Online Dealership Evaluation

Houston, Texas, July 2007

Surfing the top 20 car sites (cars.com, edmunds.com, autobytel.com...) will yield little insight into the choice of a dealer.

We'll have to dig a little deeper. I suggest building a list of potential businesses and eliminating those with bad records.

But note: texas-cars-and-dealerships.com does not rate, rank, or bad-mouth specific dealerships. Even the worst are working hard every day.

I can show readers how to find the dirt, buy it isn't my style to post dirty laundry. My job is to help my readers, who are indirectly my customers, have a pleasant and cost effective automotive experience.

When I find dealers who receive awards, have fewest complaints, and are heavily glad-mouthed in the forums, they will be promoted here. These dealers want to provide a quality experience to the best degree they can given the difficult circumstances in the industry.

Bad Boys, Bad Boys, Whatcha Gonna Do...

Car buying generates more consumer complaints than any other business. Outside the automotive retail journalistic space, car dealers are universally stigmatized as crooks. Legal experts estimate that 40,000 lawsuits are pending against dealerships in the US.

Internet brand and even dealer hate sites are numerous. Police calls to car dealerships where disputes turn violent are common.

I have had more negative than positive experiences with dealers.

But after researching many months for this site, I don't believe buying and owning a car has to be an unpleasant experience. There are good dealerships out there, but it will take work to find them.

Where you buy is just as important as what you buy.

Before the internet, car crooks could hide. A decade ago, when the net was emerging as a car shopping tool, sales staff hated the web-savvy buyer. Today every dealer publication I see urges the industry to get with the net or fail. Now, the best dealers welcome internet shoppers.

I do not endorse the blind deal fishing, "cross-shopping" method championed almost everywhere. To me, it is a sure fire way to find a fly-by-night operation or a lot full of trashy sales bank inventory.

So many new car buyers are shocked with the sell and forget attitude when their best price deal turns out to be a lemon.

"Shop the dealership as hard as you shop the deal", is the central theme of texas-cars-and-dealerships.

First we need a map showing dealer density and proximity to our daily path. I recommend Microsoft Streets and Trips, but even a paper map and stick pins will do.

One key parameter in dealership quality is density of competition. The worst dealers sometimes have exclusive territory within their brand, with the nearest same-brand dealer at least an inconvenient distance away.

Let's use the internet to research and refine our list of potential dealers.

JD Power Sales Satisfaction Survey

A national survey can provide the big picture.

J.D. Power and Associates Sales Satisfaction Index Study, based on responses from more than 42,000 customers, is a comprehensive evaluation of the new-car purchase experience.

Now in it's 20th year, the 2006 survey produced the following results.

Jaguar 912
Cadillac 891
Lincoln 889
Porsche 889
Lexus 887
Saturn 887
Buick 884
Volvo 883
Mercury 881
Mercedes-Benz 876
Hummer 874
BMW 873
Mini 873
Land Rover 872
Infiniti 868
Chevrolet 862
GMC 861
Ford 855
Acura 854
Saab 854
Pontiac 852
Audi 849
Industry Average 847
Hyundai 844
Honda 843
Jeep 841
Chrysler 839
Dodge 834
Toyota 832
Kia 828
Volkswagen 827
Scion 826
Subaru 825
Nissan 823
Mazda 815
Suzuki 810
Mitsubishi 794

While these brand results are no guarantee of a local dealer's quality, they are a general beginning.

Obviously luxury brands, with their higher margins, can provide a more amenable customer experience.

Note the disappointing scores posted by Toyota and Honda, the industry's growth leaders. Many are using the word "arrogant" to describe some Toyota dealers, I sure hope quality leader Honda is not following that example.

These import dealerships tend to be real busy, whereas a Jaguar, Lincoln-Mercury or Pontiac-Buick-GMC franchise may cherish every customer.

Although i have never been a buyer, the high marks for Saturn are no surprise.

Dealership Websites

Dealer websites often leave a lot to be desired. Many have been built by rip-off consultants who focus on flashy graphics which look good to dealers, but fail to impress knowledgeable surfers.

These sites are not content rich, the majority will never rank in search engine results. (Yes, car dealers who are web-naive are getting robbed by web designers.)

Some have mindless popup or popover ads. Many are merely copies of the pre-existing newspaper ads, hawking come-on low rate financing and cash back.

Good dealers increasingly recognize the need for improvement, but the auto retail industry as a whole is desperately behind when it comes to the web. A potential customer lands on the typical franchise's home page and is immediately hit with a sales lead qualifier.

Dealers need to start thinking like an internet customer. If we wanted a hard sell we would walk onto the lot.

To me the most important thing on a dealer's site is what the franchise says about itself: not how pretty the graphic of their manufacturer's halo model is.

Ideally the owner or executive is involved and willing to come forward with a welcome message on the site. This personal commitment is hard to fake. I'm not talking about photos of their grandchildren here.

Proud owners will want to brag about their average employee tenure, maybe measured in years, improvements they have invested hard-earned cash in to make the dealership user-friendly, Customer Service Index numbers, and awards their business has received.

If I owned a dealership, I'd shoot for at least 15 pages of text material selling the dealership itself: why is it better than the competition. I'd use customer testimonials and an owner's video tour inviting web surfers to feel at home on the premises.

Does the dealer website have an online service appointment scheduling form?

A low cost research method is calling the service number a few times: do they answer? "Leave a message" is pretty common.

Dirty laundry

Now try searching for your target dealer with a negative suffix, like "sucks."

When I Google Park Place Lexus sucks, none of the results is even about this Malcolm Baldrige National Quality Award recipient. No "complaints", "problems", "issues", or "criticism" anywhere. Of course, I picked the country club of car dealerships, with a 99.8 Customer Satisfaction Index (CSI) for this example.

But for Bill Heard Chevrolet sucks, I find about 15 sites with negative remarks. Do your own due diligence before every transaction.

There have been attempts to build a database of user dealer ratings, but these will take time to build depth. With so many copycat websites, input is scarce at all but the leaders.

Bad dealers will generate lots of customer growling at these sites, so they can be used for trimming our list.

In my opinion, the best site is www.dealerrater.com.

It has quite a few customer reviews of auto retail franchises in all 50 states and Washington, D.C.

cardealerreports.com has quite a few dealer write-ups, but seems to cover only four brands; Audi, Chrysler, Dodge, and VW.

This site has numerous Chrysler/Dodge dealership customer reviews, including many in Texas:dodgeram.info dealer survey

At other dealer rating sites, the actual reviews are buried and/or nonexistent.

This space is so overpopulated that even leader edmunds.com does not have enough buyer feedback for their dealership reviews.

At My 3 cents dealer complaints there is a list of about 400 dealers (nationwide) to scan for targets.

Another resource is www.ripoffreport.com, where you can search by dealer name. Unfortunately, the site is on a very slow server and times out frequently.

Lurking at enthusiast forums, many of which do have random accounts of dealer performance, is not an effective use of time.

Don't expect much from the government, fat sales tax revenues generated by car dealers protect the industry. Small time used car lots and parts sellers are the enforcement focus.

New car dealers are also big political contributors to, and active participants in, state government.

There is one Texas Attorney General page which can help shorten our list: Texas AG and 14 Houston Dealers

The Better Business Bureau, while less than perfect, is the first place many people go when they feel cheated. A bad dealership here in Houston has 153 complaints in the last 36 months. Yikes!

At the Dallas BBB website the above mentioned park Place Lexus shows 1 complaint in the last three years, none in the last 12 months.

Search Houston BBB will bring up the Houston BBB site search form. BBB's site requires the dealer's name as input, there is no broad display ranking.

Mo' Money

A key question consumers should be asking is: where is the money in this business?

Is the dealer selling enough new cars (a low margin business)? Or surviving by shifting to higher margin used cars, and finance office add-ons?

Is service revenue a profit center or loss leader?

A good place to start is Ward's dealer 500, which lists this information for 500 of the highest grossing franchises.

Wards Dealer 500 (.pdf file, requires adobe reader)

These successful dealers rely more on new-car sales revenue than the average dealer.

And new-car sales will generally make up a larger portion of total revenue in larger dealerships.

While these 500 are the top performers financially, the main point is to examine the relationships between new, used and service revenue, not necessarily to endorse these bigger dealers.

Ward's Dealer Business also lists the 150 top-performing franchised dealer service departments, including their income relative to total franchise revenue.

Started well before the current jalopy is ready to go, this list culling can protect car buyers from the worst aspects of the auto retail environment.