Make Your On-Line Car-Buying Experience a Good One
It might feel like a car buyer's dream: buying a car without having to talk with a car salesperson. It's like having perfect teeth without ever going to the dentist or losing weight while eating anything that you want. No, car salesmen aren't bad people, but there's no doubt that most people regard an encounter with one with the same distaste they reserve for dog catchers or politicians. So to get the opportunity to buy a vehicle without submitting oneself to the frustrating, time-consuming give-and-take that goes on in the typical dealership seems like a dream come true. And the magic of the digital world promises just such a scenario.
Go on line. Click a few boxes. Receive emailed price quote. Click okay. Pick up vehicle. And drive happily into the sunset.
That's the promise of the Internet. That's the way things might work if the world were a perfect place where every warm puppy found a home and every home team won its game in the bottom of the ninth, but welcome to the real world, people. The Internet can make the car shopping and buying experience far better than in those dreary pre-Web days, but there is no guarantee that just by logging onto a car-buying service you'll get yourself a good deal or a no-hassle experience. In fact injudicious use of the information gathered on the Information Highway can lead to frustration, irritation and symptoms similar to irritable bowel syndrome.
Why is this so? In the first place, it is so because you can't believe everything you read on the Internet, just as you can't believe everything you read in the newspapers. In fact, one of the Internet's greatest strengths - the ability it gives people to publish information quickly - is also its greatest weakness as a research tool. Information that appears in traditional printed publications most often is examined by several sets of eyes, many of them intent on "getting it right." In contrast, it seems as if information on the Internet goes through fewer of these accuracy filters, and the result is a significant amount of disinformation. This is not just our opinion either. As it relates to the car-buying process, a recent study points to serious problems.
In a recent study of the online auto information business, Bandon, Oregon-based CNW Marketing/Research has called online auto pricing "horribly misleading." It noted frequent errors and miscues by the information providers, saying "automotive price misinformation on the Web by some of the country's best known names is rampant, misstating actual prices by upwards of thousands of dollars."
The national study examined eight top auto information Web sites, comparing the sites' stated manufacturer's suggested retail prices (MSRPs) and dealer invoice prices for 86 different models against actual manufacturer data, and there effectiveness in providing accurate information varied widely. The study eyeballed top sites including AutoWeb, CarPrices, CarsDirect, ChromeData (through Vehix), Edmunds, IntelliChoice, Kelley Blue Book, and MSN CarPoint.
According to the study, of these online new-vehicle pricing sites, ChromeData was clearly the most accurate followed by IntelliChoice and Kelley Blue Book. The provider of the most inaccurate online pricing at the time the study was conducted and among these eight companies was CarPrices.
On a dollar-per-model basis, ChromeData missed the actual price mark by an average of only $84 per unit while CarPrices was least accurate with an average $888 per-unit inaccuracy. Among others examined in the study, Edmunds misstated MSRPs by an average of $570, IntelliChoice by $140, CarsDirect by $461, AutoWeb by $580, Kelley Blue Book by $324 and MSNCarPoint by $505.
Considering that nearly 40 percent of new-car buyers use the Internet as part of their shopping process, such misinformation is horribly misleading, the study concludes. Equally frustrating, said the study, was the sites' propensity to allow consumers to configure cars and options that automakers couldn't actually deliver. Since manufacturer's suggested retail prices are readily available from the individual manufacturers, there seems to be little excuse for these wide variations other than human error. But because these errors exist in online price data, the buyer relying on this information to help structure a deal must do so at his or her peril. One simple check is to gather price information from more than one service.
Another source of potential frustration is the Internet's often undelivered promise to provide actual firm price quotes. Most car buyers are aware that the MSRP is a price manufacturers and dealers would like buyers to pay, but also a price higher than most buyers actually pay. Using consumer buying Web sites, dealer Web sites and email as communication tools, the Internet has the potential to shortcut the offer-counteroffer dance that frustrates many car buyers. Sadly, it seems that in many instances the reality has yet to catch up with the potential.
Many auto dealers' Web sites fail to deliver the crucial price information necessary make a purchase decision, according to research results released by Friedman-Swift Associates, an automotive market research firm in Cincinnati, in conjunction with The Cobalt Group, an automotive industry Internet provider.
"Far and away, the hot button for shoppers is price," said Judy George, senior vice president of Friedman-Swift and coordinator of the research study. "An overwhelming majority of the shoppers, 92 percent, said that prices of vehicles in inventory were the most important items of information to include on dealer Web sites."
Most shoppers, about 86 percent of the 934 car shoppers surveyed, said they did get vehicle prices on dealer Web sites, but far fewer (65 percent) said they received an online price quote for a specific vehicle, a key factor in completing the purchase process. It seems as if many dealer sites will indicate MSRPs on the vehicles they have in inventory, but when it comes to discounting from that suggested list price they are far less likely to provide that information on the Web.
In fact, despite the Internet's promise of rapid communication, the survey noted that dealers were generally slow to respond to inquiries. When shoppers e-mailed dealers for more information, most dealers (55 percent) responded within 24 hours, the survey said, but one might have expected a higher percentage of dealers to respond that quickly to consumer inquiries. Even more damning, the survey reported that 19 percent of dealers never responded to shoppers' inquiries at all.
CNW Marketing/Research's recent consumer study "Computers, Cars and the Internet" comes to a similar conclusion. It reported about 41 percent of serious Internet new-vehicle shoppers sent an e-mail to a car dealer requesting information about price, product availability and other subjects. Of those, only 20 percent received a reply.
CNW also had a warning for perpetuators of the current way of doing business. Its report said, "This lack of response may be the single best argument for automakers and buying services to circumvent the franchise dealer system."
But when one considers the current Internet landscape of buying services, is the prospect for improvement that much better?
It would be comforting if car buyers could put themselves in the hands of Internet car-buying services and be confident that they were getting a good deal. Sadly, that is not necessarily the case. One must remember that, due to tradition and tight state franchise laws, virtually all cars sold in the United States are sold through franchise dealers. Because of this, most online buying services are, underneath, customer referral services for dealers. Further, in many instances, these services issue dealers territories, so your buying request will be referred to just one dealer. Will that single dealer offer you a great price on that vehicle? Perhaps, since the dealership knows that, as an Internet user, you have probably done more than your share of homework, but perhaps not, since the dealership might not get the impression it is bidding against other dealerships.
To address this issue, a couple Web buying sites now promise to carry your request for a firm price quote to several same-brand dealerships in an attempt to get them to bid for your business. This scenario may offer more promise of a great deal, but without significant research, it still may be difficult for the buyer to determine how good a deal he or she is getting.
The lesson here is, even in the digital world, there is no substitute for comparison shopping. If you want to get the best deal possible, shop around for good service and good prices. Feel free to enlist the services of more than one car buying service, and then compare what they offer carefully.
One thing you should know: as an individual who can afford to buy a new vehicle you are an incredibly valuable person to the car-buying services, car dealers and car manufacturers. Use that power wisely and well and be prepared to let your mouse (and your feet) do the walking whenever you encounter treatment that confuses or troubles you. After all, more information is better than less information, but no information is more valuable than good common sense.
Nerad is the author of The Complete Idiot's Guide to Buying or Leasing a Car. He currently teaches a quarterly car-buying class at a Southern California adult education institution.