A more savvy shopper is showing up in dealer showrooms, and the Internet is the reason.
Without leaving the comfort of their homes, car buyers can check out options on manufacturers’ Web sites, learn dealer cost for vehicles, check used-car values, determine how much they can finance and find a dealership that has the exact vehicle they want.
No more waiting for this month’s Consumer Reports to see if it reviewed the vehicle they want. No more trekking to the library for a copy of the Kelley Blue Book.
“Bottom line, consumers are turning to the Internet to arm themselves with information to do battle with their local dealerships,” said Chris Denove, director of consulting operations for J.D. Power and Associates in Agoura Hills, Calif.
“Nearly one-half of all new-car buyers are going online to arm themselves with information before they purchase their vehicle. That’s up from only 25 percent in the first quarter of 1998,” Denove said.
Dealers in Chicago and elsewhere don’t see that as all bad. They say it makes the customer easier to deal with.
“It’s not like you have to sell the car to them, because they’ve done all the research. All it boils down to is maybe going over some financing options and just sealing the deal so to speak,” said Dan Grimes, Web master and manager of information systems for Larry Roesch Family Auto Group in suburban Chicago. Through their three dealerships they sell Chevrolet, Ford, Mitsubishi and Chrysler-Plymouth-Jeep products. He has been with the auto group for 10 years and in his current position for three years.
Even customers in more isolated parts of the country are Internet savvy. “They understand more about equipment options, their finances and leasing. They come in with much more educated questions than they did a year ago,” said Pete Greiner of Greiner Ford in Casper, Wyo.
“Here people travel long distances so it’s very beneficial if they have a little information when they come to the dealership.”
Grimes’ experience, with Chicagoans coming into the dealership with folders of information collected from the Internet, seems likely to become more common because it is expected that more than 65 percent of new-vehicle shoppers will use the Internet by the end of 2000, according to the J.D. Power and Associates 1999 New Autoshopper.com Study.
The study found that the average Internet shopper visits six automotive Web sites and spends more than four hours looking up information online.
And Internet information-gathering is not limited to new-vehicle shoppers. More than 25 percent of used-vehicle buyers log onto the Internet for assistance, according to J.D. Power and Associates 1999 Used Autoshopper.com Study.
A J.D. Power special report on Internet marketing points out that in three years “the Internet has gone from a relatively insignificant automotive research tool for `computer geeks’ to a key means for vehicle shoppers to determine what make and model to purchase, where to purchase it and what price they should pay for it.”
It isn’t only the consumer who is online. So are dealers, pricing guide publishers such as Kelley Blue Book and newspapers concerned about maintaining their classified advertising. Cars.com, affiliated with more than 130 newspapers, including the Chicago Tribune, posts on-line classified ads from its member newspapers, as well as car-related advice, news and information.
“Cars.com has experienced a 1,700 percent increase in site traffic since its June 1998 launch,” said Bill Krohn, vice president and general manager.
Until Kelley Blue Book developed its Internet site, www.kbb.com, four years ago, the only way consumers could get blue-book information was to go to a library or a bank or buy a consumer edition in bookstores.
That information basically consists of pricing reports that allow the consumer to select the make, model and year of a vehicle so he can find out what it would cost new or used.
“In a typical month, we average 16 million pricing reports,” said Stephen Henson, director of marketing and business development for Kelley Blue Book, in Irvine, Calif.
“The site tends to double every year so about this time last year we were looking at around 8 million pricing reports and the year before that it was about 4.”
The number of blue books sold hasn’t changed much over the years, Henson said. Though there is a place for the book because everyone doesn’t have Internet access, the numbers sold are a small fraction of the Internet traffic numbers.
The Edmunds Web site, which went up in 1995, gets 1.1 million to 1.3 million unique hits per month, said Avi Steinlauf, marketing director for Edmunds.com in Santa Monica, Calif. “I can tell you it was well below 1 million last year and prior to that it was in the few hundreds of thousands.”
The company still sells books, 250,000 copies of its new- and used-car and new-truck pricing guides per year, but Steinlauf says it’s no longer a growth part of Edmund’s business.
Auto dealers are not about to be left out of this.
In 1997, 47 percent of franchised new-car dealerships had Web pages. That total is now 74 percent. It expected to increase to 86 percent by mid-2000 and 95 percent by 2002, said Paul Taylor, chief economist for the National Automobile Dealers Association (NADA), in McLean, Va.
These informed consumers are showing up at the dealership door farther along in the shopping process. They are ready to buy and want to talk price.
The customer who shows up at a dealership and says “I’m looking for a 1999 Jeep Grand Cherokee with a towing package, sunroof option and the special alloy wheel package” takes a lot less of the dealership’s time than the person who comes in saying “I’m thinking about an SUV,” said Krohn.
“Depending on their attitude, that can be positive for dealers,” said NADA’s Mike Morrissey, director of public and media relations. “If a customer comes in armed with all that information, they are probably ready to buy and the actual transaction takes less time. The customer is happy, and the dealership is happy. I think dealerships are coming around to that viewpoint as opposed to being protective of that information.”
But can an informed consumer be troublesome to a dealer?
“In the past, some of the dealers used to think, `Gosh the customer knows more about the car than my salesperson does,’ ” said Krohn. “No. 2 is, `Boy they know what the MSRP is.’ In the past those were some of the things they thought were troublesome about the Internet consumer. What’s happened is that the manufacturer’s suggested retail price is now available everywhere, and the dealers no longer view that as our dirty secret being out. Now dealers appreciate the fact that they are dealing with consumers who take less of their time.”
There are signs that dealerships have changed their attitudes toward Internet shoppers. They’ve gone on-line to try to capture them and some are even adding Internet sales managers to make sure that electronic interactions go quickly and smoothly, said Krohn.
There is no downside, said Jack Broder, who has been the Internet sales manager at North Shore Nissan-Volkswagen since 1997.
“Because in my product line, I have a younger professional, higher-income client that knows these vehicles almost as well as our salespeople. Being more informed cuts the steps of having to present the product just to sell it,” said Broder.
The fact that consumers know what a vehicle costs the dealer is not necessarily a problem, said Broder. “It all depends on the vehicle. If I have 10 of one kind, I’m going to make him a great deal, and we aren’t going to go back and forth. But in a VW market where these cars are hard to get, people who have tried to shop them see that the dealers are all pretty much priced the same. It becomes who is the closest and who has it,” he said.
Grimes, of Larry Roesch Family Auto Group, says that though the Internet does take a lot of the haggling out of the car-buying experience, some customers can be difficult because they know what the dealer paid for the vehicle and “will try to nickel and dime you to death.”
“Because they are informed does not make them the enemy,” said Dennis Fitzpatrick, of Fitzpatrick Chevrolet-Buick, Concord, Calif., in the San Francisco area. “The market dictates what vehicles sell for, as well as emotions. . . . We have things like the light bill that have to get paid, and we don’t do it by selling cars for invoice.”
But customers who come in knowing how much the dealer paid for a vehicle aren’t unreasonable, he said.
“They understand you work this to make a profit. We can beat ourselves up about it all day long, but it’s not the end of the world. I think dealers have come to realize that information is out there and you sell who you are.”
