One of the most hated activities many people have to go through in their lives is buying a car. Many people feel that interacting with the automotive industry can be a hassle. They often feel they deal with outright deception when they visit auto dealers or used-car salespersons. However, the rise of the internet has changed the mentality at most dealerships, while empowering car shoppers with information that has made the car business more transparent.
We know how much cars should cost. We know how much the dealers pay for them. We even know about all of the supporting components, such as trade value and finance charges. Despite an unprecedented wealth of knowledge about the products that surpasses many other industries, buying a car can still be challenging. We still have to subject ourselves to an ordeal at a dealership.
A Sea Change at Dealerships
The industry, stagnant in its practices for so long, has started to show clear signs of modernization. Companies like Tesla Motors have applied modern technology to their products, and it's carrying over to their sales processes. Unlike most manufacturers, Tesla has famously adopted a non-franchise mentality that allows consumers to buy their products direct. This has been both refreshing and controversial, as it turns the industry upside down, shifting the paradigm away from huge car lots and complicated, haggle-based sales transactions to indoor showrooms and simplified buying processes.
The reaction from startups, auto companies, and dealerships to these ongoing developments has been mixed. TrueCar notoriously struggled when its business model threatened the existence of thousands of traditional dealerships. A senior vice president at Toyota recently said that dealerships might have to "migrate away" from commission-based pay systems for salespersons in order to leave customers with a better experience. Some states are even considering banning Tesla sales.
"The Tesla sales model is both refreshing and scary," says Subi Ghosh, executive vice president of Dealer Authority. "On the one hand, we can see the straightforward methodology that streamlines the process for consumers. On the other hand, dealers have been the localized champion for consumers, bridging the gap between corporate manufacturers and car buyers. Consumers might not appreciate what dealers do for them, but the franchise model works to their benefit in most cases."
What About Used Vehicles?
The new car buying process may eventually shift towards one that mimics or even embraces the Tesla model, but that doesn't solve the problem with buying a used car. Companies like eBay and AutoTrader have attempted to make the process easier by giving consumers a wider range of choices and reaching away from their local area, but it has never translated into taking full advantage of what the internet has to offer. One wonders, if we can easily buy a used Xbox One from across the country, why can't we do the same with used cars?
It has always been a trust issue. Cars are one of the largest investments a person can make in merchandise that loses its value over time. This means that technology alone is not enough to make people pull the trigger on buying and having a used car shipped to them without testing it out first. Making long-distance sales more appealing requires a service model that works with the technology to bring consumers the peace of mind they need to fork over the money.
Companies like Pure Pursuit Automotive are attempting to fill this gap. They have embraced a "startup mentality" that uses modern technology while still applying the necessary human touch to actually find, test, and deliver vehicles to clients.
"The days of walking in and knowing more about the cars are over," says company founder Glen Dakan. "With our concierge service, we source and deliver exactly what you want."
The company was started as a result of a bad buying experience for Dakan. He realized that people looking for very specific models had no trustworthy way to buy higher-end used vehicles that weren't common in the local area. There might be hundreds of used Honda Accords within driving distance to a consumer, but if they're looking for a "2012 Mercedes-Benz C-Class C63 AMG with a Performance Package in black," they would probably have to surf the internet and travel around the country to get that exact vehicle themselves. Companies are now using databases to locate such vehicles and even begin the car-buying process on behalf of the customers. The price is often lower than if the customer had found it locally.
Will we be buying vehicles in the near future the same way we currently buy used electronics? This may or may not be the year that technology truly changes this situation, but it's clear that the current model is in a state of flux, and there's no going back.