Suddenly there is no virtual marketplace and no credible effort to build one any time soon. Yet beginning at our desktop there's an information highway complete with expressways and rural back roads linking communities of interest to oceans of information.
What has become of all the possibilities for a new frontier that was destined to forever change the way cars were bought and sold in America?
First of all, let's understand, exactly, what stopped the flow of all the cyber sales that were flooding the market a few years ago; what became of all the lead generation services and of all the surfers looking for a great cyber deals?
As the public became increasingly more aware of the link between cyber sales and franchised dealers, they began to realize that the Internet was the alter ego of the middle man they were trying to sidestep, not the tool with which they might avoid him.
Said another way, the promise of the Internet was a direct link between manufacturers and consumers. It promised to eliminate the added cost of the retailer by empowering the consumers to do for themselves whatever they might do, and to do it from the safety and comfort of their home computers.
Unfortunately, those who believed the Internet would obviate car dealers were missing the strength of the franchise system and all its legal protections. Moreover, customers underestimated the need for that dealer to hold their hands through the complexities of financing, leasing and appraisals.
They misunderstood the sophistication needed to spec out and order a vehicle and they had seriously overestimated the assistance that they might expect from the manufacturer should they require service of any kind.
In their zeal to avoid the dealer's cost they were seduced into thinking that dealer cost was unhinged from the value equation.
Fortunately for dealers, try as they might, cyber sellers and manufacturers could not sustain the illusion that the Internet would change the number of parties in the car buying transaction. So, increasingly, buyers bumped up against the need to visit and negotiate with car dealers whether they were shopping online.
Without thinking about it, customers were drawn to the dealer to sort out the complexities of ordering, financing and registering their purchases. The result was that customers found the Internet didn't help the deal.
Customers learned that the Web was, at best, great to research whether a given vehicle was reliable, and perfect for finding directions to a given dealership. But long term, it was no help in finding a discount deal from the virtual marketplace.
So, next manufacturers began linking their dealers' sites to standing inventory and started encouraging trades and swaps to put cyber shoppers together with that inventory.
Unfortunately, the economics of those sales didn't change the fact that customers were still required to support all the usual suspects participating in the art of the deal. Shortly thereafter the lead generators started to suffer for lack of providing or controlling real inventory.
Customers were left with thousands of dealer sites and no real way to search them and no standardized method to evaluate their content. In short, the promise of a new marketplace and the alignment of suppliers and consumers collapsed despite all the infrastructure and technology.
Happily all that technology and capacity for putting information at our fingertips is still just a click away. Sadly the potential of this technology is still unharnessed in vehicle retail.
More unfortunate is that those clicks still bode poorly for the dealer/manufacturer relationship which, in case you haven't noticed, has become as much an oxymoron as jumbo shrimp. Lots of things strain the franchise connection between retailer and OEM, but few pose as great a challenge to dealer value in the eyes of the retail public as cyber sales.
The 'Net exposes exactly what premium is being paid for dealer services and suggests that dealer margins are something that can and should be sidestepped. Putting the OEM in the link strengthens that illusion.
What we need now is an effective way to differentiate dealers and their manufacturers — not simply based on how many red sedans are sitting on a given lot, but rather a system based on attributes that are unique to a dealership; things that offer unique values for consumers.
In the next go around, I expect to see retail ratings that highlight things like loaner cars, service expertise and credible customer satisfaction indexes by category.
Most importantly, I foresee a cyber system where the customer is empowered rather than controlled, and where dealers and their manufacturers do not battle over whose customer it is.
The next system has the potential for retailers and manufacturers to align for the benefit of customers and that is a virtual reality worth investing in.
Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. He is president and CEO of Brandow Companies.
