Nobody in the auto retail business can possibly be unaware of the horrible reputation that car dealers have earned over decades of shady dealing. Heck, the internet has even created a pseudo-meme for the entire business, in the form of the passed-around image you see at the top of this post. But one industry’s horrendous reputation can be another another industry’s opportunity, and Kevin Hurst thought he had come up with a goldmine. By creating software that guides dealers through compliance with a number of federal regulations, he figured he could leverage the stereotype of the sleazy car dealer to get potential clients interested in demonstrating their commitment to walking the straight and narrow path. It’s a brilliant idea, and the kind of move that would show that market self-regulation and government regulation can work together to serve consumers. Unfortunately, Hurst made a fatal error of calculation: he assumed car dealers care about fixing their reputation and living up to national standards.
As Hurst tells WardsAuto, the auto retail industry has no such interest:
“Dealers are interested in selling cars and making money. Put simply, they don’t want to be bothered with government regulations or anything else that interferes with that selling activity.”
Many dealers choose not to comply with all those regulations “or are ignoring them altogether,” Hurst says. That puts them out of the market for Infinity’s software that systematically goes down the regulation checklist.
“We spent $1 million on codes and thought everything was in place,” he says. “We figured we had a slam-dunk product, because law requires compliance. But we didn’t anticipate the lack of interest at the level we’re seeing.”
Big dealerships, especially publicly owned chains, usually obey all the rules, he says. Some franchised dealers think they are doing that, but unwittingly aren’t. Still other dealers, particularly independent used-car lot owners, don’t even try.
“One guy told me the federal government doesn’t have the resources to catch a mouse running across his desk,” Hurst says. “Some are thumbing their noses at the laws.”
Hurst says the risks of non-compliance with federal regulations are just too low to get dealers to care. He compares it to people cheating on taxes in the hopes of getting lost in the shuffle, but notes that the risks of being busted for failure to follow federal rules on credit, money laundering, identity theft and more are even smaller. And until dealers begin to actually care about their reputations, or suffer the consequences of non-compliance at the hands of the government or the market, there’s no reason to expect them to clean up their acts. And though non-compliance with things like identity theft prevention laws may not seem like a huge deal, flouting even one law creates an atmosphere of impunity, which almost always translates into a poor customer experience.
And you’d think the car dealer community would know by now that, when it comes to reputation, they’re already fighting an uphill battle.