Gimme a Price Already! Edmunds Tries to End the Most Aggravating Part of Car Shopping

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“How much?” In almost every retail environment, this wouldn’t be a difficult question to answer. But at the car dealership, the process of getting a concrete final price can take hours. The folks at Edmunds.com now have a tool that promises to make retrieving car prices as quick and easy as shopping at Amazon.

Car shopping has a reputation as a notoriously, inexplicably frustrating experience, and the perception only seems to be getting worse as consumers have increasingly come to expect speedy browsing and one-click purchasing online. In one recent survey, young consumers said they’d prefer to visit the dentist than haggle at a car dealership. The pushy atmosphere, relentless upselling, confusing terminology and numbers, lack of transparency, and the stressful, time-consuming back-and-forth jousting surely all bother car shoppers. But mostly, the thing that drives consumers craziest comes back to how dealerships are incapable or unwilling to answer what seems like an extraordinarily simple question: How much?

“The average American person cannot understand how it is that as an industry that we cannot deliver an actual car price to them,” Seth Berkowitz, president and COO of Edmunds, said on Wednesday in Detroit. “It is just totally mystifying to people.”

Berkowitz was in Detroit to introduce the press to Edmunds Price Promise, a new tool that the car research company says will eliminate the confusing, hassle-laden time suck that is car shopping today. After entering a vehicle make and model, as well as a name, phone number, and e-mail address, a shopper at Edmunds.com instantly receives an actual price for an actual car. Print out the quote and bring it into the dealership and, amazingly, the dealership is required to honor the price. Incredible!

(MORE: Revealed! The One Big Secret to Successful Haggling)

The idea sounds so simple and obvious, it’s a wonder no one’s done it before. In fact, there are somewhat similar services out there right now. TrueCar promises that “haggling is history” with a system that gives online shoppers price quote certificates to bring in to participating dealerships. Cars.com, Kelley Blue Book, and other sites have price-quote-gathering services. It’s also possible for shoppers to deal directly with an individual dealership’s Internet sales department for price quotes and purchasing, a strategy that’s been recommended by Edmunds in the past. Edmunds has had its own price-retrieval service since 1997.

The big thing that makes Edmunds new Price Promise tool different is that price quotes come back to the user instantly. “Literally as you hit the Enter button,” Berkowitz said in a phone interview. “You don’t have to sit around waiting to hear back from a dealership.” With other services, in the hours and days after a shopper requested online price quotes, he could expect to get a variety of messages in response—some with exact, guaranteed prices on specific vehicles, some with vague enticements to visit the dealership and have a look around, and everything in between.

The immediacy and simplicity of Price Promise will surely appeal to plenty of shoppers who don’t have the time or patience for a lot of back and forth with car dealerships. “These are consumers who put a premium on time, and on not being inundated with e-mails and phone calls,” said Berkowitz. “It’s the age of Amazon.com and one-click shopping. Shoppers have higher expectations.”

There’s some upside in this system for car dealerships as well. In addition to the new channel for connecting to customers, dealerships participating in Price Promise’s pilot program say they have been able to sell cars for $300 to $500 more than vehicles sold through the usual haggling and “let me talk to my manager” ordeal.

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In other words, shoppers using the service probably aren’t going to get the absolute cheapest price. Edmunds thinks lots of consumers will find Price Promise appealing regardless, so long as they’re confident they’re getting a price that’s fair, if not a rock-bottom deal. Viewed another way, the price differential reveals that shoppers are willing to pay a bit of a premium if that means the elimination of the annoying traditional sales tactics played at the dealership.

Now that the path to skipping car dealership haggling is widening, some shoppers may be wondering why they must still set foot in a car dealership at all. Why the price quote certificate system? Why isn’t there a “Buy Now” button online instead?

For one thing, allowing instantaneous online buying of cars would complicate the test driving stage of the new vehicle purchase. (A surprisingly high percentage of shoppers don’t bother test driving cars before buying, however.) Members of a car dealership panel at the New York Automotive Forum held in April said that the presence of trade-ins and the necessity to fill out dozens of forms also makes it all but impossible to have a car purchase be completely online, from start to finish.

There also seems to be general reluctance among car dealerships to embrace the strictly online sales channel. “For me, sales are always about relationships,” said one panel member, a dealership owner in Michigan. “Maybe the technology has caught up with the fact that we could sell a car over the Internet but I don’t think we’ve learned how to establish that same type of loyalty and relationship with a customer over the Internet.”

(MORE: Will Millennials Change How Cars Are Bought and Sold?)

Dealerships are also probably scared by the idea of doing too good of a job with online sales: That could put a lot of car sales staffers, and probably some car dealerships, out of business.

4 comments
walstir
walstir

What would  be just as useful is a way to find out what people  have actually paid locally and nationally for whatever vehicle configuration that you are interested in buying.

quadequick
quadequick like.author.displayName 1 Like

Brad, thanks for the article. You and many others seem to enjoy demonizing car dealerships, hoping that some day consumers will be able to buy vehicles on Amazon. Well, here's the deal: name another business where buyers can go online and find out what the seller paid for his or her product. Real estate? Furniture? Jewelry? Nope. Customers can arm themselves with information like never before, from net-net invoice price and incentives to approximate trade valuation - all while building cars online and shopping inventories. I'm not decrying consumerism, just the uneven hand you use in complaining about the unfairness of it all.

The automotive industry sells tangible items, and as soon as those products are not treated as such, dealers run a much larger risk than simply missing a sale; they run the risk of selling someone a vehicle they hate a month after buying it. Further, when it's all said and done, consumers end up buying a different vehicle than they initially inquired about 70% of the time after visiting a store. Outsiders might think that's because of some dirty bait-and-switch trick, but in reality, it's most often because the customer decided to switch...to a different color, different equipment, and sometimes to a completely different model or body style. Translation: after viewing and driving vehicles, they found one that fit their needs better than the other. 

As much as people attempt to offer 'remedies' to the dealership model (your contentions are not new; I recall people grousing about dealership price negotiation nearly 40 years ago), it remains an extension of the marketplace. Dealers employ nearly 900,000 people in the U.S. (plus tens of thousands more in affiliated industries) and contribute heavily to their communities through sponsorships, charities and tax revenues. By and large, they spend a substantial amount of money on inventory, personnel and facilities to make the buying experience as efficient and pleasant as possible. Is every dealer perfect (or every restaurant or movie theater or mall)? Far from it. However, using a broad brush to paint all dealers as little more than swindlers is disingenuous. 

Chrisfl
Chrisfl

If they actually were wonderful would there be laws on the books in most states banning a manufacturer from selling direct to their customers? And those laws by the way were written for the most part by the dealers themselves, car dealers would cease to exist in a truly free market environment and the existence of the laws is a tacit admission.

quadequick
quadequick

@Chrisfl I tend to disagree with your logic. Manufacturers historically didn't want to sell cars and created the franchise model that required dealers to build facilities, stock inventory (at varying levels), and provide after-the-sale service. A few years back, some manufacturers (Ford for one) dabbled in the idea of factory-owned dealerships, but found they were much better at building and distributing than selling. As a dealer, had you invested several million dollars in a facility, carried hundreds of thousands more in inventory and employed scores of local people, you might feel you have a right to some protection. And that's why local and national dealers' associations have actively been fighting Tesla. And, let's be clear: if Tesla is who you're referring to in your argument, you don't understand what a truly free market is - they borrowed $465M from the government (and yes, paid it back) and customers get a $7500 federal tax credit for buying the car (plus state incentives in some areas). That, sir, isn't representative of a free market.