April 4, 2014
Back in the days when President Ronald Reagan was staring down the Soviet Union, buying a car was often a prolonged process requiring considerable patience and mental endurance from both buyer and salesperson.
A typical visit to an auto dealership might start with a scrum of salespeople — usually all men — vying for your attention. And why not? Sometimes sizable sales commissions were on the line.
The salesman you ultimately hooked up with was likely to be your friend for the better part of a day as you spent hours haggling over prices, test-drove multiple vehicles, compared car interiors, eyed dozens of paint jobs and met a cluster of dealership officials summoned by your primary salesman as you methodically worked toward a deal. By the end of the day, maybe you had a car. Or it might have been just Round 1 in a days-long process.
Oh, how things have changed.
Face-to-face car selling has evolved into something resembling speed dating. According to numerous industry sources, a typical car-buying experience can be done in as little as two hours, including the trip to the finance office and signing all required documents.
As it has with so many industries, the Internet has changed everything.
Consumers who once had little to work with beyond the manufacturer’s suggested retail price, or MSRP, and other basics listed on a vehicle’s window sticker now have oceans of data available to them via car sites like Edmunds.com, Cars.com and AutoTrader.com. Prospective car buyers can easily obtain MSRPs on any vehicle, along with the invoice price, exhaustive lists of standard features and thousands of available options.
Today, it’s not unusual for a car buyer to walk onto a dealer lot knowing the exact motor vehicle model and features they want, right down to the exterior paint color. And they’re typically versed in just how much the dealer paid for the car.
“I would say the No. 1 change from a generation ago and now is the explosion of information available to consumers,” said Brian Maas, president of the Sacramento-based California New Car Dealers Association. “Even in just the last five years, everyone walking into a dealership has a smartphone. They can take a picture, go on the Internet, check the price on any comparable car or check out all the features, all while they’re standing there at the dealership.”
The result, Maas said, is that ultra-informed consumers have “adjusted the burden to the salesperson on the sales lot. In some cases, (the customer) is more knowledgeable than the salesperson.”
Sacramento resident David Kelly, shopping for pickups last week at the Folsom (Calif.) Automall, is typical of today’s consumer. He was carrying an inch-thick stack of computer printouts from various auto websites. “If I know the answers in advance, I think it makes the sale go quicker. … And actually, I don’t mind haggling over price.”
Over at the Roseville (Calif.) Automall, Rocklin, Calif., resident Bob Foster’s “homework” included a couple of pages torn out of a recent edition of Motor Trend magazine. “I’ve been working on this for a week or two. I want the right car and the best deal. And I won’t pay a penny more than what I have in mind. … I’ll walk out if I don’t get the price I want.”
To match that kind of determination, car dealers and their sales staffs have likewise turned to technology. Using laptops and tablet computers, sales personnel regularly keep in touch with customers via email and conduct searches for specific auto models with a few quick keystrokes.
David Rodgers, senior vice president and general manager of the John L. Sullivan Automotive Group, which includes John L. Sullivan Chevrolet and Roseville Toyota in the Roseville Automall, was a car salesman back in the 1980s. He remembers when the tools of the trade were “a ballpoint pen, a necktie and a (paper) notebook. Now, it’s a ballpoint pen, a polo shirt and an iPad.”
Dealer John Driebe, who sells Nissan, Infiniti and Mazda brands in the Elk Grove (Calif.) Automall and oversees the ForAnyAuto Group, also was a car salesman in the 1980s and has witnessed the vast tech-driven changes. Like Maas, he acknowledged that some customers can be so well-informed about a particular car model that they might have more information than a given salesperson. But, the salesperson can easily match that knowledge with a quick: “I have an iPad right here. Let’s take a look.”
Jambert Corpus, who primarily works direct sales and leasing at ForAnyAuto’s Nissan of Elk Grove, said he is happy to work with “educated” consumers: “I think it’s very productive when the (customers) have the information and know what they want. It streamlines the process. In my experience, it makes the job easier.”
Corpus, 28, said he works the emails and computers, but that does not consume all his time: “You still have to work with people. That’s important.”
With consumers having so much car data at their fingertips and dozens of local dealerships to choose from, Corpus says he’s a stickler about salespersons presenting themselves in the best possible light.
“You need to have a positive attitude, be polite, pay attention … look like a professional. You can’t be wearing jeans. You need to be informed. And you should use proper grammar,” he said.
Driebe says he has seen some poorly trained car salespersons over the years, typically at “very busy dealerships where they haven’t taken adequate time to train them, and they just get thrown to the wolves. … The problem is they haven’t been given the training and tools to treat people properly.”
That can be a disaster in today’s competitive climate. Consequently, prospective ForAnyAuto salespersons go through multiple interviews, and no one is hired without talking to Driebe face-to-face. Background checks and drug tests are standard procedure. The sales staff training process, Driebe said, involves some technical skill, but much time is spent on attitude and one-on-one interaction.
“Today, a salesperson has to be a lot of things,” Driebe said. “Not just informed, but understanding, empathetic and (realizing) that even though (a customer) might have a lot of information, some people need help making a decision. … Sometimes, we need to be understanding of their frustration,” such as when there are delays getting all the required paperwork completed on a busy day at the dealership.
Technology has also put sales staff under online scrutiny, with many of today’s dealers hosting “rate your salesperson” features on their websites. Car buyers are invited to weigh in on their shopping experience. Positive reviews are coveted; negative ones sting, and are there for all to see.
“With that in place, the last thing (a salesperson) wants to see is a lot of bad customer ratings,” Driebe said.
Dealers say good ratings also tend to prompt subsequent sales among customers’ friends and family, a longtime hallmark of car selling. In today’s brutally competitive climate, every dollar counts.
Driebe said that profit margins “are as low as they’ve ever been,” particularly when price wars break out among competing dealers.
Various U.S. auto industry watchers put the current average gross profit on a new car sale at between $1,200 and $1,300, down from around $1,500 about a decade ago. Some dealers are dropping sales commissions or lowering them, in some cases to $100 or less per car.
While some analysts believe commissions might disappear entirely in the future, Maas of the California New Car Dealers Association thinks that would be a bad move.
“Commissions are not necessarily going away,” he said. “That model is hopefully here to stay for a long time. The more experience and more efficient people are, the more money you can make.”
Rodgers, of the Sullivan Automotive Group, also points out that dealerships offer something that can’t be found online: real behind-the-wheel experience.
“We still require a test drive before purchase,” Rodgers said. “No matter how much homework a customer does, they don’t always know everything we’re offering and the technology behind it. … And there are other things customers don’t necessarily think of that the salesperson can show them — how the seats fold down, how to remove the seats. Things like that.”
©2014 The Sacramento Bee (Sacramento, Calif.)
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