The answer to the question posed by the title of this article really boils down to whether you are a car seller or a car buyer. If you’re a car seller, life is going to be rough. Seriously. Tough times.
Why? Don’t be surprised if there is a steady stream of people going to your dealership, and scheduling or requesting a test drive. These people look sincere. They look legit. So, they get into the car, they look it over, they take it out for a spin, and guess what happens next? That’s right. You can’t get a hold of them.
They gave you their cell number but, for whatever reason, you can’t get through or they’re just blowing you off. The reason for this, of course, is that an increasing number of these people are actually just testing out and kicking the tires of the cars at nearby dealerships.
They do this with the full understanding that they’re not going to buy from the dealer. Instead, they’re going to buy from an online car source. As you probably already know, when you shop online, you get to take advantage of one serious competitive advantage online sellers have over offline sellers.
When you shop online, you can comparison shop. You can look at a particular car and see all the other dealers and all other sellers offering that car. And based on this comparison, you can pick out the best price, the best delivery terms, and the best financing terms.
So, when you compare this with the typical offline car buying experience, it’s not a contest. Not by a long shot. Because when you go to a typical dealer, what happens? If you’ve ever bought a car at a dealer in the United States before, you know exactly what I’m talking about.
You know what happens next. The salesman will come up to you and really try to pressure you to buy from them right there, right now. In fact, they’ve even come up with this elaborate ritual where they try to negotiate with you, and then they ask you for your best price. And then they pass you on to another salesperson who then tries to smooth-talk you.
And then the whole charade culminates with the manager making an appearance and giving you a deal that you can’t refuse. You know exactly what I’m talking about. It’s sad, it’s pathetic, and it’s a waste of everybody else’s time.
Believe me, I’ve spent quite a bit of time at Honda and Toyota dealerships and it’s no joke. I mean, you come in at 5:00 p.m. and then you leave at 9:00 p.m. It would be great if you leave with a deal that you’re looking for. In other words, you leave with a car. But if you have a specific price in mind, good luck making that happen.
Well, when you buy cars online, you dispense with all that garbage. Seriously. Basically, you get straight to brass tacks. In other words, do I have a deal or not? Do I get access to the price that I’m looking for or not? Does this car’s lowest price fit my budget or not?
Better yet, you can even pre-qualify yourself by entering financial information in some of these websites to determine whether you can qualify for the best financing. In the worst case scenario, if you can only qualify for higher interest financing, you quickly discover whether you can afford it or not.
This is a big deal, and this is why people are now buying cars online and getting it delivered to their front door. Forget about waiting for the dealership to see if they have the right color. Forget about being passed from apprentice salesperson to intermediate salesperson to master salesperson. Forget about all the shenanigans of discovering your best deal.
Just going by the amount of time and frustration you save, buying a car online and having it delivered to your front porch is probably the best idea in automotive sales since sliced bread.
No joke. It’s really great for the customer. The problem is, it’s murder for the car sellers.
Like I said in the opening of this article, a lot of car sellers have to basically content themselves with that steady stream of customers coming in for a test drive. They check out the car, they kick the tires, they check out the controls, and then they disappear.
In a way, offline car dealerships did this to themselves. I wouldn’t be surprised if offline car dealerships simply die out because people are just going to use them as glorified sampling stations or product tryout facilities for cars.
Nine times out of ten, the people showing up have absolutely no interest in actually buying from them. Instead, they have their mind set on buying the cars that they’re checking out online. Do you see how this works?
So, I’m sure that the massive automotive dealer network infrastructure built up in the United States over several decades would probably evolve. I’m confident in that because our market system favors innovation.
It may not happen overnight, but eventually, they will evolve where they can still make money despite the fact that people won’t buy online. Now, you may be thinking, “How can they make money? How can the existing networks of thousands of car dealerships located all over the United States make money in the light of online auto sales?”
Well, last time I checked, websites cannot maintain your car. You can’t drive your car into a website to get an oil change. There will still be need for a distributed network of dealers. If anything, for maintenance and scheduled services.
In fact, if you ask an auto industry veteran, it turns out that this is where most dealerships get their bread and butter from. It’s not from unit sales. So, at the end of the day, it will probably all even out in the wash, and both consumers and dealers will come out winners.