A lot of dealers wonder how they are to make a profit retailing vehicles with ever-shrinking margins against ever-increasing facility and staffing costs.
The most obvious, albeit wrong, answer is in the resurfaced murmurings about “one-price” and “no haggle.” Déjà vu?
I suspect that noise is coming most loudly from dealers trying to figure out how to cope with the age-old problem of staffing a showroom 12 hours a day without breaking the bank on overtime and health care.
Or possibly, it's born of chest thumping on Capitol Hill regarding transparency and fair dealing.
Or perhaps it's just a few dealer groups dusting off of an old ruse to hoodwink the buying public into believing there's a better deal at a dealership draped in “no hassle” than its cross-town rival known for shouting about volume and discounts.
It's quite possible some customers still believe in the tooth fairy, Santa Claus and no-hassle, one-price car dealers. But we insiders ponder more deeply than whether non-negotiating is a good idea. We wonder why there still is little consequence in today's world for dealers, manufacturers, bankers and politicians who lie.
I know, I know. Dealers and politicians don't lie, they puff. And puffery is a gentle excuse for inaccuracy draped in exaggeration.
I recently attended a mediation wherein a federal judge and I were locked in debate over whether a dealer might demand full payment for a car without an engine on the premise that the buyer's order (the contract) never mentioned said engine.
The judge advanced the theory that all things outside the four corners of the contract were “puffery.” Her argument was that the buyer's order, being the contract, merely described a make, model, year and identification number, with no reference to an engine.
I was on the side of the customer, but to no avail. Common sense was no match for a hook on which to hang a quick resolve that day. I guess we all draw our own conclusions as to what is truth versus what is just smoke.
These days, the big null surrounds how fewer dealers with bigger showrooms should translate into more profitable enterprise.
A close second is that today's products somehow present a better deal for consumers than their predecessors.
If a particular 2009 Chevy was a stinker, there are legitimate questions as to how its 2011 successor has evolved into a great alternative to import competition; how fewer servicing dealers made buying that Chevy more reliable; and how a few new colors and a couple of design tweaks corrected the cultural flaws that plagued old General Motors.
(I could expose the same fractured logic with a thousand other automotive oddities in our modern marketplace, but GM offers the most recognizable example.)
Dealers will continue to wither until the economics of retail and service are tilted in favor of a true commitment to what consumers want and need.
Happily, the new Gen Y buyers have turned a deaf ear to hype, hyperbole and hogwash. They're skilled at spotting hidden bias. They have learned that a lab coat and stethoscope do not a doctor make, and that actors, athletes, and paid commentators have no motivation to question the scripts that they speak.
Want to understand the power of social networking?
Then know that the collective wisdom of the street — however random, disorganized and undisciplined — is more likely to yield truth than a thousand hypes or listening to commissioned sales people. Tomorrow's retailers will harness the power of a blog and a great reputation.
As you ponder how the next generation of car dealers will carve out ways to make a profit, consider the credibility and power of blogging and texting.
Ultimately, savings from the elimination of hype, diversion, sleight of hand and clever puffery will help tomorrow's smart auto retailers and their manufacturers slay the competition.
Based in Pennsylvania, Peter Brandow is a veteran of the dealership world.
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