Article

Traded Away

Recent developments prove that, when the chips are down, nothing is sacred.

April 2014, Auto Dealer Today - Feature

by David Gesualdo

Last month’s NHL trade deadline brought the abrupt departure of the brightest star in the Tampa hockey universe. After 13 seasons, Martin St. Louis, the Tampa Bay Lightning’s team captain and six-time All-Star, was dealt to the New York Rangers for their captain, Ryan Callahan, and two draft picks. Asked whether the deal made the Lightning a better team, general manager and former Red Wings great Steve Yzerman replied, “I don’t know. We’re different. We’ll see.”

As a season-ticket holder, I attend almost every home game and keep my ears up for news. I knew the deadline was approaching and I knew St. Louis had asked for a trade. I guess I was kidding myself when I assumed that Yzerman would patch up his relationship with his captain, whom he had recently snubbed when building the Canadian Olympic team’s roster. (St. Louis joined the gold medal-winning squad as an injury replacement.) These are grown men, after all, and the desires of the fans should come first. Unfortunately, their inability to work out their differences has left the rest of us out in the cold.

Unlike Lightning fans, it seems that car buyers are getting exactly what they want on a regular basis. This issue includes two articles that prove it. Our cover story profiles a Southern California dealership that adopted a no-haggle pricing model after partnering with TrueCar. Both companies have joined the growing list of retailers, including America’s largest, AutoNation, that have decided that fixed prices are the way of the future. Studies quoted in the article and elsewhere seem to demonstrate that customers prefer no-haggle pricing. From its inception, CarMax has proven that used-car buyers are willing to pay a premium to get it.

CarMax’s sales process also plays into the next story, the second in a series about dealer management systems by Brian Reed of F&I Express. A tireless proponent of the paperless dealership, the author challenges us to picture a future in which the entire car-buying transaction is executed online. He acknowledges that premise could threaten the revenue stream generated by the finance office. But, as he points out, CarMax has prospered under an F&I process that generally relies on self-selection.

I am not suggesting you should model your operation after CarMax, and I don’t guess that Brian would either. The takeaway here is that customers are forcing dealers to rethink and, in some cases, abandon outdated or otherwise irrelevant processes. You have done it before. Consider, for example, the difference between the F&I office of today and that of 20 years ago. The old tips and tricks have given way to a fully transparent process designed to please educated customers.

Progress comes in many forms. Sometimes we seek it; other times it is thrust upon us. Will fixed prices and fully online sales transactions gain traction? Will widespread adoption improve our industry? I don’t know. We’re different. We’ll see.

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