November 22, 2013

THE GREAT DISRUPTION COMES TO AUTO DEALERS:

It turns out that building and selling cars is a bit more complicated than doing the same with computers. Oh, and auto dealers are extremely well connected in Congress and especially in state legislatures; they are often among the richest people in a legislator’s district, which has translated, over the years, into protective franchise laws that make it very hard for automakers to prune their dealer networks.

And yet, the dream of low, no-haggle pricing seems to be moving closer. The Internet didn’t get rid of the dealers, but it forced them to become much more competitive. Pricing is much more transparent, thanks to a wealth of Web-based information, and because dealers are now advertising. Lower your price a bit, and you’ll poach customers who in the old days might not have thought to check a dealer an hour and a half away when they had to make inquiries by phone. But they’ll happily drive that far to save a few hundred dollars.

The result, reports the Wall Street Journal, is falling profits for dealers, with some moving toward no-haggle pricing.

Car-buying is, for most people, a stressful and unpleasant experience, where they worry if they got taken when they drive off. Making it more pleasant would result in more car sales, and less interest in alternative ways of buying.