Car Buying 2.0: The End of the Dealership Dance?

If there’s one thing that I hate it is buying a car. Unless you are paying cash the salesman will mess around with pricing until you want to slap him, have his manager talk to you, mess around some more, and basically go through a whole rigmarole in an attempt to keep you there and wear you down. So, when a I needed a new car a few months ago I was dreading the prospect of doing the dealership dance. I went out planning to buy a used, er, sorry, “pre-owned” vehicle but things didn’t work out as planned. Mrs. Gibbs had found a used car online at a very good price at a local-ish dealership and so we went to take a look. We stopped at another dealership that was on the way, ohhed and ahhed over a new car that we test drove for fun, and then beetled off to the dealer that had the car Mrs. Gibbs had identified. The dealership was amazingly empty and in the ten minutes it took the staff to wake up we looked around. Mrs. Gibbs almost immediately found the car she’ was looking for and we were surprised, to say the least, that it’s lot price was $8,000 more than the on-line price. When the salesdroid turned up we asked why the difference. Sad but there wasn’t really a good answer other than they have different on-line pricing! Anyway, at the online price we would have bought it if the dealership could have got the whole selling process sorted out. Unfortunately the purchase plan we were interested in was one that they knew nothing about and after about three hours I couldn’t stand the incompetence and left. The next day Mrs. Gibbs found an interesting site: http://www.swapalease.com/. On this site you can search for a vehicle that someone else has acquired and assume their lease at the same rate they are paying for whatever period is left. Even better most of the deals include around $500 cash for you to take the lease over!. Then the dealership with the car we test drove called and asked what terms would make me happy to lease a new car. I explained the terms I could get on swapalease.com and the salesman said they’d match it. Just like that. Go for broke I thought. I said OK that I was interested but … The “but” was that I wanted him to fax me the paperwork which I would complete and fax back to him immediately and then I wanted to go to the dealership at 11:30 AM the day after next day, I didn’t want to see his manager or anyone other than the finance person, and if I wasn’t sitting in the vehicle with the engine running at midday the deal was off. Amazingly enough, what I wanted was exactly what happened. My happiness aside, here we have two interesting issues that involve the ‘Net: First, for commodity items you have to be careful about whether a better price is being quoted via the seller’s Web site than you’ll see in the real world. Second, on-line competitive offers can give you serious leverage. For all vendors this is more evidence of an inescapable future trend: The need to have transparent pricing. The client who buys a car from a dealer for $8,000 more than the on-line price and finds out afterwards is not going to be a happy client. Indeed, the vendor is going to have a huge problem in making that client happy again and even when they do they’ll still have a client who cannot help but think that they are shady. In the automotive world the next generation of car purchasing is going to be driven by the likes of Zag.com a service that closes the on-line/off-line loop such that pricing is as transparent as possible. For a good discussion of Zag.com see my old friend David Strom’s article that appeared in the New York Times. For now, I am happy with my car deal. When it comes time to replace it in three years it will be interesting to see how the world of car sales has changed. Perhaps the dealership dance will be a thing of the past. We can but hope.