Car Dealers Lose Negotiating Leverage & Profits…and Like it

11 November 2013 Dashboard Insights Blog

The Chicago Tribune recently ran a story that will in large part not surprise anyone – car buyers are armed with more information before they walk onto a lot than ever before. But there are some aspects about the article that will surprise people.

For example, at least some dealers like having customers who are more informed than ever. These dealers claim to prefer the openness and transparency of the transactions and relationships.  However, one has to wonder how much the dealers prefer this situation, and how much they are simply making the best of the situation. One of the obvious results of this flood of information available from web sites like Edmunds and Kelly Blue Book is that profit margins have fallen. For now, those lost profits have been made up by high volumes as industry sales continue to surge. One has to wonder if dealers will feel the same when volumes decline.

Dealers are adapting according to the article. One such dealer took sales employees off of commission and paid them hourly, plus incentives. As the ability to “sell” becomes ever more obsolete, it seems only a matter of time before sales staff are relegated to part-time employees as dealers seek to save even more on their costs, to boost profits. “Selling” is far less important than it used to be – the article notes that the average person visits 1.3 dealerships to buy a car, compared with 4.1 as recently as 2006! This means that buyers know precisely what they want, show up at the dealer, dictate prices to a large degree, and walk off with vehicles.

This relationship between dealers and customers is rapidly changing.  I can recall years ago asking a dealer what the “invoice” was on a vehicle I wanted to purchase.  He laughed at me.  Now, anyone buying a car without that information is putting themselves at a disadvantage.  At what point will people be buying cars without ever visiting a lot?  It might be sooner than we think.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services

Insights

A Review of Recent Whistleblower Developments
19 July 2019
Legal News: Whistleblower Developments
Cloud security inadequate for Cyber threats, are you surprised?
19 July 2019
Internet, IT & e-Discovery Blog
Blockchain: A Tool With a Future in Healthcare
18 July 2019
Health Care Law Today
Do You Know What IMMEX Stands For?
16 July 2019
Dashboard Insights
Review of 2020 Medicare Changes for Telehealth
11 December 2019
Member Call
2019 NDI Executive Exchange
14-15 November 2019
Chicago, IL
MAGI’s Clinical Research Conference
29 October 2019
Las Vegas, NV
Association for Corporate Counsel Annual Meeting 2019
27-30 October 2019
Phoenix, AZ