Car buying, in particular, has always felt like a blind negotiation. The salesperson controls all the relevant information: what cars are in inventory; how much each package of options costs; and, of course, the true cost of the vehicle (not the sticker price, which is the obvious starting point for haggling). Even business people accustomed to negotiating with vendors find themselves at a disadvantage.
Internet car-buying sites change the equation, giving the consumer much-needed leverage in the bargaining process. It helped my husband and I narrow our vehicle choices, explore the cost of adding desired options (such as kid-friendly leather seats), and obtain a quote that helped us shave $4,000 off the sticker price of the Mazda Tribute we ultimately purchased.
We don't know if we got the cheapest possible price for the compact SUV. And plenty of other factors certainly influenced the purchase price -- including the popularity of the car and the looming end of this 2003 model year, which motivates dealerships to cut better deals to clear inventory.
But at least we feel good about the process -- which is a first.
As it turns out, we're typical of the new breed of car buyer. Jupiter Research analyst Julie Ask said 57 per cent of consumers use the Internet to research a vehicle purchase -- as they would with any purchase. For three-quarters of those consumers, the online research will help determine whether they'll buy a new or used car; how much they can afford to spend and even the make and model.
A small but growing number of consumers use the Internet to select a dealer, arrange financing and buy auto insurance, Ask said.
No one expects the Internet to replace the local car dealer. Moreover, few people who research their car purchase online use that as their sole criteria, Ask said. Even fewer -- 0.4 per cent -- actually culminate the deal online with a deposit.
"Consumers still rely on the dealer's expertise. Still want to test drive. It's not a substitute, it complements information they get from the dealership," Ask said.
That's how it worked for us.
My husband, Dan, began researching the purchase six months before the lease expired on our Ford Expedition. He consulted independent third-party sources of information -- Edmunds and Kelly Blue Book -- to read car reviews and check out market prices for our area.
Once Dan narrowed his options, he began going directly to online car dealers to obtain quotes.
CarsDirect.com provided exactly what we were looking for. The only personal information it requested from us was our ZIP code, so it could provide local pricing information. The site allowed us to immediately get price information -- and do head-to-head comparisons between the Tribute and similar small SUVs.
CarsDirect refers you to dealerships willing to sell the vehicle for the quoted price; or its specialists will locate the vehicle for you. We used the referral service, but found the Mazda dealership's "Internet sales manager" bungled the sale. The rep used the same automated response -- "Good News! The car you requested is in stock!" -- not once, but twice, without ever answering our questions.
So, we abandoned that dealership and took the Internet quote to a car broker -- who couldn't meet the price; then, ultimately, to another local Mazda dealer, who matched it.
Jonathan Gaw, an Internet commerce analyst with the tech research firm IDC in Mountain View, Calif., said most local dealerships have overcome their initial resistance to the Internet to recognize such sites as cost-effective ways to reach would-be buyers -- perhaps more so than traditional classified newspaper ads.
Portal sites like Yahoo use ad software developed by its acquisition target, Overture Services, to allow local car dealers to display certain ads when a computer user enters certain search terms -- say, Mazda Tribute.
"The individual dealers are doing a much better job than they did a few years ago at promoting their own Web sites," Gaw said. "They're doing a much better job putting their inventory online -- what they've got on their lot, what features. 'If you're interested in a car, e-mail us. We'll find the car for you."'
Both the dealer and consumer stand to benefit.
"That's one of the things that the Internet has done for car buyers," Gaw said. "Before you didn't necessarily know all the options you had. You would go to the dealer, get the brochure. It's kind of like what a spreadsheet did for accounting. What if I do this? How much is it going to cost? Oh yeah, that wasn't so bad. Let me try adding extra wheels. Try out those packages. Before it was a real pain."
-- San Jose Mercury News