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.

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  • 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....

  • Ajla I'm going to whine about it. It should have a V8 available, preferably a new one or at least offering the old one as a mid-level option. That this brand new engine outperforms something introduced 2003 and last updated in 2009 doesn't impress me. Also, journalists seem to be unaware that it is possible to add forced induction to a V8.
  • Calrson Fan I'll say it again, terrible business model doomed to fail. If your gonna build an EV PU the only market that makes sense to go after is fleets. How many other BEV companies are making money pushing only truck type vehicles?
  • Kcflyer Well it's a better waste of my money than the 1.5 billion sleepy joe's handlers gave away this week to pay for gender studies tuition.
  • Dukeisduke SK Siltron - they make blank wafers, so this isn't really a semiconductor factory (wafer fab). Siltron just polishes wafers sliced from silicon carbide ingots. Sometimes these plants are located close to fabs, sometimes they're halfway around the world from the fabs.Wafer fabs take those wafers and run processes on them (photolithography, etch, deposition, etc.) to produce finished wafers. Those finished wafers go to an assembly/test (A/T) site, where they go through probe and other testing, they're cut up into individual chips and inserted into packages with lead frames. After testing on the finished chips, then they're ready to sell.
  • Argistat If China invades Taiwan (becoming even more likely thanks to DT's isolationist rants) , then the US is completely screwed. If someone tried to list all the manufactured items and manufacturing equipment that contain semiconductor chips, the list would be so long you'd never complete it. Finally a real effort to help bring this into the US.