Electric car automaker Tesla has finely detailed the tight grip automotive dealerships have on car sales market already. This is largely a function of the monopoly they have on car sales. Manufacturers pretty much have to sell their cars to dealers by law, who then turn around and sell those cars to you and me. The only way a dealer can have more competition is if there are more dealers. But franchise rules give everyone their own little market to play in with minimal overlap.
So how do these market forces translate into the dealership experience?
With little competition to worry about the dealerships are focused very much on closing the sale. In other words, taking someone that’s “just browsing” and turning them into a sale.
The Sheconomist and I have recently entered the new vehicle market. We’re very much in the “just browsing” phase and since the car is for her I’m mostly introducing her to the vehicles I think would be a good fit. I’ve always loved cars and read a lot about them so when we get to the dealership I know which model we’re there to see. Here are just a few of the problems we’ve been running into:
Salespeople don’t know the cars: At a Nissan dealership we asked to see Car X. The weather was bad so we only wanted to see one in the showroom. Looking around the showroom it’s immediately obvious to me they don’t have Car X in there. Sales guy points across to room to Car Z, thinking it’s Car X. While similar, Car Z is larger, more expensive, and not what we’re looking for. Correcting a sales guy is kind of awkward. Another example: now at a Toyota dealership the sales guy is asking us about features we’re interested in. We’re looking at a base model and he says the next trim up has more of the features we’re looking for. The problem is he’s describing a trim two tiers up. It’s clear he doesn’t even know of the mid-level tier.
Salespeople assume you need an escort: The only thing I need from a dealership is a key to get inside a car and test drive it. Some people need more assistance and that’s fine. But good luck finding a dealer that can read you and offer the level of service you want. Every dealer assumes you know nothing about the cars until you blatantly tell them otherwise. I don’t go to a Toyota dealer because I want “a Toyota”. I know the car and trim I’m there to see, just point me to where they are on your way too large parking lot.
Painful execution of a poorly designed sales process: Anyone that works in a business with everyday consumers as their customers should spend some time in the sales department. Many companies use something called a “sales process” to get all their sales people to use similar (and in theory, well-tested) methods to help customers and close a sale. Every business from banks to real estate does this. The process at dealerships goes something like this:
- Warm welcome/greeting, establish rapport
- Identify customer needs, ask about trade-ins, determine financing needs
- Introduce customer to product line, get them to test drive
- After showing vehicles, bring them inside to an “office” and get customer information
- If no sale that day, take customer information to “manager” to show them you did what you’re supposed to do
- Send customer on their way if manager doesn’t want to chat with them
- (Next day) Call customer every four hours until they either come back to the dealer or change their number
Maybe that last one is a stretch, but not by much. This process isn’t difficult. And the best salespeople hardly need a step-by-step guide to help them. So watching the people that need this help fumble through it can be painful. But the process is a holdover from when the Internet didn’t exist and Millennials were learning to walk.
When an industry is a monopoly there’s little competition and so no incentive to try and do things differently. Dealers have adapted by establishing online sales departments which I highly encourage any car shopper to use. But to see a car in person, or test drive it, you have to be strung up and sent through the meat-packing process of the “dealership” experience.
There are some bright spots with dealers. While I made fun of Toyota and Nissan, a local Jeep dealer offered a much better customer experience. I wasn’t surprised to learn my local market was much more saturated with Jeep dealers than Toyota or Nissan.
Image: Alden Jewell