Monday, April 06, 2020

Coronavirus, Car Dealers, and Consumers

Deservedly and not unexpectedly, there’s a huge amount of negative media focus on the consequences of COVID-19. Call me a “cockeyed optimist”, but I believe that, in the aftermath, one positive result will be making it possible for car buyers to get an honest, transparent and competitive price when they buy a car.

This will happen as car dealers realize that almost nobody is coming into their showrooms to buy cars. They’re already advertising that they will deliver the car to your home, but the problem is you must buy it first. If a car buyer is to maintain safe distancing during the CD-19 threat, she doesn’t want to visit the car dealership, interact with car salesmen, and will try to buy the car online.

I’ve always advocated shopping for the best price online. For one thing, you can shop and compare prices at a lot more car dealerships on the car you choose. You can also maintain your anonymity by not revealing your real phone number and using a different email address. This eliminates the annoyance of multiple calls from multiple car salesmen. Car dealers know that and will “dig in their heels” on giving you an honest, out-the-door price. They don’t want you to compare their price with their competition.

Last week, I mystery shopped, online, Palm Beach Toyota in West Palm Beach, FL on a new Camry. I told them that because of the Coronavirus crisis, I wanted to buy my car completely online without leaving my home. The only price I was able to get was MSRP, and I knew that even that price wasn’t out-the-door because Palm Beach Toyota adds over $1,000 in hidden dealer fees. They asked for my phone number, but I told them I preferred to communicate online (I used a Yahoo email address under a pseudonym). When I said that I would not buy the car until I had an out-the-door price, all emails stopped. I sent them an email this morning saying that I had contacted five Toyota dealers, and only one had responded with an out-the-door price. I said, if I don’t hear back from you by noon today, I will ask that Toyota dealer to deliver the new Camry to my home. I finished this column and waited until noon today (Monday, April 6) for a reply from PB Toyota. There was no reply and, had I been a real buyer, they would have lost

It will take car dealers a while before they realize that they have no choice, but to give you their best out-the-door price. April will be a VERY BAD sales month for all car dealers and May will be even worse. Lots of car dealers and some manufacturers will go out of business. Those car dealers that want to survive will have to sell cars at lower prices than their competition. Because the number of customers that buy a car will be, at best, half of normal, the car dealers that survive must give the customers what they demand…an online out-the-door price.

As I write this article, nobody knows for certain how long this crisis will last or how severe it will be; it will end, and everything will eventually get better, but retail buying, including cars, will never return to normal. The new normal with car buying will be better than what has been going on for over 100 years. The Coronavirus will bring an end to the haggle/hassle, bait-and-switch, hidden fee style of selling cars that has always been.

My wife, Nancy, and I are pretty much quarantining ourselves like most Americans. I conduct my business meetings by or conference calls. Our groceries and everything we buy are delivered from Publix, Costco, Walmart, Target, and the king of online, AMAZON. We love it and will never go back to the old way. We shop and compare to ensure the lowest price. We select the products we buy after reading online reviews by verified purchasers. Deliveries are very fast, next day or 2 days 90% of the time. Most purchases offer unquestioned returns for full credit. Millions of Americans who didn’t do most of their shopping online have had to and will continue to have to for months. They will have tried online and fallen in love with it before this crisis ends. THEY WILL NEVER GO BACK TO THE OLD WAY OF RETAIL.

It’s a good think Amazon came along and threatened the other retailers a few years ago. It forced the smart ones like Walmart, Costco and Target to seriously get into the online business. Those that didn’t perished or soon will. It took a worldwide pandemic to get the car dealers’ attention, but now it’s their turn.

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