A new program from AutoNation, the country's largest dealership chain, promises to revolutionize a car buying process that many consumers describe as torturous, broken or intimidating. Using the free services of a car buying consultant from AutoNation Direct, consumers can buy a new or used car without setting foot in a dealership, unless they want a test-drive. And even then, they can avoid the sales team with its pressure-filled tactics.
"Car buying should be fun and it's not fun when you go through the dealership," says Simon Smith, national sales director for AutoNation Direct. Smith and other executives of the car buying service say they are on a mission to change all that. The key benefit is that the buyer deals with a single car buying consultant who provides upfront pricing for both the new car and the trade-in, even as the buyer considers different brands. Dealing with a non-commissioned car consultant for the complete process is a radical departure from the conventional dealership experience, where customers are double-teamed by salesmen and managers before being handed off to a pushy finance manager.
Other car buying services — such as car concierges, car brokers and sites such as Carsala.com — provide similar assistance. However, AutoNation Direct's free service taps into an extensive 200-dealership network with an inventory of thousands of vehicles across major brands. Other large dealership chains, such as Penske Motor Group and Sonic Automotive, allow shoppers to search their entire inventory but refer them to traditional sales teams at individual dealerships.
So far, AutoNation Direct only represents a small portion of AutoNation's overall sales of more than 400,000 cars a year. In 2010, its second year of operation, AutoNation Direct sold 5,000 cars. In 2011, it is forecasting sales of 8,000 cars, says AutoNation Direct's president, Ron Frey.
Here's how it works: Buyers contact AutoNation Direct by phone or online and, after a brief introductory phone conversation, they (virtually) meet a personal car buying consultant. This consultant advises them on their choice of car, schedules test-drive appointments at different AutoNation dealerships, arranges financing, evaluates their trade-in and then arranges delivery of the car to their home or office. If the buyer prefers to conclude the sale at the dealership, it's a non-commissioned AutoNation Direct in-store concierge who handles the paperwork, not a salesman or finance manager.
AutoNation Direct also is introducing video conferencing, where the caller can see the consultant and also can see the paperwork being filled out, such as a trade-in evaluation. The caller or the AutoNation consultant can fill out the form, duplicating a face-to-face exchange in a dealership. All that's missing is the free coffee.
"Phone is great, e-mail is good, but if you can see the person, it validates the process and builds rapport," Smith says. The use of video conferencing is limited now, but will be expanded in the near future, he says.
Car consultant Lauren Simpers, who works in the AutoNation Direct call center in Costa Mesa, California, spent years as an account representative in the banking industry. "I hear people say, 'I love driving off the lot in a new car; I hate everything that comes before that,'" Simpers says. "I tell people, 'You can make this purchase from the comfort of your couch.'"
To test-drive the process from the consumer's point of view, Simpers says she did some mystery shopping after working for AutoNation Direct for a few months. On her day off, she used the AutoNation Direct service to buy a 2009 Ford F-150. She says her experience as a buyer gave her increased confidence in the value of her role as a personal car consultant.
A major sticking point in traditional car buying is the trade-in process, which many car dealers see as an opportunity to grab extra profit. AutoNation Direct says it provides a price for a buyer's trade-in based on the owner's description, but without a physical inspection. The company determines the value by consulting pricing guides, including Edmunds' True Market Value (TMV®) pricing, auto auction data and pricing from the buyer's local market. (AutoNation has had an ongoing business relationship with Edmunds.com in which the organizations exchange information about new and used vehicle pricing.)
Once the trade-in price, purchase price and financing are set, buyers can conclude the deal with an in-store concierge at the dealership or take possession of the car at their home or office. Paperwork, even at a dealership, usually takes only 45 minutes, Smith says. That's less than the 1-2 hours it often takes at a dealership.
The non-commissioned in-store concierge does offer extra products, such as extended warranties, but they're not aggressively pushed as they might be by a finance and insurance manager, Smith says. Furthermore, each car is sold with the following guarantee, found on the AutoNation Direct Web site: "No questions asked, three-day or 150-mile money-back guarantee on any new or certified used vehicle. No restocking fee. No exchange policy. No games." At most other dealerships, no such guarantee exists.
It's important to understand that AutoNation Direct isn't trying to distinguish itself by offering the very lowest price, Smith says. Instead, it offers competitive upfront pricing, which reflects Edmunds TMV and the local market. The main benefit is what Smith calls a "protected buying experience," one that is free from the pressure of negotiating with a salesman and then being pressured to buy additional products and services by the commission-motivated finance and insurance manager.
If paying $200 more for a car means freedom from haggling, pressure or hassle, "most customers are OK with that," Smith says. He says his customers like the upfront, non-negotiated pricing offered by AutoNation Direct, rather than the typical process of spending an hour sitting in a cramped sales office just to get a price quote on a car.
Frey points out that many consumers don't have the depth of knowledge to know what constitutes a fair price, since it's a figure complicated by incentives, holdbacks and financing rates. "There are a lot of moving pieces to this business," he says. "The better deal you think you got, the more suspect I am that there was something somewhere that you didn't catch."
One new-car shopper who decided to give AutoNation Direct a spin is Rachel Tabacnic, a 27-year-old account coordinator at Fish Consulting in Hollywood, Florida. "I'm a very busy person and they were able to get in touch with me when I was able to talk," she says. "Besides, this was the first time I bought a car and didn't know what I was doing."
Tabacnic gave the AutoNation Direct car consultant her budget, desired car color, features and information about her trade-in. The company's offer for her trade-in was $1,000 more than she'd been offered by other dealers. She describes her relationship with her consultant as being like "an older brother or my dad helping me with the decision." Tabacnic signed the paperwork for her new 2010 Toyota Corolla in the dealership in under 45 minutes. Two other customers Edmunds contacted also were overjoyed with their AutoNation Direct experience.
But another shopper, Fred Collins, a sales representative for a sheet metal fabricator from Odessa, Florida, thought the service fell short. He contacted AutoNation Direct and got two quotes for a 2011 Hyundai Sonata and a price for his trade-in. One quote was well below Edmunds TMV but the other offer didn't reflect a discount. Collins was able to find a similarly configured Sonata at another dealership and got a better price for his trade-in.
After Edmunds brought the matter to AutoNation Direct's attention, Simon looked into Collins' deal and reported that the company had made a mistake. A discount was available on the second car, but the AutoNation Direct consultant had misread paperwork and presented the wrong price to Collins. Simon says the company wants to improve its processes as it grows, and the lapse was "a perfect training opportunity for us."
The slip also shows how important it is for consumers to be vigilant about verifying pricing by checking guides such as TMV or getting bids from competing dealerships — no matter where they're shopping or how consumer-friendly the seller is.
To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.