for a Used Car
Car retailing is on a long test drive, rolling through the
changing landscapes witnessed in everything from buying clothes
to kitchen cabinets. Mergers, the Internet and a variety of other
developments are changing the structure of the industry, and those
changes are reflected at the consumer level.
Manufacturers and dealers see the balance of power now tipping to consumers,
which is putting customers in the drivers seat. This shift
is largely due to the Web and the information it makes available
to people in the market for new and used cars. Web sites also
play a role in vehicle sales, although its still unclear
what works for consumers, what works for manufacturers and dealers,
and how all the different approaches will be sorted out.
response has focused on making the car-buying experience more
consumer-friendly. Recent studies from the University of Michigans
Office for the Study of Automobile Transportation (OSAT) suggest
that still more changes are on the way. Phrases such as gently
used signal some of whats to come. Bruce Belzowski,
OSAT senior research associate, says that car dealerships
are moving toward a real-estate-like experience by giving
car buyers the feeling that the dealer is working for them.
are becoming a problem. Traditional franchise dealers and independent
used-car dealers are still around but in smaller numbers. Multifranchise
dealerships and auto malls some with a dozen or more makes
under one roof are getting to be the norm.
channels include players from outside the auto industry. Circuit
City perhaps pioneered this trend when it opened its first CarMax
in 1993. The used-car superstore was among the first to adopt
a no-haggle approach. In April 2002, Wal-Mart decided to test
the used-car market by leasing space adjacent to five of its stores
in the Houston area to a national dealership chain for six months.
Throughout that time, Wal-Mart and the dealership, Asbury Automotive,
will monitor the program and decide whether or not to expand to
other markets, a common practice for the retail giant.
remains the sole no-haggle, used-car superstore now that AutoNation
no longer fits that category. But Hertz sells off-rental cars
on a no-haggle basis, and some traditional new-car dealerships
have no-haggle, used-car pricing. AutoNation still uses a no-haggle
approach for its online used-car sales but takes the more traditional
negotiating road in the bricks world. Wal-Mart says the Price
1 stores, due to open in early June 2002, feature no-haggle prices
and a five-day, no-questions-asked, money-back guarantee. In new
cars, no-haggle has worked for Saturn, although no other manufacturers
have tried it.
Source: CNW Marketing Research Inc.
Is no-haggle pricing here for the long term? Its likely,
but industry observers generally dont expect no-haggle dealerships
to become the norm. Haggling may return, says Tom Kontos, an analyst
and vice president at Adesa Corp., which provides vehicle remarketing
services to the industry. In any case, Kontos doesnt see
any more no-haggle or big box dealerships opening
in the near future.
use of the Internet may even lead to fewer no-haggle options.
Now that consumers have all these advantages, they want
to haggle, Belzowski says. Theyre armed with
all this information, and they may come to the dealership more
willing to negotiate.
sales remain an important option, and thats evident when
you look at local newspaper car classifieds or at the FSBO pages
and classified ads on cars.com.
whether you haggle or dont, youll find that the larger
the dealership online or on the lot the wider the
choice. Whatever the future of superstores, Kontos says, theyve
given consumers a whole new concept and model.
youve got a limited budget, then shopping at a high-volume
dealership can save you money, says Paul Taylor, chief economist
for the National Automobile Dealers Association (NADA).
still encounter potholes on the way to your next vehicle purchase.
But youve also got a growing toolbox of information resources
and more choices whether youre buying new or used
to help you plan your strategy and get what you want.
is the key point. Combined with the industrys uncertainties,
its your strongest tool in making the best use of the buying
options you now have. No matter how friendly the atmosphere is,
you cant afford to be off your guard. What you know is likely
to be more important than where you buy. Today, the Web is your
best source of information.