We are often asked, "Why hasn't the dealership sales model for automobiles evolved into a type of ‘Dell’ order-online-internet service?” The answer lies in the fact that manufacturers grew their sales networks through franchise systems, and when they found that the sales model was no longer efficient, they couldn’t pare the network back.

You might be surprised to know that almost 30 years ago, Ford Motor Company and General Motors, tried to decrease the number of dealers it had in its franchise system. Even then they had too many dealers. If they had been successful in their efforts, it might have set the stage for more experimentation, and a greater opportunity for the public to shop for automobiles in different ways.

Today, according to the Wall Street Journal, General Motors has almost 5 times the number of dealers in the United States as Toyota does, Ford three times the number of dealers, and Chrysler two and half times the number of dealers. The cost of addressing this problem is gargantuan. GM's phase-out of Oldsmobile dealerships cost them $939 million in 2001 alone. The Detroit Free Press estimates that it would cost the "Big Three" roughly $13 billion to buy out 6000 dealerships that are considered redundant by the manufacturers.

The main obstacle to rationalization is provincial and state laws that protect the local dealer. Neal Boudett of the Wall Street Journal (June 18, 2007) says that today, “Automakers can't simply force dealers to close . . . thanks to state franchise laws written to protect local businesses. Buying out dealerships is expensive, too.”

The result of this has been lagging innovation. Instead of feeling pressure to experiment in a variety of formats, such as the Internet model, or Japan's direct-to-the-home sales force, the dealership model has dominated. The costs of building a dealership today have skyrocketed, so today’s dealership owner is generally more committed than ever to bringing the consumer to the store. The investment is in the building, land, inventory and technology and is centered on the physical location of the dealership. This is something like what would happen if Amazon was not allowed to sell books online, so in order to compete with Chapters in Canada, or Borders in the US, they decided to build stores twice as large as Indigos. It might help sell more books, but it wouldn’t enhance the convenience of shopping from home, or lower the price to the consumer.

In the US you can start the sales process online at such websites as AutoNation, cars.com, and Costco.com. The manufacturers’ websites generally provide a wealth of information, and in Canada, Honda, Nissan and Volvo have customer friendly websites that are easy to navigate, and offer up lots of information in an accessible format.

What has allowed a better overall experience for consumers in hotel and travel management, and what will allow for a better experience in auto sales is Customer Relationship Software (CRS). Some dealers have tentatively committed to CRS, but most have been reluctant to invest too heavily in this avenue. It not only requires money for the software, but extensive training for the sales staff. Salespeople sometimes arrive and leave quickly, and it is both time-consuming and expensive to train people. So even though you may find a beautiful cappuccino bar, computerized kiosks, and lots of chrome and burnished wood, at your high end local dealership, they are often lacking in basic CRS training.

But customers working in technology, business, finance, education and the medical sectors, to name just a few of the prime areas of the economy, place a premium on time as well as money. They are the main clients for Internet automotive sales. Increasingly people do not want to leave their workplace, or home even to buy a major purchase like an automobile or truck. They prefer to deal with the same sales representative, whether they are purchasing a Honda, Subaru, or BMW, and they want their representative to remember the colours they prefer, whether they like a five speed manual transmission, or dual zone air-conditioning. With an Internet company the emphasis is on the customer, and CRS is an important tool for providing higher levels of customer satisfaction.

It is this audience who is demanding transparent, customer friendly information, speed, convenience, and upfront, friendly service. They ask, “Why spend upwards of four hours driving to and from a dealership, negotiating with a salesperson that might or might not have the authority to complete a deal, all without even knowing for sure if the deal will be successful?”

The needs of these individuals are being met today by cars4U.com. We offer a real call centre, staffed with OMVIC Certified Professionals, a laser like focus on the needs of our Internet clientele, and a commitment to offer only products of real value, at excellent prices. Our business culture is built around a dedication to innovation, to finding the best ways to enhance the experiences of you, our customer.

Abraham Blinick is Operations Manager @ cars4U.com, and can be reached at ablinick@cars4U.com. He has 24 years of automotive experience.