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Survey: Consumers Lose Patience With Dealer Car Pricing

January 12, 2007

Dearborn, Mich. — Car shoppers demand "honest" pricing, according to a new AlixPartners survey. The survey was announced before the Auto Analysts of New York Conference held in conjunction with the North American International Auto Show taking place in Detroit, reported AutoRemarketing.

According to John Hoffecker, AlixPartners' co-leader of the firm's corporate performance improvement consulting unit, consumers no longer have the patience to sort through rebates and other incentive offers to discern the actual price they're going to pay at the dealership versus the factory's suggested retail price.

One big reason, Hoffecker said, is the continuing influence of the Internet as an auto-shopping tool.

"Though rebates and other incentives were once a powerful marketing tool in the auto industry, this new research shows that auto buyers are no longer willing to settle for anything less than totally honest and consistent pricing," Hoffecker said. "In fact, ‘honest' prices had the highest mean score, 4.32, among all survey questions in that category, versus a mean score of just 2.86 for ‘lowest' prices."

Hoffecker went on to note the study's finding about what he said was the "stunning and breathtaking" rise of the Internet as an influence of auto-buying decisions.

"The Web has officially become a full-fledged retail channel for automotive," Hoffecker explained. "According to our survey, no fewer than 41 percent of auto buyers consider the Internet to be a credible source of product information, just behind ‘word-of-mouth' at 49 percent. By comparison, the survey shows that Consumer Reports magazine stands at just 12 percent.

"Along the way, the Web also has become the window through which auto shoppers compare not just vehicles but also prices," Hoffecker added. "Therefore, manufacturers that are moving to get their MSRPs more in line with their actual transaction prices may well be taking a step in the right direction. However, of course, weaning consumers from ‘deals' is no easy task, meaning that continued cost-cutting and other strategic actions should still be very much on the minds of manufacturers and suppliers alike."

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