My Amazing BMW Shopping Experience (Part II: The Random Ranting)

3 years ago I experienced internet car buying for the first time.

After a screaming and yelling match with a dealer that tried to scam us (dealer tried push us lower trim than originally promised, hint: always get a detailed invoice/list on what you are paying for or order). We tried the internet route. We were impressed, the process was simple: we submitted quote request, dealers emailed us with offer, and we could pick the one offering us lowest rate, or ask if the nearest dealer would match the best offer we got.

Not only the internet simplified the process, it also leveled the playing field between dealer and customer. I was surprised when I bought my wife’s car below invoice price. After a little googling I learned that the invoice is not the dealer’s true price. Manufacturers do provide dealers with volume discounts and other incentives like hold back which means dealer may still profit 2% to 10% selling at invoice. We learned that the best way to negotiate is to limit the variables, negotiate only the car price with the dealer, arrange own financing and sell your own old car.

I was predicting that the car retail business model would definitely change dramatically and customer will only benefit. The days of haggling with salespeople who won’t be able to feed his/her babies unless he makes 100% profit is gone. Buying a car will be as easy as buying a Playstation-3 from Amazon.com or eBay. Manufacturers will gain more direct control of dealerships or even switch to the direct selling model. Some precedents: Saturn had success with this model early on, but sputtered lately. I am arguing that it is mostly because of the car, not the selling model. Carmax also had success in the used car segment.

Dealers are feeling the pinch too. With margins squeeze, they all start consolidating into mega groups like Autonation and beef up their internet presence.

Fast forward 3 years. I was so surprised with my recent experience trying to buy a new car I just described. Now most dealers refuse to provide upfront pricing via the internet. Trying to lure customers to the sales floor and then use pressure and some questionable sales tactics.

BMW of Mountain View was part of the Autonation group which has one of the biggest internet presence. The company knows that the information gap between them and customers is narrowing as it says in its annual report:

“the majority of new car buyers nationwide consult the Internet for new car information, which is resulting in better-informed customers and a more efficient sales process.”

Boy I was surprised when BMW of Mountain View lied about their invoice price, which was readily available through the internet. They also tried to deceive me on the financing process, that’s why I chose to obtain my own financing. It is perplexing this dealership is selling a high end vehicle like BMW in the Silicon Valley area with the most informed and educated customer base, yet it is still underestimating customers’ intelligence.

It is also surprising that manufacturers still don’t push the direct selling model harder, or at least try to reign in the dealers. Some manufacturers like Toyota tried this a while ago and failed when the dealers revolted. I wonder why customers never revolted and start demanding to be treated with dignity by the dealer. Despite the fact that many people still prefer getting a root canal than dealing with car dealership, product managers and marketing executives are ignoring the problem.

I was tempted to forward story of my ordeal to the BMW and Autonation Corporate, but I know it will just be ignored. BMW will say that BMW dealers are independently franchised, so my problems are none of their business. However, judging from all the problems other customer have with dealers(just look at sites like Bimmerfest.com, and customerafairs.com), they are cheapening the brand equity of the car, which I have to admit is a great piece of engineering. So it is time for the automakers care about what their “independent dealership” flashing their logos/trademark do. And oh the dealers will keep their CSI scores high because some customers who buy can be easily bribed to give perfect CSI scores with free mat ($130 value). And the disgruntled customers who refused to play the game just vent through their blog. By the way, any BMW corporate/marketing readers here, can I fill out a CSI survey for BMW of Mountain View even though I don't buy?

Well, enough ranting. Bottom line: I am putting BMW and Autonation on my possible short sale list. I believe that BMW’s brand equity will decline unless they can improve the customer experience. And about Autonation, please let me know if anyone is planning a class action or customer boycott!

PS: look at AN's stock chart! :)