Wall Street Journal Affirms The Rising Tide Of Transparency

November 22, 2013

The Wall Street Journal on Wednesday included an eye-opening article about the sea change underway in auto retailing as consumers seek—and find—dealers who offer transaction-like vehicle prices and no-haggle sales experiences.

The piece left me with four take-aways:

1. Early-adopters are winning big. The article highlights sales and profit gains for dealers who have embraced transparency in their new/used vehicle pricing and sales processes. These dealers wear their distinction proudly, advertising “no more commissioned sales people” and “finally, no more back and forth to see the sales manager.”

2. Salespeople like transparency, too. The piece notes the shift to flat-rate and hourly compensation on the showroom floor—which younger sales associates actually prefer. For them, they don’t have to be pushy with customers, and they know what they stand to make on every sale.

3. New car pricing transparency has arrived.  The article doesn’t really address the current dichotomy between new and used vehicle pricing. Most dealers have adopted some form of market-based pricing in their used vehicles, while this shift toward transparency is largely absent in new vehicle pricing. A prediction: Transparency in new vehicle pricing will be a necessary operational change for dealers in the coming year.

4. The “race to the consumer” is real. This catch-phrase is gaining credence as we increasingly see that dealers who give consumers what they want—clear pricing, less time required to purchase a vehicle and a more customer-centric sales experience—proves to be a recipe for success. I liked the article’s quote from an 18-year sales associate: “The heavy lifting is now done online and if you’re not in that flow, you’re not going to see the bulk of the business.”