Are car salesmen and showrooms headed for the scrap yard?

Avoiding the hard sell

If you wanted to avoid the hard-sell from the salesman, you probably trawled through the newspaper classifieds and went searching for a used car privately. That could be a perilous journey in itself.

Nowadays, thanks to the internet, potential buyers have much more knowledge and therefore much more power in the process.

We can peruse the market and decide what type of vehicle we are interested in, cross-shop the various brand offerings, narrow down to the vehicle we like and the equipment we want and the money we want to spend.

And thanks to websites like the one you’re visiting now, you can then read independent road test reviews to see what it’s like to drive.

All that before setting foot in a dealership. It certainly changes the power and knowledge dynamic.

“A lot of the people who come in are as informed if not more informed than dealer staff,” says Matthew Wiesner, the managing director of Sime Darby Motor Group Australia, which owns 10 retail sites for prestige brands such as BMW, VW and Volvo around the country.

“That’s fantastic because you know they are serious about buying a vehicle.”

Of course, you can go even further and cut the dealer experience out altogether. You can buy a new or used car off the web without ever seeing it in the metal.

Your first sighting and drive could be when you collect it. That’s how electric vehicle evangelists Tesla does it.

Or you could even skip that part of the process and have your purchase delivered to your door, sometimes with a guarantee that if you’re not happy you can get your money back.

Several recently-launched used car sites are dangling this carrot.

The buzzword

In the auto industry, this mixing of the digital and physical purchasing is called omni-channel retailing. It’s the buzzword of the moment.

It might also sound like retreat towards irrelevancy for bricks and mortar dealerships, but there seems little likelihood they will go the same way as video rental stores.

Until virtual reality becomes so immersive and impressive that you can touch, feel and test drive a car online, many buyers still feel the need to go to a dealer and check out their intended purchase in the-metal.

The primary reason that desire would dissipate is if we all abandon private ownership of motor vehicles and opt for pay-as-you-go shared mobility.

“Going to the full ‘everyone is going to buy everything online’ is not a reality we are going to see in our lifetime, given the emotive experience of a vehicle purchase,” says Matthew Wiesner flatly.

 “Nothing is ever going to replace that live experience of sitting in a car, so an omni-channel customer experience is key.”

But while the test drive is a constant, much else is changing about the dealership experience. For instance, what the car companies like to call haggle-free pricing is seeping into Australia. Essentially, it means no discounting. 

Both Mercedes-Benz and Honda have committed to this approach, swapping from traditional franchising to an agency structure. That means you are buying the vehicle from the car company - not the dealer where you collect it.

Benz and Honda argue the change is boon for customers who hate the traditional negotiating game with salesmen. But it also means they control the buying process from start to finish and therefore the money being transacted.

Agency is happening at the same time as the new car prices in Australia climb dramatically. 

Brands are excising entry-level models from their line-ups and adding equipment. The cheapest Mercedes-Benz C-class went up $15,000 in one hit. It’s an extreme example but indicative of an industry-wide trend.