Buying a car is one of the most important decisions you may make this year. Cars, trucks, and SUVs are not inexpensive, and if you are like most people, you will probably have to either lease the vehicle of your choice or seek financing to pay for it. You want to buy a car that is reliable at a price that you can afford. That is why the choice of a car dealership is so important. Let’s face it, not every car dealership is the same. Even if you live in an area with many car dealerships, often for the same brands, your experiences with each may be greatly different.
The choice is not easy. According to the National Automobile Dealers Association (NADA), there were 16,741 franchised car dealerships in the United States by the middle of 2019. If you live in some states like California (1,315 car dealerships), Texas (1,202 dealerships), Pennsylvania (877 dealerships), Florida (872 dealerships), or New York (851 dealerships), the choice of which franchised dealer to go to can be difficult. Keep in mind that these numbers do not include non-franchised used car dealerships. This is especially important because the used and pre-owned segment of the industry has grown by 1.2% over the past year as compared to the decline in new car sales by 0.2% over the same period. Therefore, you will need to take some steps to make sure you are choosing the best dealership for your next car, truck, or SUV.
Are All Car Dealerships Created Equal?
The answer to this is pretty simple: an emphatic “NO!” Like any consumer industry, some dealerships are extremely trustworthy, while others are unscrupulous, often giving the entire industry a bad name. This is what happened with many non-franchise used car dealers where the market for reputable ones was undercut by the many fly-by-night dealerships. One resource that is very helpful is provided by J.D. Power & Associates, which seems to have a rating for practically everything. Each year, they rate franchised dealerships by brand to see which ones provide the best overall experience for consumers. For 2019, the top brand was Buick with a score of 92, followed by Mini with 91, Chevrolet with 88, Porsche with 88, and GMC with 87. Land Rover finished last on the survey with a score of 65.
While this does not mean that every Buick, Chevy, or GMC dealership is going to give you the best experience, it does show that the manufacturer has been taking steps to police its franchised dealerships, making sure that they put the customer first wherever possible. Furthermore, the fact that these are three brands under the General Motors corporate umbrella speaks well of that company’s dedication to the consumer’s experience.
Also, many dealerships offer different services. Some are just in the business of selling new and/or used cars, while others offer maintenance and repairs. Many of these with their own service centers will offer discounts for routine maintenance like oil changes and tire rotations or will be willing to include some free services as part of the car purchase negotiation.
Why Are Car Prices so Different?
One question that always comes up is that you can visit three different franchised dealerships looking to buy the same vehicle, yet come away with three vastly different deals. This is because the prices of cars are based on a manufacturer’s suggested retail price (MSRP). In other words, the auto manufacturer may set an MSRP, but the dealer is free to sell the car to you for a different price. This is because anti-trust laws prohibit manufacturers from price-fixing, so the franchised dealers, as independent entities, can price the vehicle differently from that suggested by the manufacturer.
A great deal may depend on how much inventory of the specific vehicle that the dealer has as compared to other franchised dealers of the same manufacturer in that region. It may also depend on competition since dealerships are often rated by manufacturers based on sales figures. If the dealer you are negotiating with has seen a lag in its sales, it may offer you better terms than other dealers. Finally, some dealerships are more profitable than others and do a better job of controlling costs. Like any other profitable business, they can pass the savings in overhead onto you, the consumer. This is why it is often crucial to shop around for the best terms possible.
Individual Dealer Reputation
When I was a kid, long before the invention of the Internet, my parents had to rely on personal experience and word-of-mouth from family and friends when choosing a car dealership. If my uncle had a good experience with a dealer, it made it more likely we would go there for our next car. Similarly, if my next-door-neighbor felt he’d been cheated by a dealer and got a lemon, then the folks on the block would think twice before making the same mistake.
Unfortunately, such type of information is anecdotal at best, and very random. My uncle may have just gotten lucky or done a better job of negotiating than my parents. My next-door-neighbor may have just gotten unlucky, and the problems were not the fault of the dealer. There was really no way to know about the credibility of the information since it was such a small and random sample size.
This is where the Internet is your best friend in choosing a car dealership. There are plenty of review websites for each car dealership, regardless of where they are located or which brand they are franchised to represent. Just type in the name and location of a dealership into your search engine and watch the results aggregate. You will get reviews from such websites as Google, Dealer Rater, Yelp, Cars.com, Facebook, and Kelley Blue Book. Many of these are written by fellow consumers who are willing to share their experiences, good, bad, and otherwise.
In addition, you can go to the website for the Better Business Bureau, which will give you an overall score for the dealership, information as to how long the dealership has been in business, and also list all open and resolved consumer complaints made against the dealership. This breadth and depth of information far exceed anything we had when I was a kid. While it is rare that any business will be able to operate without one or two customers complaining, the ones that have frequent and consistent complaints should draw your attention, since it would appear that these dealerships are not focused on improving the customer experience.
Finally, one of the best ways to decide on where to buy your next car is from personal experience. Go out and visit a number of dealerships. Take the time to talk with the salesperson, as well as people in the service center. Test drive a number of different vehicles to see which one suits you the best. Also, this will show you whether the dealer is really focused on the customer experience. A dealership that puts the customer first will show you a great deal of patience, will not spend the visit trying to steer you into one car or another, and will not be pressuring you to make a deal. The best car dealerships are the ones that understand that the decision to buy a car, truck or SUV is a major decision in your life, and will be willing to take the time and energy to ensure you have made the best decision for yourself based on your wants, needs, and budget.