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Turning Shoppers into Customers: Mercedes Tops the Chart in New Study

Tesla turns its showrooms into museums.

by on Jul.06, 2015

Offering a test drive can be a real deal-maker, according to Pied Piper research.

When Linda Brightman started out to buy a new car she had her heart set on a new BMW 3-Series. The suburban Los Angeles mother of two made one concession to her husband, agreeing to at least visit a few other showrooms to see what the competitors had to offer. He was nonetheless surprised when she drove home in a new Mercedes-Benz C-Class.

She liked a lot of the safety features, Brightman explained. But what had clinched the deal was the way the dealers treated her. The salesman at the BMW showroom seemed more bothered than interested in working with her. The Mercedes rep, on the other hand, had all the time in the world to work with her, not just answering questions but anticipating what Brightman might ask next.

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That’s no surprise to Fran O’Hagan, a California researcher who has been monitoring dealer behavior for his annual Pied Piper Satisfaction Index. In recent years, Mercedes showrooms have set the benchmark, he explains, having “changed from a museum curator approach to being as helpful as they can, turning car shoppers into Mercedes owners.”

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Tesla May Seek Franchised Dealers After All

Battery-carmaker considers a hybrid retail approach.

by on Oct.16, 2014

Tesla CEO Elon Musk during a recent TV appearance.

It’s been win-some-lose-some for Tesla as it pushes to reshape the automotive landscape with a marketing strategy based on factory-owned showrooms. But it now appears that the California-based battery-carmaker might be considering a revised strategy that would include at least some franchised dealers in its distribution mix.

That could permit Tesla to crack into states, such as Michigan and Texas, which have firmly ruled against Tesla’s current approach. It might also permit the maker to expand its coverage even in states, such as New Jersey and Nevada, which have okayed the factory-owned approach.

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“We may need a hybrid system, with a combination of our own stores and some dealer franchises,” Tesla Founder and CEO Elon Musk acknowledged during an interview with John McElroy on Autoline Daily.

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Dealers Playing Critical Role in Recall Crisis – But Franchise System Under Increasing Fire

Tesla gets a loophole in NY.

by on Jun.19, 2014

Dealers have been investing billions for upgrades demanded by automakers like BMW in recent years.

The surge in recalls this year by General Motors and other automakers has underscored the vital role that franchise dealers play in the automobile industry – or so says the powerful dealer trade association – but there are a growing number of challenges to the century-old franchise system.

Dealers are facing a flood of work as recalls accelerate to a record pace – GM alone announcing service actions covering nearly 18 million vehicles sold in the U.S. so far this year. But other makers, including Toyota, Ford, Honda and Chrysler, have announced, or are facing the prospect of, millions more recalls in the months ahead.

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Handling those repairs is one reason why a new study commissioned by the National Automobile Dealers Association, the trade association tasked with protecting the position of franchised dealers, argues that the century-old system is the most reliable and efficient way to deal with the nation’s auto buyers and owners.

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FTC Suggests States Repeal Pro-Dealer Laws

Missouri, New Jersey told that direct auto sales are good.

by on May.19, 2014

The Federal Trade Commission told two state legislative bodies that they should repeal laws preventing automakers, such as Tesla, from selling vehicles directly to consumers.

Once again, officials at the Federal Trade Commission have put a broad smile on the face of Elon Musk, Tesla Motors’ founder and chairman.

For the second time in less than a month, three administrators suggested that laws requiring new vehicles be sold by independent dealers be repealed or scaled back.

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The administrators, Andrew Gavil, director of the FTC’s Office of Policy Planning; Deborah Feinstein, director of the Bureau of Competition; and Martin Gaynor, director of the Bureau of Economics, responded to requests for information from members of the Missouri House of Representatives and the New Jersey State Assembly. (more…)

GM Makes Internet Buying Tool Available to All U.S. Dealers

Buyers can handle entire transaction on the Web.

by on Nov.06, 2013

Just a week after saying the company was piloting Shop-Click-Drive with 100 dealers, GM made it available to all 4,300 U.S. dealers.

One week after General Motors’ CEO Dan Akerson said the company wanted to make it easier to buy cars and trucks online in partnership with its dealers and that it was piloting a program, the company rolled out its expanded Shop-Click-Drive tool to all GM dealers nationwide.

The tool allows users to complete all aspects of a purchase online, from getting a price to applying for financing 24 hours a day, seven days a week. GM’s 4,300 Chevrolet, Cadillac and Buick-GMC dealerships can feature the Shop-Click-Drive tool on their Web sites.

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“We want to make it easier and simpler for dealers to connect with customers who are looking to combine the convenience of online shopping with the personal service of a neighborhood dealership,” said GM’s Kurt McNeil, vice president, U.S. Sales Operations. “We engaged dealers to help us develop ‘Shop-Click-Drive’ to address this need.” (more…)

Despite Settlement on Capitol Hill, US Auto Sales Likely Hit Hard, Says NADA Chairman

Westcott defends franchise system despite increasing attacks.

by on Oct.17, 2013

After a burst of demand over Labor Day, car sales have suddenly slowed.

Even though Democrats and Republicans have agreed to end their debate over the deficit – for now — new car sales could drop sharply this month, in part due to the impact of the government shutdown and concerns about a possible default, according to the chairman of the National Auto Dealers Association.

David Westcott, NADA’s current chairman, said he wasn’t ready to dispute the forecast by John Krafcik, president of Hyundai Motor America, who said he believed sales could fall by as much as 10%.  General Motors and Ford also have expressed concern about the potential impact of the shutdown both on September sales, and on consumer confidence over all.

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Westcott was in Detroit to meet with members of the Automotive Press Association where he discussed not only the impact of Washington’s political crisis but also about the growing challenges to the nation’s century-old dealer franchise system.  It has been facing sharp attack on a number of fronts, including a concerted effort by automotive newcomer Tesla Motors which wants to sell cars through its own, factory-owned retail network.

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Mercedes-Benz Tops New Car Shopper Satisfaction Survey

Showroom policies likely to close – or lose – deals.

by on Jul.08, 2013

What happens in the showroom can clinch -- or cost -- a sale.

When she began looking for a new car, Chris Anderson had her heart set on a midsize Ford sedan. But in the end, she wound up buying from the Detroit maker’s cross-town rival General Motors. It wasn’t that she liked her new car better.  It was the dealer she liked – or more precisely, the Ford dealer she didn’t want to buy from.

And the Detroit saleswoman is not alone.  What happens when a customer walks into the showroom can have a big impact on what they buy – or where they buy – says Fran O’Hagan, an automotive analyst whose annual Pied Piper Prospect Satisfaction Index is aimed at measuring which dealers and brands do the best job in treating prospective car shoppers.  And this year, the study found Mercedes-Benz repeating as the industry leader.

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The Pied Piper study relies on so-called “mystery shoppers” who go through the car buying process at thousands of U.S. showrooms each year subtly notating how well salespeople handle such basics as providing buyers with a vehicle walk-around, brochures and test drives, things O’Hagan explains “correlate highly with whether a customer buys.”

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U.S. Auto Dealers Heading for Record Year

Showroom count down, sales per outlet up.

by on Aug.15, 2012

After years of struggle, U.S. car dealers are reporting strong earnings and record sales.

After years of struggle that saw 3,000 U.S. retailers shutter their showrooms, this could be a record year for American auto dealers.

Profits are back and sales are likely to reach an all-time high, at least on a per-dealership basis, according to a new report by the Detroit-based consulting firm, Urban Science.  Meanwhile, industry officials note that dealers are investing billions of dollars in showroom updates and expansions designed to not only improve customer service but to also handle the anticipated growth as the U.S. market finally recovers from years of recession.

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“It looks like we’re going to hit a record this year,” said John Frith, who oversees retail network research for Urban Science. “Automakers,” he noted, “have kept their networks relatively flat, giving existing dealerships the opportunity to take advantage of increased sales volume. By doing this, and in turn achieving record throughput levels, dealers are making a profit for the first time in more than three years.”

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Mercedes Doing the Best to Close the Deal

The Internet has changed all the rules of car buying, shows new study.

by on Jul.13, 2012

Closing the deal.

Mercedes-Benz dealers are most likely to deliver customers the sort of shopping experience they want – and then close the deal, according to a new study.

Asian luxury dealers were close behind, along with Jaguar and Cadillac, according to the latest Pied Piper Prospect Satisfaction Index which uses so-called “mystery shoppers” to measure the way potential car buyers are treated.

The study looks at 60 different sales activities, from the simple act of greeting a customer when they walk into the showroom to providing a test drive.  Surprisingly, salespeople proved reluctant to take one of the most important steps of all, actually asking a prospect if they’re ready to close the deal.

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“The world has changed dramatically with the advent of the Internet,” said Pied Piper research chief Fran O’Hagan. Twenty years ago, the dealer was the gatekeeper, controlling every aspect of the car buying process.  Today, however, “A customer can go to the showroom knowing as much as you want.  So, the role of the salesperson has changed.”

Click to Enlarge the Chart.

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FTC Moves to Block Deceptive Car Dealer Ads

If it’s too good to believe…

by on Mar.16, 2012

Frank Myers AutoMaxx was one of five dealers cited for misleading ads.

By most measures, auto dealers are doing a lot better job than in decades past when plaid-suited salesmen would promise anything to close a deal.  But abuses still occur, prompting the Federal Trade Commission to step in.

Government regulators have reached a settlement with five dealers from around the country in which they promise to stop running deceptive advertising – specifically, ads that promised to pay off whatever a consumer owed on a vehicle being traded in.

Such claims proved particularly appealing to buyers who were “upside down,” in trade lingo, owing more on a vehicle than it was actually worth. Having negative equity is normal during the period after a person buys a vehicle on credit, and the lengthier the loan terms the longer the period the buyer is upside down.

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“Buying a new car or truck is a major financial commitment, and the last thing consumers need is to be tricked into thinking that a dealer will ‘pay off’ what they owe on their current vehicle, when they really won’t,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “The Federal Trade Commission is constantly on the lookout for potentially deceptive ads, and brings actions to stop them when appropriate.”

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