This New Year’s Eve, my wife and I took part in the great American tradition of buying a car. The story goes that auto dealers will make incredible end-of-year deals in an effort to boost their annual sales numbers. Sorely in need of a new car, we decided to give it a shot. What we found is a dying business model, an unexpected network of car price intelligence and ultimately, a VW.
Like most car buyers, we talked to family and friends and did plentiful online research. Our plan was to test drive a few options while visiting family in Florida, then buy once we returned to Portland. It worked out really well, minus one factor: the blistering sales tactics of auto dealers.
As many of you may know (and some of you may be part of this world on a daily basis), car dealers often focus on extremely high-pressure sales, which means they will go to absurd lengths to get your business. For us, this meant tactics like keeping us from leaving the dealership by “misplacing” the registration card for our trade-in (seriously). What was fascinating is that we were actually trying to join the dealer’s community, where we could build a long-term, values-based relationship. But their sole concern seemed to be making the sale at hand.
For the 100th time, the dealer asked me to tell him what would make me happy, as if I were at a therapy session. Annoyed, I pulled out my phone and used USAA’s Auto Circle app to get some advice. What I found was a new service they offer called TrueCar. TrueCar has built an intelligence network of recently purchased vehicles and relationships with dealerships across the country, which they use to pre-negotiate prices. Sitting right in front of the salesman, an iPhone app allowed me to obtain a dealer-approved price that was $7,000 less than what he was offering, at the same dealership.
Now if I was a car dealer, I would look at this model and say, “Oh $h!%, our business model is dead!” Then after some reflection I might say, “Hey, let’s join the party.” Services like TrueCar help dealers lower sales costs for their customers. A smart dealer will take that goodwill and use it to start building a community, offering rewards for referrals and return purchases.
In my opinion, if the newspaper is a dying business model, then the car dealership isn’t far behind. If I can join USAA and use a mobile app while at the dealership to get a very good, pre-negotiated price, then why do I need a high-pressure sales person? And if this is happening at a car dealership, where will it happen next? And how do you stay ahead of the curve?
Our sales person with my wife and daughter at the dealership as we’re picking up our new purchase.