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Is The Day Of The Dealer Dead?

Subaru have dropped a bombshell on their dealers with the launch of their new sports car-the BRZ.

They’ve told their dealers that they can’t sell it, as it’s only available over the internet.

They call it a ‘World First’. The BRZ will be the only car not to be sold through a dealership, as the potential customer is ‘able to complete the entire purchase on-line’ said Nick Senior, MD of Subaru Australia. About half the established dealers will be allocated a demonstrator, and a delivery fee will be paid to the suppling dealer, but customers still have to book their test drives on-line. And what happens if they aren’t on the internet? Subaru says they will have to borrow a connection or go into a dealership and use theirs. But what if they have a trade-in? Well, says Subaru, the on-line purchasing process will allow buyers to arrange a trade-in valuation if required.

In fact the whole process will be completed on-line by the customer, including choosing a colour, specifications, and choice of preferred dealer to arrange collection or delivery.

This is a very brave initiative by Subaru, and is clearly taken from a position of strength, in that there is very limited supply of the new and fashionable BRZ sports car.

But there is a very close competitor in the wings. The Subaru BRZ is virtually identical to the new Toyota 86 GT. They are made in the same factory in Japan by Subaru and are only distinguishable by cosmetic differences and varying specifications.

Toyota sells its basic model for just over $34,000 on road. The Subaru BRZ sells for $37,150 on road but is equipped with a number of extras such as auto on/off headlights, alloy pedals, dual-zone air-conditioning and 17″ alloy wheels to justify the premium. Topping out the range is the Toyota 86 GTS, which also boasts sat/nav and other goodies, and comes in at around $40,000 for the auto.

But the Toyota is sold in the normal way through nationwide dealerships (but still in very limited stocks for the short to medium term).

Other manufacturers, franchise holders, dealerships and importers will be looking on very keenly to see if this game changing step by Subaru works. Initial reaction has been incredibly successful, and the Subaru marketing team will be basking in their own success, having seen the whole of this year’s allocation of BRZ’s selling out to an eager public in 3 hours, even though buyers had to overcome website glitches that occurred due to very high traffic.

If it does continue to work (and this is an ominous start), will that mean that discounts, deals and car brokers are a thing of the past?

Does that mean that that you never need to talk to Private Fleet to get the best deal? Jeez, are we out of a job??

Or is this just a passing fad, used to get a bit of publicity for a car that’s virtually unobtainable right now anyway?

Have they shot themselves in the foot? Are Subaru dealers happy? Will it catch on and is it a sign of the future? And are you happy to miss the dealer experience? Oh, and what’s going to happen to the 50 demonstrators that some dealers will have on their forecourt, but with no cars to sell?

Let’s have your say below.

 

26 comments

  1. Danny Hannon says:

    A lot of car dealers have been shooting themselves in the foot for years.
    Slimy dealers ripping off grandma’s and all for bragging rights around the lunch room. Unlike the city, your choices are more limited as you leave the metro areas and this is the sort of service you come to expect. Inflated prices, practises verging on dishonesty and hidden extra’s are all part of the game.

    A can sometimes understand the parent car companies being frustrated with their so called dealer network.

    Private Fleet will still have a major game to play though, they will be able to compare Toyota against Subaru. And if you are in the market for say twin cab 4wd and brand names didn’t matter then there are many suppliers.

    July 26th, 2012 at 10:53 am

  2. mike says:

    It’s a passing fad and a publicity stunt. It can only be used for cheap or specific models.
    I can’t imagine buying an $80,000 Audi or a $140,000 Merc through the internet without any dealer discounts.. Can you?

    July 26th, 2012 at 10:57 am

  3. Bart says:

    Time will tell if it’s a fad. But that’s what they said about online retail shopping. People cannot possibly buy shoes and clothes over the net? Nor can they buy electrical items! It’s the fastest growing method of shopping in the world. Every major retailer has or is developing on line stores. As part of their retail strategy they plan on reducing the number of stores or dramatically reduce the floor space to reduce costs and increase margins or pass on savings. This model is inevitable along side a drastically reduced dealer network which will also be replaced with smaller shop front style salons

    July 27th, 2012 at 12:40 am

  4. Gary says:

    Seling direct to the public amnd providing finance at way below market rates. They are not only shortchanging the car dealers but also finance brokers.

    July 26th, 2012 at 11:03 am

  5. Ross Jenkins says:

    I reckon dealers are now going to get their come-uppance; they failed to re-price their cars when the AUD went up sharply against the USD, Sterling and Euro, now the sales paradigm is being changed

    July 26th, 2012 at 11:12 am

  6. John Schrieber says:

    Interesting.
    I bought a Calais a few years back and was able to log in and price all the extra’s I wanted, inclusion colour, trim,wheels,skirts and tow bar etc. Was called Holden by design. Doesn’t appear to be available now.
    I just nominated the local Holden dealer and they priced my trade and did the delivery.
    Thought that was a great scheme as allowed you to view different configurations, especially with wheels to see which you liked most.

    July 26th, 2012 at 11:12 am

  7. Country Client says:

    I like many aussies want to feel , see , test drive, and THEN negioate !! What about trade ins ect. ITS BS .
    Volvo tried this in Europe , failed .
    Subaru will be surprised by this elitist attitude and marketing ploy .

    if i want one it will be the toyota and private Fleet will be used !

    July 26th, 2012 at 11:14 am

  8. Bart says:

    Everything in society is changing. The way in which we interact with each other, how we communicate with internal and external customers, how we are embracing the internet to make purchases and how we percieve the value offered by retailers.
    This concept – in the automotive industry -has been in the pipeline for many years now and Subaru should be congratulated for showing leadership, audacity and tapping into a specific need from customers.
    I believe that that this will attract a niche market to start off with (and Subaru will aim to use it as a pilot project) and eventually it will become the standard along side the exisiting dealership model. The impact will be that many dealerships will have to down size and simply be a ‘shopfront’ with less staff.
    We shouldn’t be shocked or really surprised with this decision from Subaru as what is the unique ‘value add’ that a dealership or salesperson offers a customer? Whether you buy a car from a dealership in suburb A compared to suburb B or C there is no real benefit (in my opnion) it only causes delays in negotiation, and apart from saving a nominal amount (as prices are set) the dealerships do n0t add any value.

    July 26th, 2012 at 11:17 am

  9. Alistair MacPherson says:

    Just like the banks .All the the whizzbang of the internet , but you still have people waiting at the counter . I think the people still like the personal touch of people to people .
    Remember the older generation is growing and the great majority will not be buying new cars off the internet.

    July 26th, 2012 at 11:19 am

  10. denis mulheron says:

    i believe the current model for dealers has a very short future, manufactures want dealers to build multi million dollar showrooms on prime real eastate with return on investment being up to 2% . i was in china recently the way they sell cars i believe is the way we will sell cars in the future, they have a huge wharehouse about the size of a bunnings store in an industrial suburb all makes are featured nothing fancy also the service divisions are in industrial areas. this will be the way cars are retailed in the future

    July 26th, 2012 at 11:30 am

  11. Tom Smith says:

    I suspect that many people who are your customers (like me) came to you because they don’t like the dealer experience. They don’t like the game-playing, the haggling, the frequently unpleasant nature of the process of purchasing the second-most expensive item in our lives. We came to you because you saved us money and saved us from having to go through what should be an exciting, fun time but is all too frequently a bruising experience. Most of us buy cars infrequently; probably every five or six years or so. From a negotiating point of view, we’re at a severe disadvantage against salespeople who do this thing many times a week.

    I suspect you’re right, this is a gimmick for a hard-to-get car (at present). What will happen after the initial flush of enthusiasm, say after 12 months, when the production lines catch up and the holding yards are full? Are you going to see Subaru put the cars on eBay where buyers can bid, and quickly determine what the real market price of the car is? I don’t think so.

    Going to complete on-line purchasing and getting rid of dealers means that auto-makers will still have to have showrooms, since buying a car is a very emotional, tactile thing. They are going to have to have service facilities and all the infrastructure needed to back the brand. It will cost an enormous amount of money to buy out dealers, and the negative publicity that will inevitable ensue will damage the brand quite badly. Subaru is a struggling brand, in spite of Toyota’s shareholding, and I don’t think they can afford that sort of pain.

    July 26th, 2012 at 11:33 am

  12. Peter KORTGE says:

    Hi:

    It’s a sign of the times – buying over the internet.

    This system may work for a popular, limited run car like the BRZ, however it probably won’t work for the majority of high volume make/models in that how do you “haggle over price” when purchasing online?

    Unless, of course, someone comes out with a really great car at a decent price that people are prepared to pay the stated price for.

    But, most people will still want to shop around for a bargain and will be loyal to their local or “preferred” dealer (if they have one).

    That said, a lot of dealers these days are a “waste of space” and attempt to rip you off with their initial pricing and/or try to shift superseded models as being new.

    There are too many bad dealerships around and they need to be (and will be) weeded out over time.

    This Dealership reduction can’t come soon enough in my opinion 😉

    July 26th, 2012 at 11:35 am

  13. jp says:

    Subaru will not pass any discounts in to customers for buying through the internet they are making savings for their company by selling the car this way but for the customer there is nothing and if you have experienced buying from the internet you will see that there are no savings at all, as a sample airdrone 2 sell in the internet for $299 american dollars + $64 for freight without insurance, buy it at EB games $349.00 with warranty and personalize service.
    With the Car dealer you have the opportunity to get more service, finance help, a cup of coffee a great experience , what is the point to go to the dealer to see acar and then return home to do the paper work when you should be ready to dream about driving your dream car.

    July 26th, 2012 at 11:36 am

  14. david milton says:

    In a way, this way of selling cars is not new. When cars where first sold in the UK, you could only purchase one from the factory, from add’s placed in Newspapers, you got them serviced at your local Petrol Outlet who was also serviced cars & trucks, that’s why Petrol Outlets where called Service Stations. Not today. The motor manufacturers to increase their sales then opened Showrooms so you could view their products, but you still had to order from their factories. then the Showrooms started to place the order for you, and the car instead of being delivered to your home, was delivered to the Showroom, and that is how Car Dealers started, they also added a Service Department.

    Kind Regards, David Milton.

    July 26th, 2012 at 11:41 am

  15. HM says:

    Exactly how it should be. The last time I puchased a car, a new Toyta Prado, I used a car buyer and haggled. In the end I saved $8K off the price I was initially asked to pay by the dealer I bought it from! Imagine if I’d paid that full price and the car was actually worth $8K less than I paid when I walked out the door. Actually, what is the difference between that and theft or fraud? What if I’d financed the car and been paying off the extra $8K over five years? Car dealers have nobody but themselves to blame. Cars are a product and should be sold at a flat price — there is no reason or excuse for variable pricing. Good to see e-commerce and digital channel smashing one of the great rip-offs.

    July 26th, 2012 at 11:44 am

  16. Darby Ashton says:

    With no dealers, what happens if you have warranty issue?

    July 26th, 2012 at 11:45 am

  17. Dennis Bell says:

    I think that it is only a fad, due to non availability of vehicles. Imagine if Nissan or Toyota did such with their electric cars – they would never sell.
    I think that Proton have been doing a similiar thing for years, as I have never seen a Proton dealer.

    July 26th, 2012 at 12:27 pm

  18. Jerry says:

    If it cut out the farcical deal-delivery charge I would be in favour.

    Having had to do my own dealer delivery for a brand-new slightly hail damaged Holden I learned:

    The factory warranty is still good.
    Stripping the plastic off the seats and paintwork is a matter of moments, as is fitting the hub-caps.
    Checks of fluids ditto.
    My son did the clean and polish for me.
    Registration was the longest part, having to wait in a queue for 20 minutes. then another 5 minutes fitting the plates.

    How on earth can dealers get away with what they charge?

    July 26th, 2012 at 12:44 pm

  19. Rockman says:

    Its a sign of the times, for many cars, you don’t even need a test drive.
    And imagine not having to deal with car salesman. It would make the whole process more pleasant. If you cut the dealers/etc out of the equation, then the cars should also drop in price….

    July 26th, 2012 at 12:54 pm

  20. Anthony says:

    What a great idea, buying on the web seem to be cheaper and easier. Will this also mean that we can place an order on the USA site and pick the car up here in Australia at a fraction of what it would normally cost. The normal justification for the high cost of good in Australia is that; staff costs are high; real estate costs are higher etc. So now with a JUST IN TIME mentality things should be cheaper than what we have ALWAYS experienced. Maybe we even get an exchange rate benefit too.

    Time will tell.

    July 26th, 2012 at 1:16 pm

  21. Andew says:

    One can buy just about everything on the Internet so should cars be available and bypass the middle men. I dislike dealing with car dealerships and next time would plan to deal with Private Fleet or purchase online.

    July 26th, 2012 at 3:27 pm

  22. Errol says:

    As I see it, it probably won’t really make a difference to the car market. It appears to be a publicity thing for a limited edition car to boost interest by buyers who aren’t interested in demonstrations and will be looking at ‘investing’ in a limited unit.
    As for the concerns about discounting. There is no such thing. Dealers will sell for the highest price possible so that only a few buyers will actually be buying at a ‘reasonable’ price. Trade-ins are another nonsense where buyers believe they are being given an amount for their old vehicle when in fact, a better price is available without a so-called trade. Generally, the dealer is taking your old car off your hands and may sometimes sell it on, but usually it will go to auction to increase their new vehicle markup. Keep your old car and sell it privately for half what the dealer offers you as a trade and you will be well ahead at the end of the day.

    July 26th, 2012 at 3:54 pm

  23. Just Joe says:

    This will never take off and become the norm for the simple reason being with no competition within the brand the car maker will simply charge what they like, eg Subaru selling the BRZ for $37,150 on road in Australia and because it is selling so well puts the price up to $47,000 because they can and you cannot go anywhere else in the world to buy one. That sort of market control would spell disaster for the company and buyers would just take their money to a car maker that still offered them some control over how much they are prepared to pay by negotiation over the price.

    We all want the best deal for our hard earned cash and I for one will not make that sort of purchase without knowing I’ve tried to get the best bang for my buck.

    This sales pitch from Subaru was aimed at those who don’t care about the cost and only want to be seen driving a limited edition vehicle which happens already.

    Every time you have to deal with a car dealership, whether for purchase, after-sales service or spare parts you always walk away feeling like the buggers have just fleeced you one way or another.

    The opportunity for some kind of standardisation in car prices is long overdue but purchasing only from the internet will not be the way in achieving the satisfaction that the buggers haven’t just ripped you off and left you feeling unclean even though you were only just looking.

    July 26th, 2012 at 3:59 pm

  24. Arnold Long says:

    2 new motor bikes many years ago .. great service from the dealers 4 new cars in 15 years rotten service from the dealers .. buying on the internet cannot be any worse.

    July 26th, 2012 at 6:34 pm

  25. Gary says:

    It won’t take off, I had a choice of two cars and chose the one that had a local dealer, yes they might charge more for some things but at least they know your car and are in contact with the makers for up todate info on issues etc. The internet is great for small things but something as expensive as a car I like the human touch with a dealer ship you can visit when things don’t quiet go right!

    July 26th, 2012 at 9:29 pm

  26. ED says:

    Where do Sube envisage the BRZ being serviced? Will the service be at a premium cost rate to cover the costs normally amortized by the dealer to their service dept from a dealer based sale? How does the customer get the best price with this web only sales scheme? The short answer is that he doesn’t. PF at least go to the market for competing quotes, but this is a “take-it-or-leave-it” manufacturer biased transaction based on a “retail” web price only. The buyer has no choice. To me it smacks of manufacturer arrogance and contempt for the buying public. My sense would be……… BUY THE TOYOTA, AND OPTION IT UP AGAINST THE BRZ!! This scheme sounds like something the fed govt would devise!!

    July 27th, 2012 at 4:52 pm