One Price Auto Shopping

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When I entered the automobile business decades ago, invoices were sacred. They were locked away in the sales manager’s office or in accounting somewhere. Back then, consumers had to be real savvy researchers to find out what invoice was on a car. Today they bring laptops with them (wireless of course) and contemplate up any dealers cost in 30 seconds. Regardless of the source they employ, the numbers aren’t disclosed as they are on a factory invoice. So there’s always a slight rub and some explanation needed about adv fees, association fees, T&S (things & stuff). Anyway, it doesn’t really matter because they also know your stair step numbers, contain back and year end close-out cash. 

The technology boom of the last two decades has influenced worldwide commerce more than anything that has come before it. Among other things, the internet uncorked an information scramble that honed consumer awareness to a finite edge. These information streams brought volumes of resources upright to their fingertips. You could feel the world speeding up.

In the automobile business, where negotiations are prevalent, dealers found their selves caught at a nagging disadvantage. Consumers were walking in the door with every dealer cost and incentive right down to the penny. Therein lays the value of salesmanship. We weren’t honest selling the consumer anymore, we had technology to wrestle with; competitors were just a mouse click away. How do we wrap our arms around this World Wide Web thing? Business owners of the day associated key boards to pianos. They all must have thought the sky was falling being pummeled every dot com day with waves of technological business alternatives; excluding the paper clip which quiet stands today an icon.

The terms invoice and MSRP no longer hold value and are now objective obscure clichés. Rebates are ho-hum fire sales. I never could understand why manufacturers allow dealer costs to be published. From a manufacturing standpoint, the factories obviously wanted to move the market along to keep up with production capabilities. Maybe they needed to entice dealers to sharpen their pencils because volume is going up and grosses are coming down. “Go ahead boys and girls; sell as far below invoice as you dare, we’ll make more.”

A majority of dealers started chasing factory receivables for profitability, cutting deeper and deeper into front end ghastly to compete. Today those receivables are not just supplemental income streams but lifeblood for many dealers. It’s a wonder dealers are as resilient as they are. We now know what happens when profitability doesn’t originate at the consumers pocket and a market shifts downward or elsewhere. Regardless of who struck John, here we are in a chain reaction trying to turn things around.

Looking ahead, other than a few imports such as Toyota, who is all things to everyone, Lexus the profit cow, Honda and a few others, the market is softening. Traffic for many brands may dwindle regardless of market conditions. With more global manufacturers entering the market and current manufacturers offering a wider variety of products, the slice of pie will become more and more precious and illusive. Therein, also lays the value of salesmanship.

Perhaps it’s time for change. Should brand decision makers (dealer associations, manufacturers and lawmakers) get together; make sure dealers get a fair shake and “Saturnize” the modern car industry? The mark is the price wherever you go. People still need vehicles. Saturn had a great culture and business model, it’s a shame they let their product sour.

Considering markets where you can move 15 minutes in any direction and duplicate 20 of the same model makes new vehicles a homogenous commodity, doesn’t it? If that doesn’t do it, the internet does. Yes, it smooth leaves the trade to negotiate but what better way to keep the pre-owned market healthy?

This philosophy prompts factories to region products competitively in the market at the onset. If manufacturers want to offer consumer and dealer incentives then by all means, incentivize both for customer loyalty. The benefits for dealers are numerous. Customers and salespeople would experience less stress from worrisome or stormy negotiations. Dealers would have less advertising expense, no more loss leaders, less accounting, more control over profitability, and stability on the sales floor to mention a few.

On the ethics side, RDR’s (retail delivery reports) would always be accurate, providing stair step incentives are scrapped. A one price system would also help dealers control their area of responsibility by concentrating on customer retention through customer attention. Dealers with poor CSI must stand aside. I believe the first auto maker to move in this direction goes platinum with consumer and dealer confidence. Who’s first?