Automotive Digital Marketing ProCom

Professional Community for Car Dealers, Automotive Marketers and Sales Managers

Loading... Be Patient!

From the Trenches - Gorilla Pricing Online

Forget TrueCar - Look what we're doing to ourselves!



Is it real, or is it reputation busting material?


As I was surfing the web to see what my fellow dealers were doing, I noticed that some were beginning to put sale prices on new car inventory. This is what caught my eye. I have eliminated identifying features so as not to show the dealer.


I looked up the invoice on this car and found the following:


There is a $3,500 Rebate on this car and an AARP discount of $1,000 (must qualify).

My question: Can dealers really do this or are they going to qualify the customer UP when the customer comes in to the dealership?

I truly don't believe that a dealer can sell cars at this price and survive. Soooo.....

  • What will happen when customers begin to post negative reviews about misleading prices?
  • What will happen if the BBB or State's Attorney gets involved in false advertising?
  • Should other dealers release the "Dogs of War" and fight fire with fire?

What are your thoughts? Is this just a mistaken case of a dealer taking transparency to the next level? Or is it the slippery slope into the abyss of price wars?


Written by Tom Gorham

Editor, From The Trenches

Automotive Digital Marketing

Professional Community

Views: 274

Tags: Customer, Management, Marketing, Media, Pricing, Reputation, Reviews, Social

Comment

Oops... You need to stop "Lurking" on ADM and become a more genuine Automotive Professional by completing your membership registration. As a registered ADM Member, you can post comments, publish your own articles (be a star!) and start Forum discussions. Stop being an online "Peeping Tom" and JOIN ADM RIGHT NOW!

Join Automotive Digital Marketing ProCom

Comment by Tom Gorham on May 3, 2012 at 6:44pm

As an append to this article, I was very happy to see a whitepaper, New-Car Pricing Transparency and Regulation Study, available as of April 30 from Dennis and Kathy Galbraith and Lindsey Auguste of DrivingSales with significant contribution by my friend Jim Radogna, President of Dealer Compliance Consultants.

I quote from the study,

"What exists today is a powder-keg situation:

•  Federal regulators stepping up activity in an election year

•  Harsh penalties and the use of a hungry media to penalize those dealers caught in order to intimidate others

•  An age of social media that brings more long-term consequences to public humiliation than business has ever seen before

•  A competitive dealer body still coming out of a deep industry downturn with new-vehicle sales still nowhere near what they were five years ago

•  Past enforcement so lax in many states that many dealers have forgotten what the regulations truly are

Some dealers are going to be hurt badly this year. Some may be hurt in a way they will never recover from. This ugly reality cannot be stopped. However, we can shed light on the situation and show dealers not only how to protect themselves, but how to turn this situation into a competitive advantage."

I highly recommend downloading this whitepaper at http://www.drivingsales.com/research/new-car-price-research-study?h... 

Comment by Tom Gorham on April 17, 2012 at 6:31am

Tarry, I think you are right.  If you go head-to-head on pricing online, it will just lead to complete profit loss and/or credibility with customers.  It will ultimately lead to bad customer experiences and reviews if prices aren't on the up and up.

The real problem lies in getting a place at the table.  Many customers "believe" that whoever posts the lowest price is a good starting point for purchasing a vehicle.  Everything else is an afterthought and they don't judge a dealer's total value until after the purchasing experience.  In that case, a dealer showing higher prices will not even receive a contact.

To the best of our ability, we must show more up front than just price.  We can, as you say, attempt to turn customers into payment customers.  But we can also market our good service and reputation "up-front" in order to bring true value into the picture.

 

Comment by Tarry Shebesta on April 16, 2012 at 7:59pm

In our experience, give shoppers more transparency in the buying process online. Again, purchase price is not what most payment shoppers need to determine if the vehicle is affordable for them, let alone if they qualify.

The dealership that provides real information to the online shopper in an interactive format, with rate disclosures, gives them an advantage over other dealers who require the shopper to physically visit the store to get approved and see a rate.

  

Comment by Tom Gorham on April 16, 2012 at 12:14pm

Ryan, thank you for your comment.  I always look for your opinion because you always take the high moral ground and yet look for reality based solutions.  My delimma, in this case, is that not being competitive with other dealers "ONLINE" may prevent a dealer from even getting the opportunity to give great customer service. 

Dealers who post unrealistic prices do us all a disservice in that they destroy credibility and profitablility.  I don't know what the answer is.  Maybe Honda has the right idea by punishing dealers who advertise below invoice.  I'm not sure.

I DO know that the dealer who tricks customers into their store and then shows "their true face" only has ONE chance to make money.  They will not earn a repeat customer.

Comment by Ryan Leslie on April 16, 2012 at 8:02am

Tom,

When pricing "bait & switch" is expected, you need to switch your bait!

I did a quick search for "bait & switch" on our site and I wasn't shocked to find a lot of instances, more than I could read in fact. Joshua is right on the money in my opinion too. Advertise to everybody, not just the small percentage that qualify. Pressure test your ad strategy against other verticals. Here is one from yesterday in my personal life that made me think of this post.

I was out for a Sunday afternoon romp through the twisties on my bike and the gas light came on. I surveyed my options and chose a BP that was less expensive than the competitor on the street sign by about a dime. I worked nights in a station while attending college so I'm familiar with pricing strategy and occasionally you'll see a wide variance corner to corner as the costs get pushed out from corp. "Great! I caught the prices on the move and will be able to fill up before it goes up." Guess what? The price is different at the pump then at the street sign. Two double takes later to make sure I was reading both correctly and I notice in small print, "with wash."

"With Wash??? What the Heck! I'm on a motorcycle, I don't qualify for that!" ...but you suckered me onto your lot with a price point? Lame! Next time, I'll be riding right past that station, and I've just shared my negative experience with your readers, who will likely be looking for "with wash" when the gas light goes on.

The point, advertise your differentiation, your USP (unique selling proposition)! If you don't have one, CREATE ONE... There are just too many options and too much information available to the consumer to support a "With Wash" strategy that has dried up...

(Great to see you at DD by the way, I really enjoyed talking with you.)

Comment by Tom Gorham on April 14, 2012 at 8:44am

Tarry, I agree with you but placing unrealistic pricing on new cars up front on a website encourages a price war and and unhappy customers when they feel as if they were mislead.  On the other hand it encourages consumers to concentrate on price rather than value.  If a dealer is not competitive on price up-front, they do not get the opportunity to show value.

Comment by Tarry Shebesta on April 14, 2012 at 6:09am
My question is why are we focused on the price when most consumers need to know a real payment in order to make a decision to purchase.
Comment by Tom Gorham on April 13, 2012 at 5:58pm

@Joshua - Unless that price is something that 100% of the buying public can get, with that shallow disclosure in the screen shot, it's also reinforcing decades of cynicism, and undoubtedly inviting more negative customer experiences than positive ones.  That's my take.

Comment by Joshua Michael Friedman on April 13, 2012 at 5:27pm

If the online listing was in a market with heavy GM Employee penetration (that would explain where an additional $3,500 incentive comes from -- now the advertised price is the GM Preferred price, which slightly below 310, minus $3,500 customer cash - $3,500 employee vehicle allowance), and if every one of my competitors advertised that way, the thought process is, I have to do it also.  The other side of the coin -- if only one dealer in the market advertises precisely what everyone qualifies for, and backs up that with a clear, easy-to-read disclosure of what their online pricing is all about -- it's a missed opportunity to differentiate in the market. 

Unless that price is something that 100% of the buying public can get, with that shallow disclosure in the screen shot, it's also reinforcing decades of cynicism, and undoubtedly inviting more negative customer experiences than positive ones.

Comment by Tom Gorham on April 13, 2012 at 2:40pm

@Ed Brooks - Thank you.  There is only one way to go from there... down.  I recommend dealers take the high (but competitive) road and keep their reputation intact. 

ADMPC is a Network for Car Dealers, Automotive Marketing, Advertising and Management Pros sharing Digital Strategies and Execution Tactics.

Please Consider Automotive Marketing Professional Community Sponsors

ADM Badge

Loading…

Based On Your Interests...

Onsite/Offsite Combination ADM Consulting & Coaching
Select the maximum amount you want to pay each month
$ USD
Sign up for

Automotive Marketing Tools

Get ADM Toolbar

Click here to take the ADM Member Survey

 

Google Automotive Network Targeted Placement Ads

Getting too many emails from ADM? Click mailbox below to control which types of alerts and updates you are sent......


Instagram

© 2014   Created by Ralph Paglia.

ADM Badges  |  Report an Issue  |  Terms of Service