Many of us don’t enjoy the idea of dealing with a salesperson and haggling about prices when we want to buy a new car. Some companies saw an opportunity to offer consumers a way to buy a new car with less stress. They have stepped in with a service that means customers do not have to visit a dealership in person.
The trend of avoiding going to a physical store and buying products online instead has been growing for a while. This has led to a revolution in the way many companies do business. This trend has not affected the way we buy cars yet, but this could be about to change.
Private Fleet in Australia is one company that has been successfully offering a new type of service to car buyers. The success of this company has attracted the attention of those in the motor industry. As with any companies that come up with successful new concepts, there are those who want to shut them down and others who want to copy them. The CEO of Private Fleet, David Lye, says the company is already starting to expand to other countries.
How does online car buying work?
Companies offering these services don’t sell cars themselves. They act as brokers, negotiating between the customers and dealers. Their expertise helps them to find customers the best deal.
Calling them brokers may be rather an understatement as they provide genuine cost savings to customers. They negotiate with many dealers at the same time, and the fact that they help these dealers to sell cars gives them leverage in a fiercely competitive industry. Private Fleet buys more than 400 cars a month from dealers, so they have the buying power to negotiate very good deals.
Most buyers have already done their research and know what type of car they want. The company first establishes the buyer’s needs and preferences and will sometimes even offer advice on which are cars are the best in the class or suggest cars that may not even have been considered.
After deciding what type of car they want, customers may go and take a test drive at a local dealership. This can be arranged by the company for the customer if this is preferred.
Once all the details of precisely what car the customer wants have been established, the companies take over from there onwards. They begin their negotiations with dealers. Many of these brokers are well versed in the tactics of dealerships and know precisely how to get the best deals out of them. A bidding war commences, and this can help to drive down prices considerably.
When a deal has finally been arranged, the buyer approves it and becomes the owner of a new car which is then delivered right to his door. The buyer saves money by using a service like this, even with the commission taken by the company.
Are traditional car selling methods about to be replaced?
This concept has provoked its fair share of criticism. Major car manufacturers continue to prefer customers buying cars directly. Many customers still prefer traditional selling methods too, wanting that face to face interaction with dealers. For some, saving money isn’t the only consideration, and they enjoy going through the negotiation process themselves. No-one is likely to convince them to buy their cars another way.
One of the drawbacks of this service is that customers do not get the model they test drive but another one like it. Some buyers don’t like this at all – they want to have the exact car that drew their attention in the first place and that they were able to test drive. Another one, even if it costs them less and arrives right at their door, is unsatisfactory to them.
Some customers may not want to buy a car in this way because they are afraid of losing out on any incentives offered bycompetition between dealerships for sales often results in offers of extras such as free oil changes, discounted tires or fuel savings. Private Fleet has addressed this concern effectively – they offer a membership program with benefits such as roadside assistance, deals on certain items and at-home servicing.
As with any fledgling businesses, especially ones that turn traditional concepts on their head, companies offering these services have their critics. However, the success of companies like Private Fleet indicates that people are interested in a function of this nature. Perhaps this will become the way we buy cars in the future – the signs are promising. For those who don’t enjoy the hassle of negotiating with salespeople when buying a car – and I think there are many – this new development is a welcome one.