Consumers have long felt victimized by new car sales teams that manipulate, deceive and cajole buyers into one-sided deals. Now, as new cars sales rush online, the consumer stands to fight back through new programs developed by priceline, Ford and CarPrices.com.
The auto industry could wind up wishing it had never met the Internet. Detroit has always had the attitude, “You buy what we make at our price.” In the online economy, consumers are accustomed to carrying more weight with sellers. Internet shoppers now have the attitude: “You’ll make what we want at our price.”
In this heavyweight bout, the consumer is winning by knockout. Automakers are growing more accommodating to buyer requests of color and options, and now car companies are bending on price. Savvy consumers find themselves in charge of the new-car buying process.
Two announcements yesterday illustrate the power that consumers have wrested from auto manufacturers and dealers. Ford is testing priceline.com’s “name your own price” tactics, and San Diego, California’s CarPrices.com is implementing “reverse auctions” for new car buyers.
Ford Tests “Name Your Own Price” Model
Starting this week, Ford and priceline.com will allow Florida residents to use the Internet to name their own price for a Ford car or truck. By visiting Ford’s site, a car buyer can shop for the exact car or truck, then name their own prices and payment methods. The first local dealership to accept an offer gets the sale.
Dealers can submit electronic counter offers with different colors or option packages. Each customer receives a response to the offer in one business day. There is no negotiating involved because purchase offers can be made to several dealers in a specified area.
Through this system, buyers have the maximum chance of obtaining the car they want at the price they want to pay — without hearing a salesperson say, “I can’t come off the list price, fer goshsakes, we’re already losing money on it as is.”
CarPrices.com Declares Online Price War
The balance is also tipping in favor of car buyers in San Diego this week, as CarPrices.com implements an online “reverse auction” for new car buyers. The technology allows dealers to bid against each other for the customer’s business. Nearly 80 percent of San Diego’s new car dealers are participating in the program.
The buyer submits the exact car that he or she wants, and new car dealers compete for the sale, submitting prices to the buyer. The consumer chooses the best offer, or rejects all. The process takes place over one business day.
CarPrices.com educates the buyer by providing the dealer invoice price and the price paid for the car by the dealer. CarPrices.com expects to roll out the program nationally next year.
Car buying has long been a frustrating experience for American consumers who are not generally comfortable with haggling over price. Most consumers have long believed that they are paying too much for new cars and are not confident that they can get the best price in a process controlled by dealers.
The Internet has given the power of pricing to the consumer. The new car buyer in Florida and San Diego today can take the lead role in setting the price for a new car and watch the dealers scramble for the sale.
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