Have car dealers learned anything about consumers?

Consumers still hate buying a new car, yet very few car dealers have tried to understand why consumers hate buying new cars. Among the worst offenders is Kia and Hyundai and the brands have very little they can do about it.

Consumers have a wealth of information on car prices at their fingertips, yet when they talk to car salespeople, they are often treated like they don’t know anything, It’s almost impossible to get a discount off MSRP at most dealers, and some still like to charge over MSRP on hot models. Some buyers will drive hundreds of miles to deal with a dealer who treats them respectfully and courteously.

Last year Subaru’s US President sent a letter to all of its dealers advising them not to sell cars above MSRP because of potential damage to the brand. While shopping for a new car, a Kia dealership in Cape Copal, Florida, tacked on a $5,000 surcharge and offered me below market price on my trade. That dealer is now out of business.

I’ve sat in market research with consumers who recently purchased new cars and what I heard left me asking “why can’t the industry change?”.

The car brands will eventually own all their retail outlets and focus on more transparent pricing and better service at the point of sale. Prices for new cars will be set before a customer enters the dealer, including trade-ins, provided they are not damaged.

Another tactic that a lot of dealers push is “financing” because they make more money when buyers finance their new cars. I paid for my car but was pressured to use the brand’s financing. They still do it today.

With interest rates climbing, buying a new car is getting more expensive. VW’s new minibus will have a starting price of over $40,000. That means $50,000 for the all-wheel drive version and some options. Maybe I’m just living in the past, but that’s wild. $50k for a VW minibuss?

Some car dealers already feel that the “good old days” of reduced inventory leading to higher prices are over, but too many still believe that consumers need to be “sold”. It will end, but not before doing some lasting damage to brands.