The question on my mind is how fear influences the way we behave, and specifically the way we shop for cars. I still don't believe that direct buying will replace dealerships, any more than that Americans will hide in their homes out of fear terrorist attack.
But I do think that fear of being taken advantage of will shape our shopping and move us to interact more and more with trusted sources of information.
I don't remember that people ever used dealerships for shopping the way they browse amid merchandise in retail shops.
During my more than 30 years in this business, the showroom has been the place you go after your list is narrowed to a few choices. The showroom is the place to conclude the sale, not where you begin to shop. Why? Because of our inner voice shouting, “Beware of those who make their living on commission by selling you things you don't want for prices you shouldn't pay.”
When the Wall Street Journal equated buying a car to root canal, this was that nerve which they exposed. We are a generation of people who were raised in fear of car salesmen.
In response to this fear, the Internet grew quickly. It held out the promise of a way to buy a car without grappling with commissioned car salesmen. It was born of the same fear, if you will, that spawned the “no haggle/one price” craze a few years ago.
For this reason third-party vendors captivated our attention and our wallets. The possibility of a safe way to compare, research, shop, and negotiate was so seductive that its mere promise bypassed the logical part of our brains and shot directly tripping our trigger to buy stock in whomever made the offer. This is my explanation of why we, as a nation, bet the ranch on every cyber idea to hit Wall Street.
But, now it seems as if the bloom is off that rose. Activity is down and interest has waned. High-profile companies that dominated our headlines have gone underground, sunk in the muck of financial ruin, or are scrambling for cover from the harsh light of reality-based accounting. Most of the Internet's automotive activity is focused on hooking customers with candid, accurate information and then sending them into the showroom of a stocking dealer.
The once dominant third-party lead aggregators are now losing ground to manufacturers. The integrity of third-party information has lost ground to the reality that they had no inventory to back up their pricing claims.
What's more, the cost of advertising for leads has outstripped the subscription revenues that the lead aggregators were able to charge. The survivors have been in a frenzy of consolidation as the weaker of them crumble under their own financial burn rate. A few, like Autobytel, are now gigantic in their market share, but have problems with lead quality.
And it's not their fault. Customers are no longer responding to lead generators as the place to buy a car; it's a place to research cars, perhaps even locate one and put it on hold, but not a place to conclude the sale.
Enter the manufacturer with their lock on inventory and the strength of permanence and accountability.
Today's shopper recognizes that the manufacturers are the richest sources of information, relegating the third parties to being considered second tier places to do business. The result is that, once again, dealerships are the place where the final steps of negotiation and all of the delivery steps are concluded. Sadly, however, the customer is gaining immeasurable strength as the dealership mission is being diluted to prep and delivery.
So what's become of the Internet? It is the place to shop, not buy. It's where manufacturers control the flow of information and back up their claims with real inventory.
The web is where you narrow your list, and find out where the stuff you want is located. Want to know what a new Tahoe should run you? Go to the Internet. Want to find a silver one with the Z71 package? Go to the Internet. Want to own that puppy? Chances are good that you'll be cyber chatting with the manufacturer and then heading to the dealership where they send you. True, you'll be armed with quotes and promises, but you're going to the store, not sitting in your dorm room waiting for the Chevy man to follow the deliveryman from Pizza Hut.
Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. He is president and CEO of Brandow Companies.
