Why is a Mercedes-Benz worth more at an Audi dealer than a Mercedes dealer?
In this auto business there is all the talk of social media, accompanied by a myriad of systems and software. Dealers are encouraged to have a presence here, there, and literally of over the place, and convert leads into a prospect, at least a showroom visit.
What closes a deal is the "moment of truth" in the showroom.
Here is the "true story"
This Mercedes-Benz customer visits his local M-B dealer on a Saturday morning where the current vehicle is serviced. The tentative deal is to trade in the current M-B for a newer model.
After the initial small talk, the promotion/incentive of the month is offered on the new vehicle, an individual appraises the used vehicle, and offers a low price.
We all know that when a trade in is involved its either a smooth process, or a level of "intellectual friction" starts arising. On this morning the "friction" started arising, reinforced by some questionable arguments. The dealer mentions "if a transaction does not make business sense for the dealer they will not entertain it further".
If you conclude that there is a strong level of arrogance in such a statement we agree with you. Perhaps their success clouds their showroom thinking, empathy, understanding, and desire to do a deal.
The dealer made it abundantly clear that they had absolutely no desire to do a deal that morning, on that new vehicle, with that particular trade in.
Obvious that when the trade in went for service this same dealer was very motivated in the service work, and taking the money.
We could keep on going, suffice it to say that the customer leaves with a bitter after taste.
The reality in 2014, if a customer leaves the showroom without doing a deal, and a bitter aftertaste of enduring "intellectual friction" it will be difficult to get this customer back in the showroom.
A few hours later at the Audi showroom, with no "intellectual friction" the Mercedes-Benz trade in is worth 20% more than at the M-B dealer, and the Audi incentives of the month have a higher value proposition than the M-B incentives.
Its a foregone conclusion where the deal was done.
We all know, in an age of social media, blowing a deal out of your showroom can take on a life of its own.
Why was the Benz worth more money at the Audi dealer?
The M-B dealer was "low balling" and insisting on low balling the trade. The Audi dealer paid a fair wholesale price for the trade. The monthly incentives on the Audi have more value than the incentives on the M-B.
The Audi dealer has an innate understanding that in 2014 an individual in the showroom deserves a genuine team effort (sales person/appraiser/business manager) to remove any and all intellectual friction, and close a deal.
Its only 1 customer, 1 deal, 1 trade in on a Saturday morning, the Mercedes dealer walked the customer driving a Mercedes, the Audi dealer acquired an Audi customer.