What ways could dealers be more transparent, IDEAS anyone?

[dsflynn2000]

If you price your vehicles competitively with the rest of your market - shouldn't the negotiation process become less important?

It would seem that if they didn't they wouldn't be in business

 

[craigh]

Personally, I think this is a very good thing!!!! BUT we need a definition of "ripped off," a common euphemism that could mean a variety of things based on different perceptions.

Basically, if a consumer files a complaint they do jack shit for that consumer, but then they come down on the dealer pretty hard.
Some examples:
- We have to show all fees in our pricing - the price they see is the price they pay with the exception of taxes and licensing fees. Nothing else can be added (bye bye hidden admin fees)
- We have to show the total cost of borrowing for all financing agreements. The customer has to sign off on that 18% interest rate and what that $12,000 vehicle is actually costing him over 84 months.
- If you make a pricing error online and the customer can prove it, you must sell the car for that price if the customer wants to purchase
etc.

 

[dsflynn2000]

Basically, if a consumer files a complaint they do jack shit for that consumer, but then they come down on the dealer pretty hard.
Some examples:
- We have to show all fees in our pricing - the price they see is the price they pay with the exception of taxes and licensing fees. Nothing else can be added (bye bye hidden admin fees)
- We have to show the total cost of borrowing for all financing agreements. The customer has to sign off on that 18% interest rate and what that $12,000 vehicle is actually costing him over 84 months.
- If you make a pricing error online and the customer can prove it, you must sell the car for that price if the customer wants to purchase
etc.

Basically, if a consumer files a complaint they do jack shit for that consumer, but then they come down on the dealer pretty hard.
Some examples:
- We have to show all fees in our pricing - the price they see is the price they pay with the exception of taxes and licensing fees. Nothing else can be added (bye bye hidden admin fees)
- We have to show the total cost of borrowing for all financing agreements. The customer has to sign off on that 18% interest rate and what that $12,000 vehicle is actually costing him over 84 months.
- If you make a pricing error online and the customer can prove it, you must sell the car for that price if the customer wants to purchase
etc.

The Dealer Board does the same here.......

Dealer Board Members - Auto Industry Division
The 9 member Dealer Board meets monthly to conduct rule making hearings, make policy decisions, consider licensing matters, review complaints and take disciplinary action against licensees. Board members are appointed by the governor to serve three-year terms. The Board is comprised of three motor vehicle dealers, three used motor vehicle dealers, and three public members.

• Joe Gebhardt - New Motor Vehicle Dealer - Davidson-Gebhardt Chevrolet - Subaru of Loveland
• Jason Wagner - Public Member - EKS&H - Certified Public Accountants & Advisors, Denver
• Deborah Thompson - Used Motor Vehicle Dealer - Automotive Search, Inc., Denver
• Christopher Langley - Public Member - City of Lakewood, Aurora
• Stan Martin - Used Motor Vehicle Dealer - Stans Auto Sales, Westminster
• Justin Franks - Used Motor Vehicle Dealer - Cherry Creek Automotive, Denver
• Michael Jorgensen - New Motor Vehicle Dealer - Red Noland Auto Group - Colorado Springs
• Robert Endter - Public Member - ACE Design Studio, Arvada
• Anthony Brownlee - New Motor Vehicle Dealer - Land Rover Denver, Littleton

 

[Tallcool1]

Every State has some type of dealer board (to my knowledge).

I don't feel that our board really hinders us. There are a couple advertising rules that are a little obscure. We have paid a fine or two for some oversights on direct mail. Nothing shifty, just a missing payment disclosure on a flyer that had 25 payments on it.

These boards are in place for the protection of the consumer. Unfortunately they end up making an example out of dealerships that generally do things right, and seem to allow other dealers to run wild.

 

[Clay Toporski]

If you price your vehicles competitively with the rest of your market - shouldn't the negotiation process become less important?

That is a logical theory. Unfortunately, customers aren't logical creatures. Logic doesn't sell cars. Emotion sells cars. I've had customers call from hours away on cars that were the lowest price in the market and still refuse to purchase until I saved them an impossible $1,000 additional dollars because, "You wouldn't sell it for no profit."

Customers don't know "the market". However, they do understand that when they look on Autotrader or Cars.com and price sort by lowest to highest, that yours isn't going to show up.

This is why transparency doesn't matter. Customers don't understand or care about our internal processes - trying to educate them on the business side just makes you sound like a con man. That is why third party sources, building rapport, creating value, etc. are all important parts of the process of selling a car.

Price simply doesn't sell cars. It isn't that easy. If it was, the giveaway artists would all be 30 car guys and the guys that know how to build value would be 10 car guys - except the reality is flipped. Good salesmanship sells more cars at higher profits than giving away price.

 

[craigh]

creating value

This is it right here.
Value isn't always about the price or the savings.

 

[Ilyushin]

First post here, I figure I'd weigh in on a heavy topic.

Truth is, dealers pondering how to be more transparent need to ask themselves if they really want to be more transparent. I don't believe most do. Most want to appear transparent, but not be. And there's justification for that, of course. But at the end of the day if you're asking this question but still have sales people running between their customers and the desk, you need to consider the possibility that you don't want to be more transparent, you just want to give your customer the impression that you are.

Stores that that actually want to provide transparency to their customers are called "one price stores"....but then again, at these stores there's always holding on the trade....and back end, too...and aftermarket....so maybe that's a poor metric in some regard.

Dealer profit is NOT a concern to the consumer. To the majority of consumers, in their mind, your true cost is zero. They do not care that you're making or losing money on a car. They're not interested in providing a "reasonable" margin. (how "reasonable" is defined generally differs between the two parties anyway) They're concerned that they can or can't buy the same car for less elsewhere.

But genuinely intelligent dealers will understand that "top line" or "front end" is soooo 1990's nowadays. Sure, you can still hit a home run on the occasional baby seal that walks into the showroom...but that customer is disappearing rapidly, like it or not. They know that "top line" is merely a means to an end. I'm not just talking about taking a $2k loser on the top line price and hope the sales person can pinch from the trade, the F&I guy/gal can make $2k on the back, or the aftermarket crew can pick up some of it.

The smart ones know making money happens when you buy the real merchandise, that cars with reasonable scarcity and low market day supply are available and where to get them (not the auction, ladies and gentlemen).They know that there's profit in R.O.'s.The smart ones develop an auction lane in their own showrooms where they're the only bidder, and the cars they buy are bought "right", sent into service where they have a $700+ RO, half of which is profit, and then retailed within 27 days at 95% price to market...wash, rinse, repeat.

I think if you're priced right vs. the market on a desirable car the customer wants, you can turn the screen and show the customer the R&R or APD screen and say "I'm making $2800 front end gross on you.", and they'll still buy it...(this is where buying it right, auction lane in your showroom, etc, come into play)

You can price a car at 105% price to market on a 90-day old unit, turn the screen to the customer and say "I'm losing $700!!!!" and they won't care, they're not buying it.

If you're trying to convince the customers in your market to buy from you because of how little money you're making/how much you're losing, you have a laziness problem. Today, profit takes work, disciplined adherence to process, and willingness to hurt the feelings of managers salespeople who fight the process....

 

[Alex Snyder]

Today, profit takes work, disciplined adherence to process, and willingness to hurt the feelings of managers salespeople who fight the process....

Excellent first post and you're absolutely correct. The consumer desires the perception of a good deal, and the tools at their disposal have forced the dealer to change a few things; be more disciplined. The most disciplined dealers are finding ways to turn their showrooms into process-oriented machines of consistency while concentrating their profit-seeking efforts toward the service drive.

 

[joe.pistell]

If you price your vehicles competitively with the rest of your market - shouldn't the negotiation process become less important?

Car Shoppers see price discovery as a 2 step process. Internet and Point of Sale.

 

[joe.pistell]

... until you change things at the FTC, ours will remain a business of negotiation...

Which FTC rule(s) are you referring to?