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Taking Back Our Industry

August 2010, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

So, this month I address a subject that has lit up the blogosphere, as well as the editorial pages of some of my competitors: today’s transparent retail market. At the center of the dealer community’s ire is Carfax.

If you haven’t heard, dealers are up in arms over Carfax’s History Impact tool. Heck, even a hand-picked dealer Carfax directed me to for my story on page 12 isn’t a big fan of the new feature. But you know what? He’s not agonizing over it. In fact, he still refers to Carfax as a trusted partner.

There are some bloggers and dealers that are calling for an all-out boycott of the company, while others liken Carfax’s business model to extortion. Personally, I think all this energy is directed in the wrong direction.

Here’s how the company described the tool in a press release issued in April: “The Carfax History Impact reflects the amount consumers have adjusted a vehicle’s retail book value, based on the information in Carfax Vehicle History Reports.”

The question everyone’s asking is: What book value are they using? This is how a Carfax official responded to my question on how the system works: “Based on data from previous car sales, the Carfax History Impact is a guideline that shows how much more or less than the retail book value consumers would be willing to pay for each car, based on all the information in the Carfax report.”

Not much different from the release, right? However, the company did send this quote from one of its dealer customers to show me how dealers can take advantage of the tool:

“I had a customer wanting more money for his trade. To counter his request I pulled the retail book value in a condition I thought was fair. Then I pulled a Carfax report on it and adjusted that book price using the Carfax History Impact on the report. I went over the history with the customer and explained to him how we determined the value of his vehicle. He stated that he had never seen Carfax used in this way. He trusted Carfax and traded his car right then.”

Not surprisingly, the Carfax issue was a hot topic on our F&I Forum. However, as I read the complaints, it was clear to me that the mere existence of such a tool isn’t what has car people upset; it’s the image it perpetuates. As one member put it, these tools continue to punish dealers for their past transgressions. I don’t think I’m straying too far from the truth in saying that there are a lot of reformists in our industry, but I understand his point.

In fact, take a look at this month’s Industry Trends section (page 52), in which we detail the results of Pied Piper’s 2010 Prospect Satisfaction Index. Without going into too much detail, the report says that today’s dealer gets it. Here, I’ll let the company’s CEO, Fran O’Hagan, say it for me:

“Today’s car shoppers are armed with far more vehicle and pricing information than ever before. Successful brands and dealerships have responded by acting as helpful enablers for today’s shoppers. At the most successful dealerships, the stereotype of the old-fashioned car salesperson no longer exists.”

I wonder how Carfax’s impact tool calculates that into its formula.

Listen, we can scream all we want, but it’s too late. All this information that’s arming your customers is out there and there’s no way to pull it back. Stop agonizing over it and start figuring out a way around it. In fact, check out our F&I Forum and search for “Carfax.” Several of our members offered some nice ideas on how to put these reports into perspective for customers, so go check it out.

My point is that it’s time for us to tell our story, not complain about companies that have profited from a reputation we earned. See, what we have on our hands, folks, is a public relations problem — one that can’t be fixed if we just sit around complaining on some forum or blog. We need to reach out to the mainstream media and start telling them about the pressures we face in getting customers into vehicles, why we charge what we charge and why we, as dealers, understand that there’s too much at stake to mess around with our reputation.

So, start talking to your local newspapers and get ahead of what’s being written and said about the industry. And when you do, just make sure you know what you want to say. Speak slowly so the reporter can keep up and, for goodness sake, keep the car-guy jargon out of the discussion.

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