Car dealers rethinking sales strategy with more informed consumers
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.”
At least 20 percent nationwide provide access to NADA Guides, Kelley Blue Book, Edmunds.com, TrueCar, AutoTrader.com and other sources from showrooms, said Korner.
“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 firstname.lastname@example.org.