SOME DEALERS USE THE INTERNET TO "TEASE" THE customer into coming to the store, then revert to traditional sales methods.
"That doesn't work," says Matt Parsons, marketing manager of the EDS Automotive Retail Group.
It defies what the Internet customer is all about, he says.
The Internet shopper goes on-line to do a lot of research on vehicles. That includes learning dealer invoice costs. Knowledge is power, and such shoppers are powerfully armed when they enter the dealership.
That can make some salespeople gun-shy.
Says Mr. Parsons, "They become defensive, rather than say, 'This is great! This guy has done his homework and he's coming to me.'"
Ironically, four dealers on an EDS Internet study panel say profit margins from their Internet shoppers are higher than from traditional buyers.
"They are willing to pay for the convenience," says Mr. Parsons. "But salesmen can't get them in a room and 'rust' and 'dust' 'em."
How widespread is consumer knowledge of dealer invoice prices? Well, the National Automobile Dealers Association - of all people - now includes that information on its expanded website.
More than 50 websites disclose invoice prices, including some dealer sites. So the NADA is joining 'em despite its long-standing opposition to publishing those wholesale costs.
"It's like giving up the battle," says one dismayed retired dealer.
But the Internet arming consumers with information - including invoice costs - is not the threat some dealers perceive it is, says Rik Kinney, senior vice president of the Dohring Co.
He says dealers can make more money than they think from that savvy set.
Mr. Kinney, who visits four to five dealerships a week, explains, "A lot of dealers tell me an informed consumer is an easier sell."
Take the situation of a dealer facing a shopper who knows what the dealer paid wholesale for a vehicle.
Mr. Kinney says a wise dealer would explain his costs of doing business, then, considering that, ask what's a fair mark-up for the vehicle. Interestingly, many people name a price that's more than the dealer had in mind, according to Mr. Kinney.
"Most people are not out to cheat the dealer," he says. "But the dealer must be open, not resistant, to the consumer knowing the invoice."
Mr. Kinney relates his own experience in buying a car after researching it on the Internet and contacting a dealership by e-mail.
A dealership employee did the right thing by responding quickly to the e-mail. But then the employee made all the wrong moves.
Mr. Kinney recalls, "When he called he said, 'We really don't like doing Internet sales.' That floored me.
"I was perfectly willing to give him $800 over invoice. But before we got into that, he said they'd sell for $300 over invoice.
"They were so fearful of being perceived as gouging with a higher price that they didn't bother asking what I'd be willing to pay."
The Internet is a great preliminary sales device that can attract shoppers to dealerships, says Mr. Kinney. But it's not an end-all, he adds.
"It's like the telephone," he says. "The phone is a helpful sales tool, but you don't expect to sell too many vehicles over the phone. Same with the Internet."
Incidentally, he says Dohring research indicates the vast majority of Internet users will purchase a vehicle only after visiting the dealership - and only after taking a test drive.
Moreover, those customers want a test drive in a vehicle that's quite like, rather than somewhat like, the model they're looking to buy.
That defies some oracles of the brave new Internet world.
Those seers predict that Internet users ultimately will place their car orders directly with the factory and get delivery in days. Furthermore, they say if those consumers really want a dealership test drive, well, all the dealer need have on hand are a few demos that are sort of like the model the customer is interested in.
Will future Internet customers still want to go to the dealership for this and that? Or will they only stop by to take the vehicle and run?
At this point, no one really knows for sure. But astute dealers know their strengths, and how to leverage them.
If customers have problems or need help with selection, financing and the like, they turn to the dealership, says Bill Stasek.
His suburban Chicago store, Stasek Chevrolet, is plugged into the Internet, but he says the cyberspace experience can only go so far.
"It's pretty tough for customers to jump on a computer and 'point and click their way to making their situation better," he says. "No matter how technology changes, this is and forever is going to be a people business."
Ward's Dealer Business covers the on-line scene on an on-going basis. Now we're packaging Internet news into a department of its own.
Check out the new Internet section along with our established departments of Dealership Training, Sales & Marketing, Finance & Insurance, Fixed Operations and Information Technology.
As with all the departments, this one aims to keep dealership management informed and successful.
Steve Finlay is editor of Ward's Dealer Business. His e-mail address is: [email protected]
