Industry News & Trends

Mazda encourages consumers to Haggle?

Mazda allows haggling on Website – Automotive News

Mazda North American Operations has upgraded its Internet site so that vehicle shoppers can get a price quote from a dealership without leaving their desk.

Most factory sites lead interested buyers to a dealership’s site and will only list the sticker price. But the mazdausa.com site allows Web surfers to contact a Mazda "shopping assistant" via a live Web chat session. The assistant is a Mazda employee.

The program went live today. (July 9, 2007)

With help from the assistant, Web surfers can configure a vehicle, select a dealership, search vehicle inventory, obtain a price quote, schedule a sales appointment and get financing information.

Once a price is agreed upon between the customer and the dealership, the assistant arranges for papers to be signed and the vehicle to be delivered at the dealership.

What do you guys think of this? I’m not sure how I feel about it really. I doubt the process is not as smooth as the above paragraph reads. I read somewhere how it took over 10 minutes to contact a Mazda Rep on the online chat.

Mazda_haggle1

Choose your model.

Mazda_haggle2
Choose from up to 3 dealers to receive a price quote from.

AutoBlog posted this article on their site and it’s interesting to read peoples comments.

"Excellent idea. Why not take the stealerships out of the picture
entirely and ship direct to Mazda "service centers" where the car can
be test driven, picked up, and serviced?"

"This is exactly what I’ve been saying should happen for years. The auto retail channel (and real estate agents, for that matter) are basically a Mafia of Dinosaurs in this age of information. There is simply NO REASON for them anymore."

"This is a baby step in the right direction. Cars sales and brand
loyalty would build quickly if the process was more like buying a TV
and less like selling your first born."

I remember when I was selling Mazda several years ago and MazdaUSA had introduced their Dealer Inventory Search (catering to the larger dealers) on their website, I was not convinced this was a good move from the dealers perspective.

It’s at tough call; from the dealers side I find this to hinder my opportunity to sell more cars BUT from the consumer side, I would totally be on board with researching my next vehicle purchase, finding the car I want to buy and contacting the dealer for a price quote, all from the convenience of the Manufacturers Website. But then again, I can’t imagine purchasing my next vehicle like shopping at Walmart and having to deal
with a customer service rep that makes $5.00 an hour and could careless
about my needs! 

Is Mazda making it more difficult for dealers to make money by simply making the process easier for its customers?

Is Mazda taking a step in the right direction?

How long will the "New Car salesperson" position be around?

Founder of DealerRefresh - 20+ Years of dealership Sales, Management, Training, Marketing and Leadership.
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    Lao Shi
  • July 12, 2007

I also believe this is a step in the right direction for the consumer as well as the industry. It will stream line the process for the consumer, offer better pricing for the consumer and less shenanigans from the stores.

I believe, and there are examples, that we will see a bigger move into virtual stores where consumers will be able to go online and make their purchase. Ebay is an example on this as well as Google Base, Overstock.com. More and more the opportunities for the consumer will be greater and more efficient.

I think as Microsoft comes into the game with their DMS Solution in 08 this will be another step in the right direction. There are other new entities developing as well, i.e.: Arkona and companies that provide new LMT and CRM solutions speak of consumer friendly solutions not the “cookie cutter” options that are popular today that do little more than mirror the showroom experience that most consumers are wanting to move away from.

Not all consumers want to go to the store and roll around in the parking lot and fight over the deal, get stressed because the dealer is trying to squeeze them, get home and find out there were incentives / rebates that they were not told about, sold a warranty product that they did not need, placed in vehicle that was beyond their needs and budget.

It will be better for the OEM’s as well as they will have a better awareness of what the consumer needs are, what makes them unhappy and trends the industry needs to address.

Toyota, Honda, Volvo, Kia, Saturn and a number of OEM’s have been moving in this direction.

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<strong>Mazda Changing Up the BuyingExperience</strong>

Autoblog and DealerRefresh both have two posts about Mazda changing up the way consumers can buy Mazdas. Instead of haggling with a sales person on the lot, they can go through the Mazda website and have a sales assistant help them in the process. I th...
M
Tough one.

Hard to say if it's a positive step for "the industry", if that term refers to a a bunch of guys who inherited stores from their dads and are accustomed to raking in over $3,000 per sale.

It's a positive step for the industry if the term refers to the overall consumer experience. It's just one more move towards the future of car buying... no sales staff as we know it. A big warehouse full of cars, a test track, a dozen buyer's guide kiosks that cover lease vs. purchase, model pricing comparisons, financing, insurance, aftermarket, etc. And a Walmart greeter at the front to document demographics for the OEMs.

If no one has seen Mercedes-Benz's (German dealerships) OEM dealer web sites with the vehicle/payment drilldown tool, just have a gander at that to peek into the future of car buying.
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Per my post above, here's the German's vehicle/pricing drilldown tool... better brush up on your Deutsche first.

http://www.daimlerchrysler-bank.com/wunschfinanzierer/wf/startstg-gfg.html
B
So Mazda dealers don't need trade ins as a source of used vehicles?

I read somewhere that 1/2 of the car buying consumers have trade ins as a part of their deal. Is that still a ballpark number?

And the Mazda dealers must also feel confident living with "upsell at delivery" for their other F&I products with no effective introduction during the sale?

Do the dealers at least get to keep the finance income from the finance contracts arranged on the Mazda site?

Must be good grosses in those Mazdas to live without these other income streams + be able to keep the lights on.

Actually the process models what Scion did, but I'm not sure how Mazda allows haggling without running afoul of US Anti-Trust laws. Look here what happened when the OEM negotiated price was determined to be a cover for price fixing... and that was in Canada which has relatively lax laws and penalties vs. the US.

HTML
www.cbc.ca/disclosure/archives/030211_notebook.html
That's not a happy PR day.

Access Toyota was a good idea gone very badly wrong and it didn't have to be that way. I am very supportive of a seamless consumer OEM to dealer buying experience, but it can't be the OEM controlling the prices. I'll be very interested to see dealer's reactions if their total gross profits are eroded... you just can't make up the loss of trade ins as a source of supply + erosion of F&I profits on volume. Without those, almost every franchised used car dealer would have gone out of business a while ago.

Oh... and most sales person pay plans are based on a % of gross profit. Or maybe that's changed. Let's hear from the people who walk these miles every day.

This kind of thing can't just be one-sided change in this case and kill off dealers. Dealers can not go away. There are exceptions, but for the most part they play incredibly important roles in their communities, they are the single biggest payers of state sales taxes, in the aggregate they are major employers of good paying jobs, there is legislation on many states prohibiting OEM's from selling directly (which this is not... a "sale" requires offer, acceptance and an exchange of consideration) and exactly where are consumers thinking they are going to take their vehicles for warranty service?

There are far more good dealers than bad dealers. I tell consumers all the time to spend just as much time doing research on the dealer you are buying from rather than obsessing on price. Just because 3rd parties on the Internet try to get you to believe they have access to lower prices, all car dealers buy their new cars from the same supplier at the same prices (it is illegal in this country for it to be otherwise). On a $30,000 vehicle a dealer will typically make $1,500. Out of that, he has to pay his sales person, rent, lights, hydro, overhead, etc. Without the trades + F&I product revenues... no dealers.

The better online shopping experience is a good one... but not like this. Dealer pricing can be tied in without fixing, but for heaven's sake, let the dealers make enough to service their customers well. Learn to shop those that do.
J
One could make the argument that Mazda is simply providing the Business Development Center for its dealers who haven't aggressively developed their own online presence or internet sales team through this new process. I doubt many dealers will be thanking Mazda for the assistance, however. Just one more reason why dealers need to continue to search for the best employees in an ever-increasingly tough market to make a buck.
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    Richard
  • July 16, 2007
Anyone who thinks the OEMs would ever be able to move merchandise without the dealer is sadly mistaken. It's been tried in too many industries and failed.

I personally have worked with a German auto company that was recently studying the U.S. dealer networks to find out how to move more units per capita.

Bottom line,

1. Inventory on the ground.
2. Motivated salespeople.
3. Aggressive advertising.
4. Competitive dealer networks.






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Jeff,

I landed here (as usual) from the AutoConversion Automotive Sphere newsletter. I saw the article you mentioned, and was very interested in the potential shift of the vehicle distribution paradigm that this article suggests. I got to thinking . . . I really am in the market for a new vehicle . . . and I saw the CX-9 on TV the other night and it looked pretty cool (plus it ZOOM's). I thought that I would put this format to the test because I read alot of the comments above that are mainly assumptive. Please take the time to review my experience when i actually engaged the Chat/Haggle session on the MazdaUSA.com website after building a vehicle . . . the results may surprise you!
________________________________________________

(CLICKED CHAT NOW AND WAS CONNECTED TO SCOTT INSTANTLY)

11:06:58 AM System - Welcome Mark ...
11:06:58 AM System - Connected to Mazdachat.mazdausa.com
11:07:01 AM System - Scott has joined this session!
11:07:11 AM Scott - Mark, thank you for connecting with Mazda’s Personal Shopping Assistant. My name is Scott, how may I help you.
11:08:05 AM You - Scott, the CX-9 has some options listed as limited or late availability . . . are these on the lot right now or being built?
11:09:00 AM Scott - I think they Should be at the dealers Mid September or Early August let me make sure.
11:12:04 AM You - OK . . . this is the Rear Entertainment package correct? Or Navigation and Rear Entertainment? (I have 4 kids)
11:14:16 AM Scott - The rear entertainment package is separate from the Navigation rear camera package... but both are available
11:14:23 AM You - ok
11:14:32 AM You - so they are in dealers inventory now?
11:15:56 AM Scott - The items that are listed as late availability... Rearview camera system with auto dim is a the dealerships
11:16:16 AM Scott - The alarm system I am still checking on..
11:16:25 AM You - ok . . . one other question . . . I read an article recently that Mazda's website offers price negotiations. What is that all about? Can you explain.
11:16:31 AM You - is interesting
11:16:59 AM You - Can I order the vehicle on this website?
11:18:09 AM You - I am trading a 99 Ford Contour so not sure how that works
11:18:24 AM You - it has 107,000 miles on it
11:19:45 AM Scott - Vehicle trade value is determined at the dealership because we are unable to accurately assess a vehicles condition online.
11:19:55 AM You - ok
11:20:12 AM You - makes sense I suppose . . .
11:20:51 AM Scott - If you use the quote request page, the dealer should contact you with in 3 hours
11:20:52 AM You - so can I order a CX-9 online and choose the dealer or something? How does that work?
11:21:23 AM You - So you are saying that I have to contact a dealership?
11:21:27 AM Scott - Configure the vehicle the way you want it online and submit it for a price quote
11:21:44 AM You Right . . .ok.
11:21:57 AM Scott - Then you can negotiate trade value etc.
11:22:01 AM You - I was just curious about the article I read. Are you familiar with it.
11:22:23 AM You - Mazda allows haggling on Website - Automotive News
11:22:37 AM Scott - That is not correct.
11:22:47 AM Scott - Automotive news blew it
11:22:53 AM You - HAH
11:22:56 AM You - ok
11:23:16 AM You - well, that clears that up . . . huh?
11:23:18 AM Scott - We can only provide quotes from a local dealer.
11:23:25 AM You - k, well thanks for the info on those options
11:23:33 AM Scott - Your welcome
11:23:44 AM You - I will check out a local dealer
11:23:56 AM You - I can't wait . . I hope they have the one I want
11:24:00 AM You - thanks
11:24:09 AM Scott - Wait
11:24:14 AM You - uh, ok
11:24:22 AM You - I'm here
11:24:40 AM Scott - If you can't find one at a local dealer, we can widen a search out and find one for you if the dealer can't
11:25:03 AM You - WOW ok, so what should I do, just come back here and get on chat again
11:25:36 AM Scott - Yep. Or if you have time right now we can try and find one for you... and I can tell you were it is at
11:26:10 AM You - Well, I know a guy at the dealer in St. Louis so I will send an email over there and ask for him
11:26:21 AM You - if they don't have it, I will come back here
11:26:27 AM Scott - Okay ... no problem
11:26:28 AM You - but thanks for the help
11:26:47 AM Scott - Thank you for connecting with Mazda’s personal Shopping Assistant. I have enjoyed the opportunity to assist you. Have a great day.

________________________________________________

SUMMARY: Automotive News Blew It!

It appears that the Corporate level touch point is a supportive element to the local dealer. I imagine that anything that is done online is designed around completion of the sale with mutual responsibility by Corporate and the dealer.

Hope this helps!

Springer
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    Jeff Kershner
  • July 31, 2007
Mark, awesome!! Thanks for sharing your experience with everyone. This was obviously a positive experience and great for the Mazda brand from the perspective of the consumer.

Jeff
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    Bobby Harris
  • August 25, 2007
I currently work at a Mazda dealer and one thing I can tell you for SURE is that the number of leads has gone down significantly since this program started. Within the first week we saw a drastic drop and it's just gotten worse.

I have talked with other Mazda dealers and they've confirmed this as well. It seems to me that customers are using this online program to figure out who has what and if the EXACT car isn't at any dealer, they just don't submit a lead.

-h
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    Jeff Kershner
  • August 27, 2007
Bobby, very interesting to hear that. If you really think about this, Mazda could be loosing out. Some people get so fixated on what they want on their next vehicle, they often switch to another Make completely if they can not get exactly what they want. If you can at least get the customer into the dealer, you have a good chance they will find another vehicle that they would like to own.

Keep us updated with this!! Please.

-Jeff
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