Car dealers rethinking sales strategy with more informed consumers
By John D. Oravecz
Published: Wednesday, Oct. 23, 2013, 11:39 p.m.
Since Saturn introduced a one-price, low-pressure car-buying experience in the 1990s, auto dealers have wrestled with the tension produced by the traditional shell game between salesmen and buyers.
The Saturn strategy was revolutionary in its day, and customers loved the experience, but that didn't save the General Motors brand from going out of business.
Now dealers realize that strategy could help them with price-conscious, computer-savvy consumers who come to showrooms more educated and looking for a quick deal — minus the haggling.
Auto manufacturers and dealers are reinventing their approach to selling cars by simplifying pricing and employing strategies to make the experience friendlier.
Some dealers moved to the one-price model. Others tried promotions that give buyers the same deal as the company's employees. Some promise a price guarantee: If buyers find a better deal, say within 60 days, the dealer will refund the difference.
This week, #1 Cochran, Western Pennsylvania's largest dealer chain, introduced an updated one-price, low-pressure strategy it says will change the way dealers sell cars, though Baierl Automotive Group in Wexford promised buyers the lowest price with a similar promotion in 2010: “No haggling. No fighting to get the best deal possible.”
#1 Cochran, based in Monroeville with 21 dealerships generating $550 million annually, owned two Saturn dealerships and is betting that simplifying car buying will allow it to capitalize on volume sales instead of profit margin from any one car.
“It's a complete overhaul of our sales process,” CEO Rob Cochran said. “We've spent four years on how do we use technology to rid ourselves of the bad habits the industry has been challenged with for decades.”
Typically, buyers negotiate for a discount from the manufacturer's suggested retail price, the highest price for a car. Many buyers consider the negotiating process to be contentious, and often feel they're in the dark about the true retail price for a car.
#1 Cochran will use independent information from Edmunds.com and other sources to offer cars at the market selling price. Kiosks in showrooms enable customers to research car prices on the Internet.
“It's good news — addressing what for many of us is the most intimidating purchase of our lives. In the showroom, we match wits with a trained professional who is very experienced in negotiating,” said Jack Gillis, director of public affairs at the Consumer Federation of America in Washington. “The dealer chains are more aware they have to do business differently than in the past.”
Today's consumers do research and spend less time in dealerships, said Brad Korner, vice president of the automotive retail and media team at Polk in Southfield, Mich.
“They know what they should be paying,” he said. “They go to dealerships to look at what the dealer has in inventory and to get a trust factor that what they are seeing is what they expect.”
“It's like night and day,” said Rachel Grabiak of Connellsville, who bought a car on Tuesday at #1 Cochran Volkswagen of the South Hills. She liked using the kiosk and found the indicated price would be about $2,000 less than the manufacturer's list price. “I could pull up everything about the model, such as colors and features, and how the price would change.”
It's too early to say how many dealers will adopt this strategy.
Gillis said a Washington-area dealer, Jack Fitzgerald, CEO of Fitzgerald Auto Malls, has promoted a one-price, no-haggle strategy at his dealerships for years.
“God bless (Cochran) for a new marketing program,” said Bud Smail, owner of Smail Automotive Group in Greensburg. “But I don't think other dealers will change that much, if at all.”
Bob Baierl, whose automotive group has 10 dealerships in the North Hills, said different generations prefer different buying strategies — and some embraced haggling.
“Culturally, you have to be ready to embrace it,” Baierl said. “If he makes a spike in sales, he may influence the rest of us.”
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Federal regulator OKs Peoples Gas’ acquisition of Equitable Gas
- Pennsylvania, other states considering bids to host Boeing 777X production
- Area jobless rate slips on decline in workforce
- Crown Castle to grow, adding Mylan building
- Generic drugmaker Mylan completes $1.75B acquisition in India
- Range looks to sell Texas drilling assets
- Firms transmit market data at near light speed
- Many tellers just scraping by
- Madoff cut dead client’s payout by creating fake loss, jury told
- Fast-food workers to walk out, demanding higher pay
- European officials fine first U.S. banks in rate rigging scandal