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Trends: Car Dealers Embrace the Web

Trends: Car Dealers Embrace the Web

Photo: Manik./Flickr (cc)

Don Hammonds/Pittsburgh Post-Gazette

Before browsing at a new car showroom, most Americans browse online. Almost 90 percent of consumers turn to the Internet as a research tool — in addition to traditional sources such as newspapers and magazines — although only about 30 percent complete a sales transaction online, auto industry analysts say.

“People think they can click a button and a vehicle magically appears in their driveway, and that’s just not the case,” said Philip Reed, senior consumer advice editor for Edmunds.com, one of the most popular sites for car buyers.

“Online car buying means you will use the Internet to help in a number of ways to make a purchase. But you still can’t test drive a car on the Internet,” he added.

That is among the reasons that dealers have embraced the Internet.

“The better informed a consumer can be before [he or she comes] into the showroom means we will have to spend less time telling [him or her] the basics about the car,” said Daniel C. Biondi, owner of Biondi Motor Co. in Monroeville, which sells Lincoln, Mercury and Mitsubishi products.

“You have to earn the right to have a customer spend money in your dealership. If [customers] don’t, it’s because something went wrong when they made the visit,” Mr. Biondi said.

Most car dealers have Internet business managers whose jobs it is to handle inquiries that come in via e-mail and those who choose to buy a vehicle online.

Mr. Reed said that while main sales staff works on a commission, and thus benefits from selling a vehicle for as much as possible, the Internet business manager often is salaried and wants to sell on volume. “They want to sell as many cars as they can. They are motivated by possibly getting a bonus because they’ve sold a lot of cars, not because they’ve sold a few cars at a higher price.”

Analysts say that can work in the favor of the consumer.

“This is almost like a secret. If you know it, you’re great,” said Mr. Reed. “The Internet manager assumes a high level of education for the consumer he or she deals with. That manager assumes he is dealing with somebody who’s gotten a lot of information. So there seems to be more disclosure in the Internet department, especially about rebates and incentives.”

But buyers shouldn’t expect the deal of the century because they use the Internet. Dealers generally will quote prices within the range of what everybody else is quoting.

And buying a car without a visit to a dealership can present problems.

“In some cases, people won’t even test-drive the car,” Mr. Reed said. Without a hands-on experience, buyers may miss details that they might not like, such as options or even a difference in color from what is shown on the Internet. And a buyer who wants one more look at a car to be sure it’s right, will find that harder to do online.

If a consumer does decide to request an online price quote from dealerships, several may respond, usually those that are closest geographically, although a buyer isn’t limited to nearby dealerships.

“The advantage for consumers is that when you request a quote, they know you are online and that you are simultaneously soliciting quotes from other dealers. That puts them immediately in a competitive situation. Once they know that, they know they had better have a competitive price quote or they will never hear from you again,” Mr. Reed said.

Despite the competition, quotes from dozens of dealers will not necessarily help.

“They may save $100 or $200, but I don’t believe consumers will be able to save a lot of money by checking at dealer after dealer. Everything is so competitive now that everybody knows what everyone else is doing,” Mr. Biondi said.

Mr. Reed agreed. “This also applies to things like a document fee, which essentially is a bogus little fee for preparing the papers that you can’t get away from paying. The dealer may reduce it, but [dealers] know that you have to go someplace to buy the car and so will charge you the fee.”

Buyers also should watch out for dealers quoting a “low-ball” price that looks too good to be true because that often comes with extra fees that will eventually jack the price up, or there may be rebates included in the price for which a buyer doesn’t qualify.

If a dealer responds to a request for a price quote with an invitation for a buyers to visit the showroom, “You simply reply to them, ‘No, I know what I want. If you would like to give me a price, I would be happy to receive it.’ The next e-mail you’ll get will probably say, ‘We have a blue one on the lot, here’s the options and here’s our price,’” Mr. Reed said.

General Motors’ eBay pilot program, which sells cars and trucks via the Internet, has prompted cautionary notes from Edmunds.com. The Web site suggests shoppers avoid the “Buy it Now” pricing option because it can result in paying about 2 percent more than Edmund’s True Market Value price. Edmunds suggests shoppers use the “Make an Offer” option with a realistic offer.

Don Hammonds can be reached at 412-263-1538 or dhammonds@post-gazette.com.

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