98% Choose Their Car On The Internet

Bertel Schmitt
by Bertel Schmitt

Frank Greve’s “Taking Readers For a Ride” article told us a little bit about the priorities in he auto PR business. If you write for a buff-book, sugar will be blown up your anal orifice. If you are a blogger – tough noogies. That stance is utterly misguided and so past millennium, says someone who knows best. That someone is Scott Painter. Never heard of him? I’m sure you heard of TrueCar. Scott Painter is TrueCar’s founder. TrueCar and competitor Edmunds know the car business better than the manufacturers: Truecar and Edmunds predict monthly sales with razor-sharp accuracy, their analyses of transaction pricing and incentives provide unprecedented (and often unwelcome) transparency. Investor’s Business Daily had an interview with Painter. And what picture did he paint?

“Today, 98% of people who bought a car in the U.S. last month went online first. That is the reality and also the industry’s frustration.”

The industry gets frustrated, because the Internet provides strategic information to the common carbuyer, information which even the carmakers did not use to have.

“You and I could walk into the same dealership on the same day and buy an identical car from the same salesman and pay a totally different price. The sale price on an identical car can vary as much as 40%. The system today does not work and that is why the American consumer has completely lost faith in the auto industry at every level. We don’t trust car salesmen.”

A lot has been said and written about carmakers in trouble. The carnage amongst car dealers was mostly ignored, a little bit like Cambodia after Vietnam.

“The auto industry has been through its worst four-year stretch in its entire 110-year history. It nearly killed two of the three largest U.S. car companies and resulted in closure of nearly 15% of the industry’s retail dealerships. The industry went from selling about 16 million new cars four years ago to below 10 million last year. That’s a third of demand gone. How do 38,000 new-car dealers sell cars in a market where there is lower demand? They have to lower prices. So the profitability of those that are surviving is so perilously close to nonexistent that the business of building and selling cars is a loser.”

Painter does not have advice for dealers. But he has advice for customers: Use the power of the Internet to find the most desperate dealer and the best deal.

Auto manufacturers will need to decide themselves where to blow their sweetener. To buff books which are a shadow of their former greatness, and which show visible symptoms of consumption – in the medical sense. Or to websites that often get more viewers in a day than the buff books sell magazines in a month – allegedly. The auto industry in general is well aware of this. Certain cro-magnon PR flacks could talk to their colleagues in marketing to get the latest dope.

Case in point: Painter just raised $200 million for TrueCar. Like that. Without making a lot of noise. At the same time, Saab could not get a $157 million bridge loan, despite a highly publicized and noisy search. If a website is deemed a better investment than a storied car company, then this is worth at least a thought or two.


Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments
Join the conversation
3 of 33 comments
  • Carve Carve on Sep 08, 2011

    So, I always look up incentives and invoice price, but what else can you do online? How do you find the most desperate dealer? Usually when I do that "request a quote" thing I get a highball figure.

    • Jj99 Jj99 on Sep 08, 2011

      This is part of the game. Just don't respond. After a few days, someone will start sending you eMails, or call. At that point, you tell them that their price was so out of control that you ignored them. They will start to negotiate with you, and you start dropping a price you claim is one you really have from another dealer. Use the price as calculated in my post above. Also, make sure you are talking with the sales manager. Forget the bottom line people. They are just low paid sheeple who can only do a deal at a price that is not a deal for you.

  • Dave M. Dave M. on Sep 11, 2011

    After doing my extensive (and I mean extensive....I take 6-9 months to car shop) research, whether I visit a dealer or go through their internet sales person....the first thing out of my mouth is "You've got one chance to get this right. What is your price for X?". I've been successful....

  • Carson D At 1:24 AM, the voyage data recorder (VDR) stopped recording the vessel’s system data, but it was able to continue taping audio. At 1:26 AM, the VDR resumed recording vessel system data. Three minutes later, the Dali collided with the bridge. Nothing suspicious at all. Let's go get some booster shots!
  • Darren Mertz Where's the heater control? Where's the Radio control? Where the bloody speedometer?? In a menu I suppose. How safe is that??? Volvo....
  • Lorenzo Are they calling it a K4? That's a mountain in the Himalayas! Stick with names!
  • MaintenanceCosts It's going to have to go downmarket a bit not to step on the Land Cruiser's toes.
  • Lorenzo Since EVs don't come in for oil changes, their owners don't have their tires rotated regularly, something the dealers would have done. That's the biggest reason they need to buy a new set of tires sooner, not that EVs wear out tires appreciably faster.
Next