The cumbersome process of haggling for a deal is what makes the car buying services of Costco and AAA so popular!

BrandingWire.com focused on this subject Monday. Our group of 12 studied the experience from every angle. And surprise, surprise--auto dealers don't get it!

My piece of the BrandingWire study is here: Can Plaid Become the New Chic, http://lgbusinesssolutions.typepad.com/solutions_to_grow_your_bu/2007/08/can-plaid-becom.html

Ross Perot used this process when he was on the GM Board and it drove them crazy. He would dress casually and go to a random dealership and try to buy a car. The Board loved it so much that they bought him off with early vesting to leave the company.

The people at CarMax obviously understand the hellish process that people have endured for years. I bought a vehicle there last April, and I am impressed with their people and how simple they made things. I'll never buy any other way!

Shelley,

You aren't alone. CarMax receives high ratings for customer service and experience.

We just went through the process of helping my son buy his first car. Used car sales is a different animal altogether! Ouch.

Salespeople are lined up outside waiting to pounce. Some can sound good, but many are a plain nuisance. The haggling is an antiquated way to make a deal.

In the end, the car's electronics don't work after pick-up. It seems the guys who detailed the car knocked out a wire or two. The salesman hasn't called back. What else is new?

Far beyond going through this process to buy a car, salespeople should be made to go through this process to buy groceries once a week for an entire month.

Then we'll see some progress.

That's funny, Cam. I can see it now... Produce managers following your cart, "I've got some late model Yukon Golds, low mileage, and I'll make you a sweet deal." Then at checkout, a store clerk ushers you into a cubicle, painstakingly calculating a total sale price with finance charges and "standard" add-on fees for bagging the goods and carry-out to your car, patiently waiting for your counter offer. She looks skeptical, and you wait while she trots over to the business office to get coffee and pretend to argue with the supervisor about discounting your canned tomatoes. Meanwhile, your child is getting cranky and your ice cream is melting... and you seriously consider whether your family really NEEDS to have food in the house!

The other industry that needs to buy their own product is the insurance industry. All of these industries with the "black box" of rules and regulations are those most feared by customers. It usually feels like the rules and regulations are built to make it harder for the consumer to get a break, or the best deal. Many are financing related; insurance, automotive financing, mortgage lending...anything at all with a FICO score attached automatically has a "black box" element to it.

Shelley - That is EXACTLY what I mean! You put it beautifully. :)

LOVE it, Shelley!!

Thanks for the thought provoking article.

It may be just me but I _love_ buying cars!

The reason I love buying car is, as so many pundits on MarketingProfs have pointed out over the last year(s), the customer is in control.

The Internet has enabled customers to be able to review and research all elements of cars including pricing, warrantees, secret warrantees, reliability, financing packages, etc. And if you don’t have time to do the work, or don’t want to, there is a whole new cadre of personal service reps who will act as your agent.

For example, the steps I usually take are to first read Consumers Reports to understand reliability and safety issues. Next, I check out Phil Edmonston’s Lemonaid Cars guide to get his rating on both the new and used models as well as residual / resale values. I then head over to Edmunds cars to get another assessment and see financing rates and pricing calculators. Finally, if I am buying a new car, I buy a report that gives me the wholesale value of the car and all active OEM to dealer incentives. If it is a used car I always run a VIN check with my insurance agent to see any liens or collision history. Alternatively, I have used an agent to do this work. Agents charge fees about equal to the first monthly lease payment and will deliver the car so you never need set foot in a dealership.

The last car I purchased was a New Beetle. After I did my homework I decided on a model sold by a dealer 150 miles away. I bought the car based on pictures on the Internet and my research. I knew there were potential reliability issues with the vehicle so I went with the manufacturers used car warranty program. To my delight, when the car was sputtering, my local dealership has replaced a couple of computer chips and rebuilt the transmission no questions asked.

I don’t debate that car sales people still have an Herb Tarlek aura about them. Research suggests that car sales people are a generally unsatisfied lot who have to work the hustle just to get paid. Check out King of Cars on TV to get a sense of it. Or better yet, do a Google search on “Chopper Car Sales” and see that Towbin Dodge customers have started a Website to expose alleged fraud associated with the dealership. Perhaps Toyota, being an industry leader, is adjusting to a new reality where customers often know more about the cars that the sales people do and they need to change to meet this new reality.

Links
---------------------------------------------
Consumer reports: http://www.consumerreports.org/cro/cars/index.htm
Lemonaid Guide: http://www.lemonaidcars.com
Edmunds: http://www.edmunds.com
Wholesale pricing: http://carcostcanada.com
VW CPO interview: http://www.vwcpovision.com/
Herb Tarlek: http://en.wikipedia.org/wiki/Herb_Tarlek
Chopper search: http://www.google.com/search?hl=en&q=Chopper+Car+Sales

I can't believe they had this revelation. I think the reason car buying is horrible is that you never feel like you get a good deal. I actually am one of the few that likes buying cars, but it helps when you know what are you going in for and you understand the process. I hope there will be change due to pressure from companies like carmax. I used them once before and they worked out great. Thanks for the great post.

IF I am buying a new car, I buy a report that gives me the wholesale value of the car and all active OEM to dealer incentives.

Jeanne--
I hadn't seen that announcement by Jim Lentz, so thanks for bringing it to our attention. It's absolutely true that for most people buying a car is a terrible experience. And while I appreciate Oliver's enthusiasm for buying a car, doing all that research and prep work has no appeal to me whatsoever! When there's literally 400 models of cars to choose from, with prices fluctuating all the time, and salesmen that are generally less than desirable to talk to, the steps involved in car buying amount to a recipe to disaster. I definitely will keep an eye on what kind of changes the auto industry implements...

Thanks to the internet, car buyers do have a lot more information at the ready. My wife and I just bought a car and we went to the dealership with an average selling price for the car we wanted from Edmonds.com. All we wanted was for them to match it. They said yes...but then they had caveats that they sprung on us at the last second. We said we'd walk and they eventually came around and we got exactly what we wanted. But it was a huge hassle and unnecessarily stressful. Next time we'll buy through CarsDirect or CarMax. Transparency and respect. I think everyone deserves and should demand that in a buying experience.

Wasn't it only a few weeks ago that the head of Time Warner said in an interview that he had never set foot in a Wal-Mart, and "hell would freeze over" before he went to Blockbuster to rent a movie?

How can someone justify carrying the mantle of strategy master and grand poobah dealmaker of a company when s/he has never experienced the consumption chain of that product?

NW Guy's story about Ross Perot on the GM Board is an excellent example of a board that has their priorities wrong.

Here from my view in Detroit, Michigan automotive sales is only the tip of the iceberg. We have captured the lowest economic ratings in the country because we have built and regulated our way into them. Not too long ago the county in which I live was 3rd richest in the nation and last year was not listed in the top 50. Michigan and Michigan based companies are famous for using regulation and control of their sales and products to gain dominance. It stopped working long ago and the State is suffering as it is trying to undo the damage. First, the office furniture industry thought it could control the big box office super store's pricing. Now, little if any US furniture is sold through these outlets. Slow to act after transportation and banking derulation in the 1980's no large banks or logistics companies are based here. Then, the housing industry rolled back standards in Michigan and now we do not even meet minimum world housing standards. It's now taking federal action to reform unfair practices by the real estate industry in Michigan where we again sit at the bottom of the nation in sales. Try to sell wine online/off line. You are better off being from any number of other states than Michigan where with some of the nations best vineyards, you must open a business in all three traditional and regulated state distribution channels and then, you might not be able to sell to Michigan based customers. Cars are in the news but the world leader of the 1950's and the home of biggest international land border crossing is sitting the future out, unable move under the controling regulation and practices that they once found confort in. The auto, furniture, real estate, trade and wine industry in Michigan has been so busy defending a business against local competitors they lost track of the billions of customers outside their walls. Oh, there are plenty of lessons to be learned here in from Michigan and It's my hope the change lesson is also written from here as well.

Thanks so much to everyone for the passionate exchanges!

Here's what's sad. In 1994 (yes, I'm that old :)) when I was at Mazda, these were the same issues. Shortly after that, Saturn came on the scene and it was thought that they would shake it up enough that others would follow...but that went the other way. Lexus and a few other luxury brands "get" it, but for the most part, the hassle-factor still exists, the "black box" on financing still exists and the craziness on the negotiation still exists. The online information gives us more to have as we step onto the lot...but we know we've got to go in with our dukes up!

It would be good to hear from people what they think would finally shake the rafters enough to really create lasting sea-change in this experience!

Hi. I am in the car business in the southeast, but not in sales. I know that auto folks are mistrusted, and I could see why a few bad apples (or a lot of bad apples in this case) could kill a whole orchard of trees. But what I want to know is what does everyone expect? If there could be a perfect scenario (reasonably) what would it be? Is it shorter amount of time at the dealer? More transparency in transactions? More friendly people? What is it? Thanks for the feedback.

I think there are really only two ways they will change their practices. Increased competition from companies like car max or lower sales from consumers. However, lower sales from consumers has to be traced back to purchasing experience and not some economic factor.

The fact is that despite the horrible experience auto dealers still sell thousands of cars each month. Until that changes, I would expect very little change in the way they do business. After all, the tactics do work on many people to lead them to worse deals then if the process took 30 minutes like it should.

Buy used cars not from dealers!

My wife and I recently had such a bad showroom experience that it makes me want to teach the salesman a lesson. Our 3-page note to his sales manager was followed by a phone call from the salesman, not his manager. We had complained in detail that the salesman performed very poorly by not knowing the specs and by doing a 5% demo. He called to complain about the allegations in our letter, stressing, over and over again, that we were wrong, that since we are seniors, we should take-up volunteering and do something useful with our lives. When I realized that he was in serious denial, I said, "You're stupid!". He replied, "No, you're stupid. I'm not going to roll out the red carpet just because you want to buy a car!" He continued to berate me promoting his integrity and sales accomplishments. After 20 minutes he hung up. We expected more from the top salesman in the country. Not only did he fail to use the professional sales techniques taught by his company, but he also failed his CSI. This is another superstar in denial, having fallen prey to bad habits, is intoxicated by his success and is in need of rehab. He is no longer a salesman. He’s just an order taker. Yet, he’ll keep on selling cars because consumers want his brand. He’ll keep on selling to seniors because they are not demanding.

As a life long professional salesman and sales trainer (including auto sales) I cannot let this go unchallenged. I am writing the details of this encounter and plan to share them with anyone who is interested.

Is there anyone out there who wants to contribute to my discussion about bad showroom experiences? Are we not entitled to respect and a proper sales performance by a salesman?