing if you wanted to buy a Macintosh, but of course you could bypass the brick-and-mortar store entirely if you wanted to.
I assume both companies have these features.
Tesla has won the game at this point. The death knell of GM, Chrysler and Ford rings loudly. Ford will have some life due to the F150 line of pickup trucks until Tesla or some other new outfit comes online. The big three resisted real progress and have effectively committed suicide. Toyota is strong enough to have a chance at survival but most imports will fail. Idea like the new Fiat import are way too late and frankly the quality of former Fiats speaks against any likelihood of current success. The public has had enough of over priced junk that costs a fortune to keep up and running. Tesla got the message and as the prices of Tesla models drop they will dominate the market for decades.
It's going to be interesting, but there are still a few key functions the local dealer provides
1. A place to test drive the car. I don't know about you, but i'm not spending 30k on a car without test driving it. This is going to require some kind of showroom/test drive area which has to be staffed. Now maybe, the manufacturers like Tesla set these up on their own and get rid of the middle man. Or maybe people get used to not test driving it.
2. Service. Some people have a higher degree of trust for the dealer when it comes to repairs. They might cost more, but they're probably more reputable than an unknown shop. Sure not better than the rare quality honest mechanic you find. And this has to be local.
It will be interesting to say the lease\t
I can tell you that the only reason the company hasn't imploded is because there are physically not enough seconds in the known universe with which to schedule all the conference calls needed to schedule the conference calls needed to round up the list of people needed to hold conference calls about who knows fucking what about anything. It's a company that in reality runs on its own through sheer inertia. There may not even BE anyone in charge and it wouldn't matter anyway.
Their business model relies on being able to screw over the customer on the price, and if the customer is walking through the door with a price that's guaranteed, then they can't screw them over (as hard, I'm sure they'll find a way).
The whole dealership paradigm needs to die. Open "service centers" instead of dealerships for the maintenance and sell over the web. Put all those scumbag salespeople/managers right where they belong: either in jail for fraud, or unemployed because they have no useful skills.
Never underestimate the power of stupid people in large groups.
I have yet to find a dealer that I *want* to visit. Every time I've bought a car (four times in four years) I get *argued* with when I come in for a specific feature set.
It's been like this since I bought my first car in 1990.
I want these features offered, some favorite responses.
You can add AC later (In Kansas, where six of the months of the year are >90 degrees)
You don't need four wheel drive
You don't need a high performance option, here, take the four cylinder model.
GPS? No one needs that
Adaptive cruise control? on a car with 300 HP? Why would you want that
You can always upgrade the stereo yourself, AM/FM will be fine.
You go to Ford.com, Chevy.com, etc, they have tons of cool options. You can build what you want, but good luck getting it from the dealer.
As a rock-in-roll Physicist once said, No matter where you go, there you are.
Has anyone ever wondered why we buy cars the way we do? If you wanted to buy a banana, you wouldn't go to a banana store. You would go to a grocery store and pick from a multitude of different fruits. Yet with (new) cars, there is no grocery store equivalent. Why is that? Well the reason is that in all 50 states dealerships have established a legal monopoly which basically prohibits this.
Planet Money did a podcast on this very issue.
nt