We love cars

But hate buying them

 

Car buying and servicing is painful. It is full of friction points that generate headaches for shoppers and dealers. Nobody likes this.

Everyone wants change, but dealers are not equipped with the tools to make the change.

Buying a car is a game of who plays chess better. Why?

 

a brief

HISTORY

of the car business

Horses

The car business began long before Henry Ford developed the assembly line. It came from the horse trade, a business of questionable scruples where every transaction could be the last. It was in the horse trader’s best interest to get every dime possible from the customer because he may never see that person again. It was an adversarial sales relationship, not to mention the source of a horse was always in question as characters like Billy the Kid funded his antics selling steeds to horse traders.

Automobiles

When we traded our horses for cars the well-established horse trader was positioned to switch from nags to black Model Ts. And this was a good thing! While horse thieves were out of jobs, established processes were carried over from a sales model that was bred over thousands of years prior. This helped consumers faster migrate to automobiles. Unfortunately the adversarial sales tactics came too.

Technologies

In the 1970s larger dealers made their first investments in digital technology, and eventually computerized accounting systems found their way into dealerships. Initially it was a tool only the Chief Financial Officer used, but grew to be one for tracking vehicle and parts inventories too.  Such was the birth of Dealership Management Systems (DMS) that are still the heart of a dealership’s monetary tracking.  In the 1990s and 2000s the current applications of technology came to market. Following on the horse traders’ foundations for the car business, these technologies reinforced a foundation of adversary.

How

Technologies

create

adversarial

Relationships

Their Desking tools pits managers against sales people.

When a salesman says, “I’m working hard for you here” he means it.  He is literally working for you against his manager to try to make a deal.  It is how the salesman gets paid.

Yet this is supposed to help everyone come to terms.

Their CRM Systems grow tensions between sales people and customers.  Then managers get mad at sales people.

The sales person has to hound customers nonstop, or get yelled at unless you buy on the spot. Ridiculous.

Management wrote a flawed sales process that ticks customers off, and then also yells at the sales people for having bad closing ratios. It doesn’t make any sense.

Yet this is supposed to assist in creating rapport.

The fight starts on their websites

 

Calculate a car payment on the manufacturer website, and it’s too high by an average of $100 per month. Calculate a payment on the dealer’s website, and it’s too high by an average of $75 per month. While $75 is better, it is still too much, and many customers already walked away on the manufacturer’s website. Remember, this is designed to draw people in.

Check inventory online, and oftentimes what shows online does not match what is truly available at the store.

“They lied to get me in the store!” Ever hear that? They actually didn’t. Their technology did.

Yet this is supposed to be a pleasurable enough experience to entice a ride into the dealership.

How much are the payments?

 

You build your next Mercedes on MBusa.com and get to a payment of $903 per month. That looks okay on a nearly-$80,000 vehicle!

But what is going on in those payments?

What is that down payment?

 

Oh!  That’s how they are getting to that payment. Mercedes wants a 10% down payment of $7,781.

What does a $0 down payment look like?

Still can’t get there

 

Entering $0 into the downpayment box does not give a true “ZERO Down” lease. Mercedes requires $2,198.

Mercedes also offers a 7,500 miles per year option that isn’t on their website. That option would have significantly reduced the payment amount.

What about the dealer?

 

Here is one of the largest dealer groups in the world. With the levels of money they have to operate on they must have their act together!

A similarly priced E 400 is available at one of their many Mercedes stores. The site claims it can be leased for $699 per month for 36 months with $5,903 due at signing.

When we click for more details…

What happened to $699/mo?

 

This is confusing. We are now on a totally different website with different numbers.

They now want $1,101 per month with $1,900 due at signing. However, the 7,500 miles per year option is now available!

Good thing I don’t drive a lot because I can no longer choose 15,000 miles per year.

How much are the taxes…

There are the taxes

 

After expanding section 6 (not pictured) a box to enter a zip code is revealed and that triggers the addition of taxes.

It now says the monthly tax due is $66, but the payment increased $94. This is weird.

The actual deal

 

$955.60 per month for 36 months. First payment is due on the day of signing and the dealer fees were paid up front too. That was a total of $1,255.98 spent in the dealership on the day of contracting.

Compared to Mercedes’ website that is a difference of $147.40 per month. That equates to a $7,986.69 difference to the customer.

Compared to the dealer’s website that is a difference of $239.40 per month. That equates to $11,228.50 difference to the customer.

How would you feel if you overpaid by $11,228.50?

Trust

 

How can the dealer earn trust with so many conflicting numbers?

Is the customer being ripped off? No, the customer is being shown bad data by the technologies that are supposed to support the car dealer.

 

 

The top 2 payment quoting solutions dealers use

Approximately 13,000 dealers use one of these

The top customer relations managment (CRM) solutions dealers use

Approximately 11,000 dealers use one of these