And now for a look into the future of car dealerships and deal-making:
Imagine, for a moment, a car dealer in the heart of a big city, a packed urban centre lacking extra space for acres and acres of unsold inventory. On hand are a handful of test drive models representing the lineup. That’s it.
The dealership is primarily a “brand” experience dominated by digital displays that allow buyers to learn about the cars with the help of a customer relationship manager, not a salesperson, Frost & Sullivan analyst Julia Saini explains in a www.just-auto.com report.
By the time most shoppers arrive at the dealer they will know what they want, how much they expect to pay and the method of payment – cash, financing, leasing. Much of that info may have been shared with the dealer beforehand. This is what the Internet means for car retailing in what Saini tells just-auto is the coming age of “bricks and clicks.”
Far fetched? Not really. Saini points to the Audi City dealership in London, England as a possible vision of the future.
“It is the smallest Audi dealership in the UK and displays just 3-4 cars,” she tells just-auto.com. “But it has the highest footfall of any Audi UK dealership and it sells its cars with a 20 per cent mark-up. It is a digital store, provides a brand experience and you have an unlimited way of configuring your car.”
In fact, the experience is so seamless and so entertaining, customers can quite easily go over budget, clicking and configuring and spending. It’s quick and it’s easy and it can be exhilarating and that is good and bad news for customers. Bad in that it becomes quite easy to bust the bank with options and extras, but good in that the buyer is empowered by having so many facts and figures just a click-click-click away.
What seems absolutely certain is that car dealers who resist change, who fail to embrace technology, won’t last.
“Dealerships will always be there to sell the car and it’s tough to imagine a world where the existing auto makers could evolve to Tesla-like corporately owned dealer networks; legislation makes it very difficult,” says Andrew Tai, CEO and co-founded of the Internet pricing and referral service unhaggle.com.
“However, the information and data available to consumers online today really changes the shopping process. More and more of the car buying process is now being completed online before the customer even arrives at the dealership and consumers have access to more data than ever.”
The savvy, deal-hungry customer of today who wants the right price on the best vehicle for them does mountains of research online. Sites such as Globe Drive give a sense of the marketplace, of trends and car culture, of basic pricing, while sharing car-buying advice and such. Manufacturer’s websites are available with detailed and specific configurators, while sites such as unhaggle.com specialize in breaking down the walls that surrounded what in the past was hard-to-find pricing and sales incentive information.
“The evolution in automotive retail will look a lot like how e-commerce changed the travel industry,” says Tai. “In the same way that Priceline, Kayak and Expedia brought complete price transparency in a few clicks to travel, online tools are doing the same for car buyers.”
Tai’s site earns the bulk of its income from dealer referrals, but unhaggle.com also earns income from doing the legwork for car buyers. Those who don’t want to “negotiate personally…can even get Unhaggle to collect competing offers from all of their local dealers, compare them, and reserve a vehicle completely online,” he says.
Travel agents have evolved primarily into knowledgeable advisors. Car dealers in the Internet age are best advised to assume that today’s car shopper is empowered and only wants advice and guidance in how to finalize the deal and take delivery of a new car.
“Dealers that embrace transparency and adapt to the way consumers want to shop online have the opportunity to gain market share and lower overhead in the end,” says Tai, agreeing with many of the main points from Frost and Sullivan.
In a digital age like this, Deals of the Week is a place for ideas, leads, suggestions, and most important of all, sober thought. Here, we look for excellent offers and point to marketplace trends that aid the savvy shopper.
This brings us to Ford of Canada and its hot-selling F-Series pickup. Last year Ford sold 106,000 full-size F-Series trucks in Canada and this year Ford seems intent on breaking that record. Sales year-to-date are up nearly 20 per cent and for the reason why, look at the summer deals. You guessed it: Ford’s Employee Pricing promotion is back.
“The simplest way to think about Employee Pricing is as just another incentive,” says Tai. “But customers should not expect to be able to use the traditional difference between MSRP (manufacturer’s suggested retail price) and invoice (price) as a gauge for negotiating room with the dealers. Most dealers won’t discount any further than Employee Price.”
How could they? As unhaggle.com points out, the typical F-Series with Employee Pricing is already heavily discounted. Take a 2013 Ford F-150 4WD SuperCrew XLT with an MSRP of $41,099. It has a $7,250 factory discount (Delivery Allowance), a $4,689 Employee Pricing incentive and the tough negotiator/patient customer should be able to squeeze out another $1,000 in what Tai calls “Unhaggle savings.”
Add up all the F-Series offers: $12,939 in real discounts that can be combined with 4.49 per cent financing for 72 months. That all translates into a relatively affordable monthly payment of $536.99. And if six years seems long to make a truck payment, consider that the typical pickup owner holds onto a rig for eight to 10 years or more.
Ford’s Employee Pricing promotion has another effect on the market, says Tai, noting “it certainly puts pressure on the other auto makers to increase incentives, particularly the domestic brands.” Truly, this summer the Canadian new vehicle market is alive with deals.
For instance, as we note below, BMW has $4,000 on a 3-Series coupe, Honda $2,500 on a CR-V compact utility and Chevrolet $2,000 on a loaded Malibu sedan – plus in each case, other savings, too. In the age of the Internet, then, it can be a buyer’s market for those who know where and how to look and what to do with that information and insight.
Deals of the Week consulted with unhaggle.com and other sources on these offers, including www.carcostcanada.com. As usual, pricing information here is subject to change, so consult your dealer for all the final details, including expiry dates for all offers.
2013 Chevrolet Malibu 4 door sedanLTZ (2LZ)
- MSRP: $32,540
- Freight, dealer prep, air conditioning tax: $1,685
- Factory discount: $2,000
- Unhaggle Savings: $1,913
- Total savings: $3,913
- Taxable subtotal: $30,312
- Total price with 13 per cent HST: $34,252.56
- 1.99 per cent financing available without factory cash incentive
2013 Honda CR-V AWD EX-L
- MSRP: $33,315
- Freight, dealer prep and air conditioning tax: $1,775
- Factory discount: $2,500
- Unhaggle savings: $1,712
- Total savings: $4,212
- Taxable subtotal: $30,878
- Total price with 13 per cent HST: $34,892.14
- 1.99 per cent financing available without factory cash incentive
2013 Ford F-150 4WD SuperCrew 145” XLT
- MSRP: $41,099
- Freight, dealer prep, AC tax: $1,785
- Factory discount: $7,250
- Unhaggle savings: $1,000
- Employee Pricing discount: $4,689
- Total savings: $12,939
- Taxable subtotal: $29,945
- Total price with 13 per cent HST: $33,837.85
- 4.49 per cent financing for 72 months
2013 BMW 3-Series 2 door Coupe 335i RWD
- MSRP: $53,400
- Freight, PDI, AC tax: $2,130
- Factory discount: $4,000
- Unhaggle savings: $2,305
- Total savings: $6,305
- Taxable subtotal: $49,225
- Total price with 13 per cent HST: $55,624.25
- 3.90 per cent financing with $2,000 factory incentive
Pricing information source: unhaggle.com and www.carcostcanada.com. Calculations based on Ontario customers. Please note that while the information above is accurate at the time of publication, incentives are given at the discretion of individual dealers, and may be changed or discontinued at any time. Where noted, “dealer discounts” are negotiated with the customer on a case-by-case basis. Unhaggle Savings are actual discounts received by Unhaggle customers.