What will keep dealers in the game is the valuable utility that we provide to the consumer and to the manufacturer.
The newest dot.com partnerships to reshape our automotive landscape are being tested this month by a few franchises to gauge customer interest in buying cars on the Internet.
Mostly, the experiments are designed to learn more about technology, selling and cooperation. What's fascinating is that the partnerships are the joining of hands by a few manufacturers with their dealers.
Thankfully, these experiments signal a move past the debate over “whose customer is it?” on to what customers want and from whom. I say “thankfully” because all the while we were debating ownership rights to customers, they were leaving us in droves. It seems that someone forgot to tell those customers that they were owned in the first place.
I see these trials as welcome next steps in the evolution of automotive retailing. On the proving ground is a contest of which franchise will move ahead of the pack by offering cutting edge cyber benefits.
Just below the surface is a sub-test, if you will, of which manufacturer commands enough trust with its dealers to put the goods on the 'Net. Smart money seems certain that the first wave of dot.com failures tanked because of a lack of tangible product. They were long on information but left unanswered the question, “Where's the beef?” The first wave of Web winners are certain to have real inventory for sale at the click of a mouse.
In the golden age of retailing, I was weaned on stories of how the factory sold the car while the retailer sold the deal.
But, over-dealering and depleted advertising budgets caused the bold line between factory advertising and dealer marketing to become a fine line and then a blurred one.
Co-op ad groups co-mingled our money and blunted our message. By the mid-eighties, our local voice was reduced to a whisper, or perhaps a belch, in the auto section of our newspapers. “Sell-off,” “discount,” “free,” “wholesale” and “one day only” replaced “selection, know-how and service” as reasons to buy from a particular dealership.
It's no wonder the “get me bought,” “lowest price,” circus spawned trickery and deceit as the selling tools of choice.
It's also no wonder that consumer advocates gained popularity by boosting customer awareness of the rules of the game and the necessary facts and figures needed to level the playing field of negotiation.
It was just a matter of time before our most intimate details and strategies were circulated on national media. Before we entered the new millennium, there were no secrets left. Everything about our selling systems could be bought in paperback at a local Barnes and Noble. The Internet was simply another step along the path of that crusade.
So why then all the hype and paranoia about the 'Net? Isn't it just a bunch of asynchronous communications (e-mail) bundled with digital product brochures? Are any of our inventories, save a few hot models, more than a commodity? Why the passion?
I suggest that many dealers are at the end of their rope and are hanging on to the Internet as their proverbial knot.
In their minds, the Web is the final frontier of retailing and retailing is their domain. Many dealers have deep concerns over whether giving up the 'Net to manufacturers will rob them of their last selling opportunity. Michael Dell's on-line showroom suggests that retailers are not necessary for selling complex and expensive products. The Dell model is proof that traditional salespeople can be exchanged for on-line configuring of products followed by ordering either through clicking a mouse or by dialing into a toll-free call center.
A second deep area of concern is whether the publishing of trustworthy and complete pricing information will offer so much strength to consumers that dealers will no longer be able to negotiate a profitable enough deal to support their facilities.
And lastly, dealers are bracing against the possibility that fewer consumers will shop around, kicking tires on sales lots. As more and more purchases are decided virtually, dealers will lose their ability to encourage the sale of alternate choices that would be more profitable for the dealership.
As usual, the concerned dealers are not wrong in their opinion; the Internet is a powerful catalyst for change in automotive retail. We all concede that change often brings about the uprooting of what was, motivated by the desire for what will be. On-line sales will obviate many current dealership processes by offering an alternative to in-store shopping.
Equally true is the fact that profits that were made possible by deceit and trickery will be undermined by the availability of pricing on the Web. This is in addition to the fact that customers who spend less time shopping often buy what they were looking for, but fail to look for what would best suit them.
What is absolutely false, however, is the notion that the Web will replace dealers with a direct pipeline between customers and manufacturers.
The reason that such a pipeline will not be built has nothing to do with our entitlement as franchisees or with the legislation that protects us from over reaching manufacturers or even our own stubborn refusal to participate in the new process.
Ultimately, what will keep dealers in the game is the valuable utility that we provide to the consumer and to the manufacturer. We provide service to consumers and elasticity in an otherwise rigid manufacturing system.
Cyberspace is simply the next tool with which we will provide these attributes. And the fact that a few of our favorite crutches and sins may be taken from us is not all bad either.
Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. He is president and CEO of Brandow Companies.