Chrysler is terminating contracts with nearly 800 dealers. GM is considering booting 1,100 dealers from their flock. So what? Do we need car dealers? No.
There was never a time when the car salesman had a good reputation. Think of an item people hate to buy and a car will be the first thing that comes to mind just ahead of a root canal. Buying a new car should be fun. It’s a huge investment but also a great new addition to your life—for a while.
But people hate the experience of buying a car. Do you know anyone who loves buying cars from dealers? Sure, you’ll hear an occasional story about a pleasant experience someone had buying a car. But those stories are rare and usually told by fools—“we went in with cash, saw the car we wanted and just plunked down the dough and out we drove!” Or, the story sounds like a post-disaster interview. “We went in prepared because we knew what was coming. We’d done our homework so we weren’t too scared when we saw the guy heading straight for us. Henry dug in his heels and said we weren’t paying a cent more than we offered. It took us about 6 hours but they finally agreed to our price. Sure, we had to take the green one but we don’t really care about the color. We were happy to get our price and get out of there.”
Close all the dealerships. Think about how much a dealership adds to the price of a car. You’ve got the huge overhead—acres of valuable real estate. You are paying commission to a guy trained to talk in circles and pressure you into ‘options’ you don’t want. There is a huge cost of carrying millions of dollars of inventory yet you’ll still have to compromise on something you wanted.
Why can’t you go online, select the car, add the features, select the color and complete the financing arrangement and have the car delivered to your door?
Smart dealerships will dump their inventory and focus on auto service—done on a large scale, auto repair of specific manufacturers ought to be very cost-effective, and profitable. New car lots can become used car lots—with set prices. No more ‘haggling’ to buy a car. Add to cart.
It’s 2009. We don’t need horse traders. We don’t need car dealers.
What else can we do without?
Newspapers. We’ll talk about that later.
In the meantime, make certain every aspect of your business is relevant.
Chris Reich, Author of TeachU’s Business Talk Blog