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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."
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.
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.
GM will continue to survive until it is forced to compete in real capitalism.
But hey, I'd rather car-shop online, and if that is EVER going to happen, law-makers have a vested interest in the success of GM (an "american" institution). Not so much in Tesla.
- Nec Impar Pluribus, or so I'm told.
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.
Ask and ye shall receive!
... 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
the last car i bought, 5 or 6 years ago, i considered a GM car. I had just gone through a great experience buying a honda for my wife, then GM came along to show me how miserable a shopping experience could be. There were a couple of options that made me want this car, but then I couldnt figure out how to get them. The salesman just wanted me to pick one off the lot, but they were over priced with options i didnt want, or didnt have what i came for. We looked at how to order the car, but the items all came in bundles... piles of bundles. One might have a sunroof, a certain radio, upgraded rims, and memory seat adjustments. of these I wanted the sunroof. Then you pick a different engine, and it changes the rims and radio and carpet, and you arent sure which set of overlapping choices would end up on the car. No one could figure that out. This happened for every option i wanted.
I then tried to configure on a website. again the options were a joke of complexity. At the end, I got to choose which dealership would contact me with a quote. I could choose 1, and only 1. I wanted to see what competing quotes might get me, but I had to start the entire order process over. This was going to take too much time, so I bought a Nissan.
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.
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.
You were on a roll, until you just said this crazy thing: " Keep it up and this new generation that seems to have little interest in cars, preferring to bike everywhere"
The whole "wheeling and dealing" for a car price needs to go away.
Spelling and Grammar errors have been added to this post for your enjoyment
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/
Fat or not, agile or not... it's sure a heck of a lot easier (and cheaper) to buy a GM vehicle than it is a Tesla. GM dealerships are near everywhere (as is their quick fueling options)... not so much with Tesla.
Yeah... that couldn't be because of political pressure to deny them permits, could it? Great argument you got there.
Tesla has a great bit of tech behind them, they are still the new comer and have a great deal of mindshare to win with regards to 'the big three'.
You say that like they're all playing the same game, and under the same rules. You couldn't be more wrong.
#fuckbeta #iamslashdot #dicemustdie
GM is functionally incompetent when it comes to the internet. Tesla is new, small, agile, and responsive to the market.
Well Tesla has, what, one model, with very few options available. More coming, sure, but today, its pick your color and battery size, and send a check.
With any of the other big manufacturers, the combinations are almost endless. Engines, transmissions, rear ends, tires, interior trim, exterior trim, across maybe 10 or 30 models. Its a whole level of scale. They have never been set up to do this on a massive scale. Even the dealers need hand holding when ordering cars. Dealers typically order from a pick list of pre-configured models, of what they think will sell in their area.
When you come kicking tires, if they can't find a car you want on their lot, they might check other dealers, but sooner or later you end up settling for something handy or going for a custom order. And custom orders aren't quick through any of the big dealers. It can take a couple months easily, and if you are near the end of a model year you are SOL. So most people settle for what's on the lot.
Tesla was set up from the beginning to custom build from a SMALL selection of models. Detroit was set up to pre-build bazillions of standard models with a very few custom orders.
Still you have to give them credit for trying. You can already "custom build" by picking package options from most manufacturers. (Not with anywhere near a desirable level of granularity.) But you are going to go through a dealer somewhere along the line.
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But hey, I'd rather car-shop online, and if that is EVER going to happen, law-makers have a vested interest in the success of GM (an "american" institution). Not so much in Tesla.
Everybody car shops on line. They read the specs, pick the model, look at prices, and maybe get a few quotes. Very few people actually order on line. (Women tend to do this more than men, but then women buy more than half the vehicles sold in the US).
I'm not willing to spend 25 or 50k on a strictly on line purchase. If I bought a Tesla I'd do the same on line shopping but I'd STILL go find a showroom/service center. (I'd have to drive to Seattle). I'm Not dumping that kind of money on the net, and having it show up wrong, dented, or what ever with out a local-ish resource.
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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...
I wouldn't define any business that acts as a legally-protected middleman as "successful" -- actually successful business provide their own value and don't need legal protections because customers are happy to pay them for that value.
Heh, unless you work for a GM dealership, you have NO idea how bad GM is at IT. Their dealer-side website still does not officially support anything other than IE8. Business reporting relies on ActiveX integration with Excel, and only works properly with Excel 2000 and 2003. It can be made to work under 2007, but they don't support anything higher. Parts of the service-related workbenches still use VBScript. It used to be accessible only over a super-slow satellite link, but they changed that a few years ago, thank god.
To be fair, though, Toyota's web back-end, Dealer Daily, is even worse. IE-only, accessible only through a dedicated T1 which may not be used for anything else (but which you still pay full price for, of course). Blank page under anything other than IE.
Come to think of it, a lot of dealership stuff is locked on IE. Dealertrack (intentionally locks out non-IE browsers), Dealersocket CRM (featured-limited under non-IE browsers). ADP is the biggest supplier of dealership management software in the US and most of their stuff is entirely reliant on IE.
It's a pathetic state of affairs.
End of lesson. You may press the button.
I had the same experience trying to buy an FJ Cruiser. Not every dealer though was a tool bag about it. I just called a bunch telling them exactly what I wanted until I got one that said "sure no problem" most lied or were ignorant that such a thing could be done.
The others all wanted to sell me a automatic, two-wheel drive big-rimmed urban bling cruiser with all the inane extra crap that makes it look "edgy and offroady".
I wanted the 4x4 manual transmission base package (steel rims, no roof rack, no fog lights, no little $500 dashboard thingy that has a thermometer and a compass, no $1500 navigation package, no special badging and stickers,etc). The funny part was most of the sales personnel took it for a spin around the block because they had never seen one like that before and certainly never a 4x4 or a manual transmission(Tampa Florida). I didn't mind these guys even let me order the complete set of dealer repair manuals for the FJ without any grief. Other deals told me no way.
Frankly I think Mini and Tesla are the only car companies that get it close to perfect on their websites. Let me go through every option available, show me what the car will look like, (and someday hopefully) have a "buy it now" or "have a rep contact me to finallize the deal" button. I don't mind having a good dealer available, much like a good mechanic, but frankly I don't need that much handholding to make up my mind about what I want to buy.
Except that "under the age of 25" basically means the world hasn't kicked them in the balls yet, and biking around their urban area seems a pleasant way to pass the INFINITE amount of time they have left.
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.
Actually given the legal restraints imposed on GM (and most other large automobile manufacturers) GM is showing it's anything other than "functionally incompetent" by implementing this. It's a hack, but it's one that's absolutely necessary if GM is going to go on-line without being sued into oblivion by current franchise owners and being banned from selling its vehicles in other states.
Tesla isn't more responsive to the market: it sells cars that cost over $60,000 and the only people buying them are the ultra-rich. If Tesla is "more responsive to the market" then Bentley must be the world's most responsive car company!
Tesla can, at this point, afford to eschew dealerships despite the problems that imposes upon Tesla's ability to trade in certain states because of the expected low sales and the motivated buyers it targets, but without comprehensive reforms - reforms that would benefit GM and Ford just as much as Tesla and Bentley - it will have to stick to the elite market and avoid selling more popular platforms.
Note: I've worked in the industry, I'm familiar with the restraints car companies are under. The fact the average Slashdotter doesn't understand that the restraints are there doesn't mean they're not there. Yes, they may be poorly suited for the modern era, but, let me put it this way: the rail companies are still suffering from regulations designed in the early 1900s that worked under the assumption that rail was the only way to travel, and while there's been the occasional reform, the bulk of ludicrous regulations and taxes that afflict that industry are still in place - which is why Amtrak is making massive losses and can't run more trains. Now, that's a situation where it costs the government money to keep the current regulatory framework in place, so you'd have expected them to do more about it.
By comparison, keeping the laws that force automotive manufacturers that plan to sell large quantities of popular vehicles to do so through dealerships doesn't cost government anything. There are massive lobbies to keep those laws on the books.
So expect to deal with this for the time being. It's not going to change, and no, Tesla isn't going to change anything - it'll assimilate, or it'll remain a famous niche player. And GM and Ford will continue to have to hack around the edges to get things more consumer friendly than they are at present.
It's quite an achievement GM has gotten this far.
You are not alone. This is not normal. None of this is normal.
As someone who worked in the industry, I know that the last thing any of the big three want are the current dealership laws.
The entire premise of your post is BS. Dealerships exist not because of lobbying by GM, but despite it. Early on in the 20th century, as car companies got started, they needed outlets to have cars sold and didn't have the resources to create their own nationwide networks. Once they had the resources to do so, the privately owned dealerships fought back, and lobbied for laws to protect them - from Ford, GM, et al.
The difficulty and inflexibilities inherent in managing private, independent, dealership networks contributed to the fall of GM and Chrysler, and very nearly destroyed Ford too.
They don't want this. They don't have the ability to change it. They're powerful politically, but not that powerful.
You are not alone. This is not normal. None of this is normal.