What’s Wrong With This Picture?
Following a debate-like exchange the other day with a few industry players about the state of today’s new car market, I did a quick search on AutoTrader.com.
I kept my query simple. I wanted to see listings for 2014 Toyota Camry SEs in the Chicago market. I went seven pages deep to make sure my unscientific review had sufficient data to tell a story. Consider what I found:
Premium Listings: One dealer dominated the 20-plus Premium listings. All of the dealer’s vehicle listings advertised prices ranging from $2,400 to $3,200 below MSRP. Only one competing dealer appeared in the Premium space, occupying the last listing with a Camry priced $4,800 below MSRP.
I also noted that the dominant dealer offered a standard vehicle description that touted its sales process as “the future of car buying.” This dealer also took pains to offer a custom photo for every advertised vehicle.
My thoughts: Overall, I was impressed that both dealers with Premium listings were trying to differentiate their dealerships and Camry offerings. First, they’d ponied up for the Premium placement. Second, they both invested in custom photos to show potential buyers the specific car they had in stock. I wondered if the other dealer’s $4,800 below MSRP price would be an incentive or disincentive to potential buyers—meaning would they view it as a decent offer or something too good to be true.
Featured Listings: Here again, I found a single dealership dominating this paid-for advertising space. My search results included three pages of Featured listings offering an assortment of different-colored Camrys from the same suburban Chicago dealership. A majority of these vehicles listed a price $500 above MSRP, and all of the listings had descriptions imploring shoppers to “PLEASE CALL FOR OUR BEST PRICE.” In addition, I only found one Camry across these pages with a custom photo; the others all carried stock photos of a red Camry, irrespective of the listed vehicle’s color.
My thoughts: Really? I found the Featured listings troubling on several fronts. First, the dealer’s advertising cars above MSRP while telling customers to “call” for a better price. I mean, really? This truly seems like a page from yesterday’s new car playbook. If I were a consumer, I’d likely be wary of calling this dealer, given every listing essentially says “we’ll only play ball if you will.”
In the dealer’s defense, I have to believe there may be some kind of process or technical glitch here. There were far too many cars priced EXACTLY $500 above MSRP, and far too many vehicles with the wrong photos, for me to think that someone had consciously made these merchandising decisions. Either way, the listings suggest the dealer isn’t trying too hard to wow potential Camry customers.
Standard Listings: The Standard listings began on the fifth page of my search results. I evaluated about 70 vehicles from seven dealers (including the two who dominated the Premium/Featured listings). Among these Camrys, all but five vehicles were listed at MSRP; prices on these cars ran $3,100 to $6,000 below MSRP. All of the other Camrys listed MSRP pricing, and the vast majority also carried stock photos, which only occasionally matched the color of the listed vehicle.
My thoughts: If I actually wanted to buy a Camry, I’d be frustrated that a realistic purchase price—e.g., one that’s in the ballpark of transaction price ranges for 2014 Camry SEs on valuation sources like KBB.com and others—seems impossible to find. If I remained committed to a Camry, the dealers who listed the below-MSRP prices would most likely get my first calls. I would also approach each call warily, ready to pounce on price if I felt like I was getting the run-around. Conversely, I’d also probably feel an extreme sense of relief if I found a dealer who credibly diffused the pent-up emotions and pricing confusion I’d gathered while shopping online.
After seven pages of listings, I decided to stop my exercise on AutoTrader. I did a similar, though less-deep, look at 2014 Toyota Camry SE listings on Cars.com. There, I found much the same story—Camrys mostly priced at MSRP, with enough photo/car color mismatches for me to notice.
All in all, my exercise affirmed that my initial assumption was correct. When it comes to new vehicle pricing and promotion, our industry has a long way to go to provide the kind of transaction-oriented transparency that buyers today, and especially tomorrow, have come to expect. Put simply, I don’t think my experience searching online for 2014 Toyota Camry SEs is especially good for dealers, factories or potential buyers.
What an opportunity this is for dealers who see what I see, and take advantage of the technology and tools that help them do a better job pricing and promoting vehicles in a manner that satisfies the wants and needs for consumers searching for new vehicles online.