Why Dealers Need to Be More Transparent with Data, Communication, and Pricing


Buyers have long been suspicious of auto dealers. Historically, there has been a lot of distrust here, as the perception is that prices can vary widely from dealer to dealer, depending greatly on how willing the dealer is to “deal”.

The negotiation model has worked for years in the car business because there wasn’t much of an alternative, and pricing was not easy to understand. Most buyers dreaded going into a dealership, and felt they needed to dawn the proverbial boxing gloves in order to negotiate the best deal and come out with the least amount of damage. There used to be a lot of uncertainty when buying a car.

The world has changed, however. The internet and the smartphone have given buyers much more confidence. This has prompted a concerted movement across the industry toward greater transparency and trust.

The real question is, will you be one of the dealers embracing transparency, or will you stick to outdated methods of negotiation and holding gross that buyers have never liked?

The Age of Negotiation is Dyingdealers

Dealers have long been trained to hold gross through negotiation with buyers. This aspect of the business is exciting and has been very profitable over the years. The problem is that negotiation only really works when both sides want to negotiate. In today’s market, buyers have less tolerance for song and dance and they really don’t want to negotiate. They’d rather just cut to the chase with a fair price and low-stress experience.

Dealers who continue to rely heavily on negotiation aren’t really negotiating with customers anymore. They’re negotiating with themselves. Trends indicate that customers will pay a bit more up front, with no negotiation, if they get the right experience and a fair price up-front. 

Young Buyers Want an Easy, Fair Transaction

Younger generations (Gen Y and Millennials) have grown up in the age of Amazon, where transparency is one of the most important factors in making a purchase. Amazon and other buying sites make it so easy to check prices, reviews and other factors that affect the buying decision.

For younger buyers, this mentality naturally transfers to car buying. Younger buyers are more likely to use tools like True Car to make the process easier. They don’t want to hassle. They are also more interested in having a positive car-buying experience than they are about saving every last nickel.

If you want to play the game, you need to recognize the power of transparency to attract customers. Many dealers have adopted market-based pricing for used vehicles and a minimal- or no-negotiation sales processes. These dealers are consistently selling more cars. While it is currently a matter of choice for dealers, transparency in pricing and sales processes will become an operational necessity.

The Smartphone Can Make or Break any Deal

A recent Cars.com Insights study found that mobile research leads buyers to visit additional dealerships. Overall, 72% of shoppers using a mobile device on the lot are more likely to visit additional dealerships. As many as 62% of customers who used a mobile device while in a showroom decided to visit another store the same day.

So what are they seeing and why are they leaving?

As Google puts it, each customer will come to that “Am-I-getting-a-deal” moment, and when that time comes, you and your sales team need to be consistent. If what they are seeing on their phone does not confirm that they are being treated fairly, then they will walk.

If your message, pricing and overall experience is consistent with their smart phone search results, then they will stay. You cannot achieve this without transparency. 

Close the Deal Before Buyers Visit Your Store

Another way to increase transparency and trust in the digital age is to start moving more of the sales process online. If your website provides transparent answers, pricing and communication, coupled with tools to move them further down the sales funnel, you can cover more hurdles with buyers before they ever walk in the door.

With digital retailing, you can qualify buyers, get approvals, and even sign paperwork all online. If done properly, your BDC can transition from merely scheduling appointments, to confirming sold vehicle deliveries.

By driving many of the time-consuming portions of the transaction online, your staff can have more time to handle more customers. Spending less time in the dealership will also allow more buyers to complete transactions during the lower traffic times of the week, as opposed to waiting for the busy weekend.

All of these leads to greater transparency, greater trust and greater success in the digital age.