Innovating the Car Buying Experience
We’ve all had the dreaded experience: entering a dealership, being approached by a salesman who takes an exorbitantly long time to take a copy of your drivers’ license, find a vehicle to test drive, tell you incorrect facts about the car, and in general, waste too much of your time. And that’s all before you’ve entered into the negotiating process. Sure, online tools have improved this process somewhat for the savvy buyer, but the process still makes a root canal seem far more appealing. Dealerships have evolved by investing in fancier, more elaborate showrooms with nice coffee makers, but that’s just to keep you within their grasp longer.
The real issue at hand, however, is the antiquated car sales practice. Edmunds.com recently released a survey indicating that 21 percent of respondents would rather give up sex for a month than go car shopping, and even more—44 percent—would give up Facebook. But why are car sales so important in the first place? No other purchase says as much about the individual as the car they drive. Sportiness, capability, safety, fuel mileage, and ruggedness are some of the outward personas people exude in the choice of automobiles they purchase. Additionally, people must choose cars that fit their needs, as well as their wants and ultimately their pocketbook. Choosing a car is fraught with pitfalls that can cause anxiety in the savviest of people and downright paralysis in the uninitiated—all before they’ve even entered the showroom doors.
Recently, the electric car maker Tesla has begun to wage a war against the traditional car dealer model, setting off a potential revolution in the car sales process. Tesla has begun a direct to consumer network of stores—arguing that they can better inform the consumer about the technology in the car if they have control over the personnel that are selling the vehicles. Naturally, the National Automobile Dealers Association (NADA) is fighting Tesla tooth and nail in the courts to force Tesla to use independent dealers to sell their cars. The NADA counters that Tesla is violating state dealership laws that have been on the books for decades. As a car guy and an engineer, the debate sparked me to take a look at both new car sales approaches that are being developed and come up with some ideas of my own that could make car sales even better:
Amazon: it was more of a publicity/marketing push, but for a limited time in 2013 you could buy a Nissan Versa online through Amazon. You entered your contact information and were then paired with a local dealer to complete the transaction. Three lucky purchasers were even delivered their vehicles in an extra-large Amazon box on a flatbed trailer (guess they didn’t have drones powerful enough yet). While not completely removed from the dealership experience, this could be an attractive option for people that really view cars as an appliance to get from A to B with little drama.
For those that need to have that hands-on experience of test driving their vehicle, Tred provides a service that delivers cars to your home for you to test drive (up to two at a time) to allow you to drive the cars at your convenience without the pressure from a salesman. Once you’ve selected a car to purchase, Tred also handles the negotiations and provides you with a purchase price through the website.
But why stop there? Here are some ideas that could make car shopping even better:
When you browse online, websites give you the options to “Build Your Car,” but when you go to find that car at your local dealer, that configuration is not available. Instead, they have an inventory of mint green cars or ones with strange option packages that dealers are dying to get off the lot. For one of the biggest purchases you make, you’d think you would have more personal choice in the matter. Gone are the days when people walk the lots to find a car. Giving consumers the option to truly personalize their car and order that way will help build a tighter connection between the user and the brand.
The most onerous part of the car buying experience has to be the price negotiations. Americans have been conditioned to seek out deals, looking for sales and buying based on lowest price. Between salesmen trying to maximize their profits, regional variations in car prices, dealer incentives, and online pricing tools such as TrueCar, trying to figure out a fair price for a car is nauseating to say the least. If Tesla’s successful in their ability to sell direct then that should open up the doors for other manufacturers to control their sales channels. According to a 2009 report by Gerald Bodisch, direct sales would save consumers $2,225 per car, based on an average vehicle price of $26,000. Allowing direct sales from manufacturers would be a huge financial benefit for consumers. Adding a “buy” button to an automaker or e-commerce website might be just the thing to make it easier for consumers to buy cars. Additionally, all the loan application and paperwork could be handled online.
Mobile Service Stations:
Since the car buying experience doesn’t end when you drive off the lot, instead of bringing in your car for service, the service comes to you. With on-board diagnostics (OBD) communicating service needs, a fully equipped service vehicle would come to your car at the location of your choice. The vehicle could be equipped with a lift and full set of mechanics’ tools. The OBD transmits parts needs prior to the visit, so the vehicle is stocked and ready to go.
Despite constant innovation in the product realm, the car buying experience has changed very little in decades. The time is ripe to improve the way we purchase our primary means of transportation.