Forget what you think you know – buying a new car is changing rapidly as the automotive industry throws out the techniques and tactics it has used for the better part of a century.
In years gone by, it didn’t matter what make or model car you wanted, buying a new vehicle was always the same process. You visit a showroom (typically on a local ‘auto alley’), get some brochures, hear a salesperson give you the pitch and take the car for a short test drive. Then you’ll haggle over price and spend a few hours on the phone and/or internet talking to other dealers to see if you can get a better price.
In 2022, there have been sweeping changes to several brands in the way they go about selling cars. It comes as car companies try to ensure customers get a better experience and dealers focus more on looking after potential and returning owners, rather than squeezing more money from them.
Stores instead of showrooms, online car configurators and test drives that come to you are just some of the ways that buying a car has changed.
There are several reasons for this change – consumer trends, the rise of e-commerce, new brands – but one of the most obvious is that the old way of doing things has a bad reputation. Too often car dealers has earned a negative reputation for trying to sell too hard, haggle over money or push you into a car that isn’t right for your needs.
This isn’t meant to demonise car dealers, but a 2021 Roy Morgan poll had ‘car salesman’ at the bottom of its list of most respected professions – behind real estate agents and politicians.
Car dealers and the role they play has long been an unspoken issue in the car industry, with salesperson effectively becoming ‘middle men’ that slot between the car brand and the customer. It means if a dealer doesn’t treat a customer well, that customer goes away unhappy with the car brand rather than the dealership, which is an entirely separate business. It’s a problem car companies are trying to find a way to combat with new selling models and techniques.
Tesla was one of the first brands to ditch the traditional way of doing business. It never even bothered with a car showroom in the traditional sense, avoiding the traditional ‘auto alley’ and instead setting up ‘stores’ in popular shopping strips.
It has spread across the industry and one of the most committed to this new way of selling is Genesis – Hyundai’s luxury spin-off. In the not-too-distant past, a new sub-brand like Genesis would have set up new showrooms attached to existing Hyundai dealers and done business as usual.
Instead, Genesis Australia took an entirely fresh approach. It doesn’t have showrooms and is in the process of establishing a smaller network of ‘Studios’ in high-traffic retail environments and ‘Test Drive Centres’ in more traditional automotive retail locations. Importantly, Genesis Australia owns all these sites and employs all staff, so the entire operation is in-house.
The idea of the Genesis Studios is that would-be customers (which are likely based in the CBD in Sydney or Melbourne where the initial studios have been opened) will visit and see the car in-person and then Genesis will arrange for a car to be sent to the person’s house so they can test drive in a familiar environment.
This so-called ‘Genesis-to-you’ concierge service is designed to separate the South Korean car maker from its more established European rivals.
“A test drive around the block is basically useless,” says Connal Yan, head of Genesis Australia.
That’s why the concierge visits typically last between two to three hours and can, in special circumstances, be extended to an overnight or even weekend-long test drive.
While that’s an example of how things are done at the premium end of the market, Honda Australia has revolutionised its way of doing business locally and that includes the way it interacts with its customers.
While Honda still has independently owned dealerships, it now controls all vehicle stock in the country, so the dealers are no longer directly selling the car but rather facilitating a sale that is made through Honda directly. To this end, the car salesperson doesn’t earn a commission on each car sold, but instead there’s a flat fee Honda Australia pays out for each sale.
Honda – like many other brands that still have a traditional retail dealer network – tries to start the sales process before you even set foot in a showroom. It overhauled its website and added a more detailed car configurator, as well as a guide to national stock, so a customer can do all their research at home and not have to worry about being upsold when they do visit the dealership.
While it’s obviously in the business of selling as many cars as it can, Honda Australia director Stephen Collins says the company is now more focused on customer feedback than how much money a sale makes. To that end, the company has adopted a real-time customer feedback system, similar to what you’ll find on your Uber app, that gives them a clearer and quicker understanding if its dealers are treating customers well.
All of this comes in addition to what is arguably the key difference in this new way of selling cars – fixed prices. Genesis, Honda, Mercedes-Benz and selected others have begun offering a set price for new vehicles regardless of where you buy them from.
This isn’t a traditional ‘drive-away’ price that can vary from state-to-state based on local government charges, this is the standard price for the car. Take, for example, the Honda Civic VTi-LX, which costs $47,200 whether you buy it in suburban Sydney or rural Queensland.
While many people will lament the lost art of haggling for a better deal, Mr Collins believes most customers prefer to have a clear price and not leave feeling like they got dudded.
“We’ve known from day one that people want to haggle… but the vast majority of our customers want transparency.”
It’s a view backed up by Mr Yan at Genesis, who believes the transparency on pricing allows for a greater focus on deciding whether a particular model is the best fit for a would-be buyer.
“It’s all about the customer, showing them the cars,” he says. “ You don’t have to worry about the price.”
So these days, if you want to buy a car, you don’t need to visit a showroom, you don’t need to worry about brochures, you don’t need to hear a salesperson give you the pitch and you don’t have to take the car for a short test drive before haggling over price with someone who does it for a living.
Instead, with more brands expected to follow the lead of Genesis, Honda and Mercedes, you can do most of your research online, get the car brought to you and choose from any car you want in the country and get it set to your most convenient spot to take delivery.
And this is just the start, as more and more consumers get comfortable buying larger items – like cars – online, you can expect car companies to take advantage and find new ways to make it easier for you to buy…
Keyword: How buying a new car in Australia has changed: Honda, Mercedes-Benz, Genesis and others are leading a dealership revolution that's already shaping the future of the showroom