Sales and Dealers

In the U.S., vehicle sales must occur through a franchised dealer. This is law in 48 states. A select few legacy OEMs are allowed to own and operate one dealership (referred to as a point), for historical reasons, but for all effective reasons, it is zero. There are limited exceptions for Tesla and they are fighting to change these draconian laws en masse, but for the foreseeable future, only automobile dealers can sell vehicles.

Dealers are independent business people. And they are likely the most capitalistic people on the planet. They know how to use everything to their advantage to make a buck. They are rich, powerful, entrenched, politically savvy, and will fight to the last soul to protect their businesses.

For the most part, I have found dealer principals to be some of the most fun and thrilling people to work with in the automotive industry. They are creative, wickedly intelligent, and willing to try just about anything to make their business a success. They are extroverted and naturally disruptive.

Technology features, outside of safety, often get left out of the sales pitch, because historically people do not buy a car for it’s in-vehicle navigation system.

If they weren’t perceived as “old school” and untrustworthy, I think most of the Silicon Valley would embrace dealers as kindred spirits for their espirit de corps. But, according to a Gallup Poll from April of this year, car sales people are still the least trusted profession. I’m sure if taken today, the number 2 least trusted profession, Members of Congress, might take the number one spot, but that is a different discussion.

Dealers are a direct channel of the voice of the customer to the automotive OEM. When a customer is unhappy with their car, they can easily go to their dealer to complain. When I wanted to throw my no-longer-fabulous-phablet-“smart”-phone across the room because I couldn’t figure out how to do something seemingly simple; I could not go to some Samsung dealer to get it fixed and to vent bile from my spleen. What was I going to do? Call Samsung?! Really, like they would answer a call. Or go to a Sprint store? You think they really know the features of the Samsung phones they sell? Maybe a few, but it is hit or miss.

For the most part, cell phone makers are not customer service based organizations. They do not have well-coordinated processes for addressing problems or explaining their products. I had to Google the solution (and I thank the Google everyday for existing) and figure it out for myself. Sure, you could do that for your car. But you just paid on average $32,000 for your car. It is likely the largest purchase you will ever make, outside of your home. And the dealer is right there, in your neighborhood, down the street. They will listen, take your call, give you an appointment, hear your complaint.

Automotive OEMs really do listen to what dealers have to say about customer complaints and demands. JD Power issues surveys on Initial Product Quality, Vehicle Dependability, and APEAL. These surveys and what OEM executives hear from their dealers matter a lot. People lose their jobs when dealers complain and JD Power scores tank.

Car dealers are not highly regarded for having knowledgeable sales staff. Part of the problem is the high number of vehicle models and the proliferation of features. Dealers and OEMs have to train sales associates on vehicle features every new model year. The average OEM brand will have 100% turnover in sales associates a year. This is a Sisyphean task to say the least. High turnover, model and feature proliferation leads to many people feeling they know much more than their car dealer does about their vehicles. In many cases, this is absolutely true.

I do a lot of mystery car shopping and test-driving of vehicles. I was at a local Chevy dealer and the sales woman was 3 weeks into the job. I was very interested in knowing about the Chevy Spark and how Chevy was going to position their technology features to me. Needless to say, with 14 years of telematics experience, I did know quite a bit more about the car’s infotainment features. But she was incredibly knowledgeable about Chevy’s full model line up, available power trains, safety features, gas mileage, and inventory. She was fluent on pricing, model trim levels, and the range of their electric vehicles. I honestly think it is rather impossible for anyone to know everything about the vehicles an OEM makes.

Technology features, outside of safety, often get left out of the sales pitch, because historically people do not buy a car for it’s in-vehicle navigation system. Automobile purchases are emotional, frequently impulse purchases, and take over 4 hours. One of the biggest complaints about buying a new car is how long it takes.

Dealers are trying to fill the information gap through special events at dealerships, having a technology genius dedicated to explaining, selling, setting up, and servicing telematics features. Some OEMs are trying to remove the dealers from the entire process of selling technology features all together, but I seriously doubt that model will be a success in the U.S!