Crushing the Competition in the Automotive Industry

Any current headline will tell you that the auto industry is doubled over and writhing around on the floor grimmacing in pain. Without a clear differentiator the major auto companies whack each other over the head competing with ever-larger rebates.

One area of innovation no one has been brave enough to tackle is the sales and delivery pipeline. What is the one thing universally hated and reviled above nearly all other earthly creations? The car salesman! I suppose there are many reasons to hate car salesmen but one sticks out in my mind: these guys train and drill relentlessly, like Navy SEALs, to perfect techniques to manipulate and coerce a hapless customer into a purchase decision that may not be in their best interest. Since the average consumer is so ill-equipped for this kind of hard-nosed "negotiation", and the bargaining table so stacked in the dealer's favor, most people come away feeling taken advantage of--and they're probably correct!

What real value does the car salesman offer? For the short term blip of a sale today people often wind up in "upside-down" car loans that hurt their ability to buy a new car later. They don't benefit the car maker. The salesman-based business model is tired and its time to get rid of it. Disintermediation is the new world order! Kill the middlemen!

Now consider what would happen if a brave car manufacturer got rid of the whole dealer/salesperson model and went with a straight store model. Go to the mall and see and test-drive sample models but order and buy either online or at a kiosk in the store. Salaried staff that don't work on commission can help facilitate these functions. The service departments can either be owned by the car maker or licensed out to certified franchise operators.

Whouldn't that be a radical change? Saturn almost got to that point, but not quite. Even so, for a time the Saturn dealer experience was very highly rated by consumers.

Let's see who'll be first to be brave enough to tamper with the sacred cow of the car salesman business model!