Internet Price Quotes: Empowering Buyers But Not the Whole Story
Though car buyers are requesting Internet price quotes in increasing numbers, a study by BuyingAdvice.com shows that they are using the Internet as part of a mixture of options rather than completely replacing traditional methods of getting a price.
Of 1158 buyers surveyed who requested Internet price quotes and stated they were within thirty days of making a new vehicle purchase, 73 percent stated they would also visit a dealership to get a price. However, only 41 percent had asked for a quote from a dealer web site.
Just over 54 percent of the sample, drawn from users of the web site, stated that they had requested price quotes from more than one source.
Historically dealerships have gone to great lengths to avoid price wars between competing franchises of the same brand. But with manufacturers increasing the number of dealerships within tight geographical areas, this is becoming increasingly difficult.
The advent of the Internet price quote has further weakened dealer resistance to compete directly with each other, as it is now easier than ever before for the customer to get a price on a vehicle without visiting a dealership.
"In the old days we had a strict rule against 'talking numbers on the phone'. Our salespeople were trained to set an appointment and get the customer into the showroom," says retired dealership owner Jim Smith.
"Now with an increasing numbers of Internet buyers we are really being forced to compete on price just to get the customer in the door," admits Smith. Because of this newer development, dealerships have had to adjust their business and sales model.
"Most franchise dealerships have set up specialist Internet divisions within their sales force. One of the keys for the Internet customer seems to be speed of response. They are used to instant gratification and that is what the dealerships are trying to provide. Having a quick call back or email also cuts into the time a competitor has to reach the customer. If we can assure them quickly that we have the model and color they are looking for, we still may be able to get away without getting into a price war," says Smith.
Despite the changes resulting from Internet-based pricing competition, some incentives for buyers to visit dealerships in person remain. Smith explains "in many ways the emphasis is still the same - getting the customer into the store. Even if the customer is intent on getting a good sales price we can still offer one-stop shopping in terms of financing and trade-in all in one location."
But buyers should be cautious not too pay too high a price for convenience. One-stop shopping can allow the dealer to make back some of the profit they may have to concede on sales price by recouping their losses through the trade-in or financing transactions.
Former sales executive Dan West says that while some dealerships are worried about the impact of the Internet price quote on profit margins, there are elements of the sales experience that require a customer to come to the lot.
"At some point you have to sit behind the wheel, feel the handling and pop the hood," he says. While the Internet is going to change the car buying experience for dealers and customers alike, it is only part of the picture.
"Sales representatives should not be afraid of fair competition. I think if you have a good product, you will ultimately benefit from an informed consumer." asserts West.
An earlier survey from BuyingAdvice.com revealed that 86 percent of new car buyers felt that using Internet price quotes resulted in lower purchase price for the buyer and 82 percent felt that it speeded up the process of buying a new vehicle.
That survey also revealed that over sixty percent of respondents were requesting a price quote for the first time, indicating that it is a growing part of the process of buying a new vehicle.
"Dealers have to understand the Internet is part of the future of car buying and adapt to include it in their routine," says Smith.
"However, you still have to come to the lot to drive the car. And that is why the emphasis is increasingly on the service that buyers receive. Buyers are more and more aware that they have options, and they will walk away if they don't get what they believe is fair treatment and a good price.
"The consumers hand has never been stronger. But they need to use that to their advantage and take the steps that are necessary to get the best deal they can. Research the vehicle, get competitive price quotes and know what financing terms you can achieve, both at the dealership and elsewhere," Smith advises.
Published on Thursday, January 10, 2008 - Email to a friend
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