A new arsenal of information technology tools is allowing dealers to welcome Internet-savvy used-car shoppers.
That hasn't always been the case.
Too often, dealers and their used-vehicle sales staffs have dreaded the Web-informed consumer.
Because they have focused their homework on a single vehicle or model, those shoppers can tell the dealers what their competitors are asking for similar vehicles. They know about quality ratings, warranties, and other information.
Dealer salespeople can be at a disadvantage, especially if it's a brand they are not used to selling. For example, a salesperson at a Chevrolet dealership probably knows all about Chevrolet or even General Motors used cars but may not know nearly as much about Chrysler or Honda vehicles.
That's where inventory management vendors such as vAuto, FirstLook, HomeNet Automotive, and DealerTrack come in. They continue to refine software products that put at the reach of a salesperson's fingertips the same or better information than what the Web-surfing buyer has--for as little as $500 per month per store.
VAuto's product lets a dealer pick a radius--say, 50 miles from the store--to see prices that competitors are asking for all similar makes and models of vehicles in their used-vehicle inventories. The dealer then can show the prospective customer that his car is priced at the lower end of the market range or defend a higher asking price than a competitor's on the basis of lower mileage or better condition.
Stephen Zehring, sales manager for the Saturn store at Ingersoll Automotive in Watertown, Conn., said those tools are crucial. He said he likes Web-savvy shoppers because they should be easier to sell to than the uninformed buyer of yesteryear. The new tools allow sales personnel to reassure the shopper that the dealership is offering a fair deal, he said.
Use the same sites
A shopper who has done Internet homework and comparison-shopped a number of vehicles will have a hard time quibbling with a dealer who uses those same trusted sites to demonstrate where cars rank in price, mileage and trim level, said Zehring. Ingersoll Automotive also sells Buick and GMC.
"Once you've had a chance to objectively walk them through the information, it tends to give them peace of mind," he said. "Their fear is that they're not getting a great deal."
Zehring's store sells about 70 used cars per month. It uses DealerTrack AAX.
Jack Anderson, used-vehicle director of the 19-store West-Herr Automotive Group Inc. in suburban Buffalo, N.Y., said that before the Internet became as commonplace as the telephone, dealers typically priced used vehicles using a cost-plus formula.
In simplified terms, that meant the dealer would take the price paid for a used vehicle, add any refurbishment costs and tack on a $4,000 to $5,000 markup to provide negotiating room with the customer, Anderson said.
It was a recipe for contentiousness, he said. Customers often operated at a knowledge disadvantage to the salesperson and resented the entire process.
The Internet changed that. Today, 80 percent of car buyers have done some research on the Web before choosing a vehicle, according to J.D. Power and Associates.
Consequently, dealers must price used vehicles in a narrow range because they assume customers will have comparison-shopped the competition before coming into the showroom or making an offer online, Anderson said.
'Consumers don't care'
"What a car sells for today has no bearing on what a dealer paid for it," Anderson said. "Consumers don't care about that."
West-Herr ranks No. 22 on the Automotive News list of the Top 125 Dealership Groups, with 14,555 new-vehicle retail sales last year. It sells 21 new-vehicle brands.
The dealership group, which in 2009 sold 10,386 used vehicles, uses vAuto's pricing tools to help its staff sell used cars and trucks.
The latest product from vAuto, called RealDeal, takes pricing transparency to another level, Anderson said.
With the program, a dealer invites a prospective vehicle buyer to go to a Real-Deal Web site to comparison-shop for the vehicle of choice using the same tools available to the dealer, said vAuto founder and CEO Dale Pollak.
Dealerships can show the data to the shopper in the showroom or e-mail a link giving a prospect access to the comparisons. The RealDeal site is available only through participating dealerships, not casual Web surfers.
The shopper can compare the price of vehicles of similar make, mileage and trim level and even set the radius in miles of how far they'd travel to buy the car, Pollak said.
Once the dealer and shopper are operating with the same set of facts, a salesperson's job is largely confined to explaining why a car might be a little higher in price because it has lower mileage or extol the virtues of the dealer's service plan, Pollak said.
"Documentation replaces negotiation," he said.
Anderson said West-Herr, which has been piloting RealDeal at two stores, intends to extend it into its other stores in the coming weeks.
John Mantione said the Internet has helped debunk a nagging misconception that used BMW vehicles have a 50 percent markup. Mantione is vice president in Winter Park, Fla., for four of six BMW stores in that state that are owned by Fields Automotive Group. The four stores sold about 2,000 new and 2,000 used cars in 2009, he said.
By using a printout from the DealerTrack AAX program, Mantione said, he can show customers that his cars are priced in line with those in the area. That kind of information would have taken a shopper days to gather during trips to dealerships, he said. Now the information is a button-push away.
Said Mantione: "The Internet has made our salespeople a lot more efficient."