I’m sure we’ve all seen news reports of traditional car dealerships experiencing tough times, financially speaking, in the current economic climate. I’ve seen reports of ‘buy a car, get a second car free’ sales in both England and the USA: and I know of a number of dealerships that have closed their doors.
Now, from Germany, comes news of an entirely new approach to selling cars.
The discount supermarket chain Lidl is known for offering rock-bottom prices on everything from pickles to bedroom furniture. Starting Monday, Lidl will see if its low-price formula work selling cars.
Lidl’s online store will begin selling Opel’s Corsa and Volkswagen’s Cross Polo at about 25 percent off the list price, the company announced on Friday.
The Corsa’s list price starts at just under €11,000 [US $13,900] and the Cross Polo at just over €15,000 [US $19,000].
“Comprehensive” accessories will be available for both cars, which will also come with a two year manufacturer guarantee.
Very interesting! The supermarkets will cut out all the traditional dealership overhead of spare parts stocks and workshops, mechanics, repair facilities and so on, and probably won’t employ car salespersons in the traditional sense. This cuts their cost of sales very significantly. Even more interesting is that the car manufacturers are clearly on board with this new approach, offering a warranty on the cars sold through supermarkets.
What does this mean for the traditional car dealership, here in the USA as well as in Europe? That’s an interesting question. If this approach becomes widespread, I guess dealerships in their present form might begin to decline, whilst independent servicing and maintenance workshops will increase in number to take on the workload normally handled by the dealerships. As to how warranty claims will be handled, we’ll have to wait and see.
However, I can see one potential problem. You know how wives are always complaining that they sent their husband to buy some bread and milk, and he came back with half a dozen more things that they hadn’t asked for and didn’t want? Well, now he can come back from the supermarket with a brand-new car as well! I foresee complications . . .
Peter
Here in the US, for a dealer to have a franchise they are required by contract to maintain a service department at certain (expensive) standards.
Should the supermarket trick be done here, I can see an endless supply of law suits.
Back when I was in Abu Dhabi, there was a Lion-Mart(French supermarket chain). It was a five-story operation that sold Mercedes on the ground floor.
Hmmm… At first glance this sounds like a good idea. Cutting out the middle man that does pretty much nothing but add to the retail price of a vehicle. I’ve never met a sales person I liked anyway. They are all crooks and leeches in my opinion.
However, I do see where it could become a problem if car dealers went out of business. It would make it rather difficult to get quality parts and service especially when it comes to getting warranty service.
Cutting out the lazy ass sales person that does nothing but add to the cost sounds great but I think it would have to be well thought out and planned (by someone that does not work for the government) to assure that quality parts and service are readily available. I’m not talking about Bubba the shade-tree mechanic with a garage full of rebuilt or after-market parts made from pot metal in Taiwan either.
I think new car sales are the biggest scam in the USA, second only to jewelry sales. If people knew the real markup on these things (not the markup the dealer tries to say he’s getting) I think many would switch to bicycles and other modes of transportation.
Joe