Outlying dealers vie for share of car sales

The ads used to say, “Drive a little, save a lot!” The implication being that if someone was willing to take a drive to Brighton, Fort Lupton or Fort Morgan, they could save a bundle on a new-car purchase. However, the reality is very different.Industry insiders say that getting a good deal on a new car depends more on factors such as the customer’s negotiating skills than the location of the dealership. While the battle may seem to be one of David vs. Goliath, smaller dealerships are still very much in the game.
“I would say they are doing very well,´ said Bill Barrow, director of the Denver-based Colorado Automobile Dealers Association. “They can, and do, compete with the city dealerships.”
Faced with competitors who have larger selections and more financing options, smaller dealers have found that stressing the hometown approach and providing the best customer service they can helps keep old customers and generate new business.
John Clatworthy, a General Motors dealer in Fort Morgan, said dealerships in Colorado face many of the same challenges and that there really isn’t a competitive difference based on location.
“There are advantages and disadvantages to both situations. I don’t know which is a better deal,” he said.
“I don’t think you can paint dealerships with a broad brush,” he added.
One reason the smaller dealers are able to compete, Barrow said, is because the manufacturer’s cost of new cars to the dealership is the same across the board.
“A dealer in Fort Lupton can buy a car for the same price as a dealer in Denver or New York,” he said.
Because they all start at the same point, Barrow said, the art of the car deal is flexible. Whether a customer gets a good deal depends on what they bring to the table in terms of trade-ins, credit history and negotiating skills.
Some customers may think they will get a break from smaller dealers on county and city sales taxes. But Barrows said this plays no significant part in a deal because the tax is paid to the county where the vehicle is registered, not where it is purchased.
The one area where dealers in smaller towns are at a disadvantage is in the number of vehicles that they may have on the lot.
Barrow said that while the small-town dealer may have 10 models of a particular car on hand, the larger dealers may have 100. Because of this, some customers may opt to go to a larger dealer in order to get the model of car or truck they are looking for immediately.
In addition to this, the larger dealers may have more financing options available than does the smaller dealer, which can play a part in where a customer purchases the new car.
Clatworthy agreed, saying that he knows of people who buy their vehicles in Denver because of the selection. But he added, just as many customers, many of them from the Denver area, prefer to deal with small-town dealers because they like the way they are treated or out of a sense of local loyalty.
Both Barrow and Clatworthy said the lack of selection isn’t really a problem, because the local dealer can get any model the customer is looking for, by purchasing the car from one of the larger, regional dealers or from the manufacturer, usually within a few days.
“If they are willing to wait a few days,” Barrow said, “they can get the car they are looking for.”
Clatworthy said that having an excellent working relationship is critical for the success of both large and the small dealerships.
“Without it,” he said, “the small dealer is a memory.”
While their size puts smaller dealers at disadvantage in terms of selection, it works for them on the balance sheet, the two said. Because they are smaller, local dealers have lower costs, which means they don’t have to sell as many vehicles in order to turn a profit.
“We don’t have to pay the multi layers of sales staffers,” Clatworthy said. “We don’t have six or seven sales managers.”
Customer service has been one area where local auto dealers have focused on setting themselves apart from their larger competitors, Barrow said. In this area, he added, the smaller dealers may have an advantage over metro dealerships, which can give the impression that the customer is just a number.
He said that frequently the smaller dealers devote more attention to keeping the customer happy after the sale with tactics such as frequent reminders for service calls, customer-satisfaction surveys and special events such as information sessions to go over questions the new owner might have.
Barrow said that many respond to this personal attention, and that regardless of where a person buys a car, they should be happy with the customer service.
“Buy a car where you think you’re going to get the best service,” he said. “Try to get a good relationship started with the service department. I don’t think that kind of relationship is impossible today.”
Clatworthy agreed, saying that improved customer service goes a long way to getting repeat customers.
“It is a lot easier to keep a customer than to try to develop a new one,” he said.