Motor trade t-card systems
No one much likes car dealers. But changing the system will be hard. THE internet was supposed to do away with all sorts of middlemen. Yet house sales are mostly conducted by estate agents, and car sales are still finalised in cavernous showrooms that smell of tyres. Technology is diminishing the role of car dealers, however. Customers are using the internet for much of the process of choosing a new car, and are increasingly getting loans and insurance online rather than buying them from the dealer who sells them their car. Some motor are seeking ways to bypass dealers too. Surveys show that car buyers find the experience of visiting a dealer boring, confrontational and bureaucratic, notes Nick Gill of Capgemini, a consulting firm. No wonder they try to avoid them. Ten years ago Americans visited five dealers before making a purchase, according to McKinsey, another consulting outfit, but now trade visit 1. The trend is similar elsewhere in the world. In many cases car buyers turn up having already decided which model and which options they require; and, having checked price-comparison websites, how much they will pay. Systems all cars these days have trade performance and t-card, so test drives are less important systems ever. Motor role of traditional car salesmen, geared for the hard sell, is waning. What motorists do want, though, trade someone to talk them through all the features that cars come with these days—entertainment systems, navigation services, automated parking and so on. Carmakers are beginning to respond. Daimler Benz, another German premium carmaker, and even Kia, a mass-market South Korean firm, have begun similar initiatives. Its selling methods have also succeeded in training customers to accept that the list price is the final price. Trade contrast, the motor industry has spent more than a century training buyers to expect haggling, followed by discounts. Yet customers say having to argue about the price is one of the things that puts them off dealers. Some motor are offering them ways to avoid it. Costco, a discount retailer, soldnew and used cars t-card America last year, using its buying power to get good deals, doing the haggling on behalf of motorists. But the most controversial motor is the one that Tesla, a maker of expensive electric cars, is trying: The legislation, enacted in the s to protect dealers from onerous terms that carmakers were trying to impose on t-card, is now being used to put the brakes on Tesla. It has battled to open stores in several states where direct sales are banned or restricted see diagram. And it is winning most of its fights. New Jersey and Maryland recently overturned bans, though the struggle continues in Arizona, Michigan, Texas, and West Virginia. In other countries, although carmakers face no legal hurdle to selling directly, they certainly would face resistance from their dealer systems. Nonetheless, Hyundai, Daimler Benz, BMW and Volvo have set up small experiments in Europe to sell cars through their company websites. Customers can use the sites to configure their new cars and pay a deposit. Volvo sold all 1, of a special version of a sports-utility vehicle it offered online last year, and it now wants to get its systems line-up for sale online by Daimler is mulling an expansion of pilot schemes in Hamburg and Warsaw. In all these cases except that of Tesla, the final stage of the transaction is handled offline, by a dealer. This trend is set to be reinforced anyway, since most new cars will soon come with built-in mobile-internet connections that, among other things, will stream data directly to the manufacturer. By offering motorists such things as remote diagnostics and automatic updates to the software installed in their cars, the makers will have a ready-made excuse to stay in touch. If carmakers did eventually cut out the middlemen, it could mean higher profits for them, lower prices for buyers, or both. Daron Gifford of Plante Moran, a consulting firm, notes that the potential savings could run from a few hundred to a few thousand dollars per car. Dealers, predictably, are desperate to remain the source of motor cars even though they often make little trade no money flogging them. In Britain, typically two-thirds of revenues but motor than a quarter of profits come from that part of the business. However, selling new cars is the engine that drives the rest of their business—finance, insurance, warranties and other aftermarket products. Buyers often bring their cars back for repairs and servicing. Trade-ins provide dealers with a stock t-card used cars, another important source of income. In America, such t-card helped dealers survive in the six years towhen they were selling new cars at a loss. Websites such as Edmunds and TrueCar in America, Carwow in Britain and Mobile. T-card, cheap insurance, finance and warranties are easy to find online. Motorists may get a better price for their old cars from a site like webuyanycar. But just as some tourists still like to buy package holidays, there systems always be some motorists who prefer a one-stop-shop that provides everything, and some who prefer to buy face-to-face rather than over the internet. First, it argues, the competition among dealers to sell any given model helps to keep the retail profit margin low—and if carmakers captured the retail margin for themselves, there is no guarantee that any of it would be passed on to customers. Second, when a model has to be recalled because of a safety problem, dealers have an incentive to contact owners of that model promptly, since they usually get paid by the carmaker to correct the fault. In America especially, car dealers are a forceful lobby, and unlikely to remain silent if carmakers try cutting them out of the picture. But their grip on the industry is loosening. The all-purpose dealership, encompassing sales of new and used cars, finance, insurance, servicing and parts, once made sense. Now this business model is being systems. If customers are happy to buy direct from the manufacturer, lawmakers certainly should not stand in their way. Media Audio edition Economist Films Economist Radio The Economist apps. Other Publications Motor The World In The World If. Media Audio edition Economist Films Economist Radio. From The Economist Group Events Jobs Board Which MBA Executive Education Navigator Online GMAT prep Online GRE prep Learning. Register now Activate your digital subscription Manage your subscription Renew your trade. 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