New research has identified a discrepancy in the rate at which customers experience dishonest practices during the car sales process and the percentage of customers who fear their dealer will behave dishonestly, underlining the critical role transparency plays in brand reputation and the need for united reform among U.S. auto retailers.
According to KPA, a provider of compliance solutions for car dealerships, most car buyers expect to encounter dishonest tactics when they shop with an auto retailer. In a survey of 2,000 consumers, 86% are worried about being charged hidden fees, 76% expect sales representatives to lie about pricing, and 84% believe most dealerships fail to be transparent when it comes to price.
But while most consumers were distrustful of the car sales process, only one-third of survey participants claimed to have experienced dishonesty at the dealership. KPA reports that 34% of vehicle shoppers were pressured into purchasing ‘add-ons,’ 30% discovered hidden fees that resulted in a price higher than what they initially agreed to pay, 28% encountered dishonest sales representatives, and 29% took their business to another dealership due to a lack of pricing transparency.
These differences between the high levels of distrust toward dealerships among consumers and the actual rate of bad customer experiences highlight the need for unified action among auto retailers, especially in regard to price. While the number of bad actors in the car business is smaller than is often portrayed in news media, the effect they have on the general customer experience is devastating. The only way to offset their impact is for the vast majority of dealers to hold themselves accountable when expectations of transparency are not met.
Unfortunately, dealers have a tendency to misinterpret how their car buyers feel in regard to the sales process. In the 2023 Capital One Car Buying Outlook, researchers found that 68% of dealers felt vehicle shopping practices were “very or completely transparent,” while 80% “believe that all individual aspects of purchasing a car are transparent.” However, these beliefs conflicted heavily with the sentiments of car buyers. Only 19% of consumers examined in Capital One’s research agreed with dealers on transparency, while 77% called on dealers to share more information upfront as opposed to waiting until the end to include hidden fees or add-ons.
To close the gap between buyer and seller perspectives on honesty and prove to the car-buying public that the retail automotive sector is as transparent as it claims to be, dealerships should start by re-examining their sales process for potential issues. Replacing outdated tactics with strategies that educate shoppers and identify the best possible deal for their needs is a fast and efficient method to improve consumer trust.
Failing to accomplish this transformation in time can result in grave consequences for the auto industry. For example, the Federal Trade Commission’s Combatting Auto Retail Scams act, momentarily delayed to allow for a court review, was largely implemented in response to car buyer complaints. However, the policy would add extra steps to the sales process that would lengthen the amount of time a shopper spends in the dealership, an issue that research has shown to have a negative effect on customer satisfaction scores. Dealers must take the issue seriously to avoid further restrictions on their ability to serve customers.
