To be, or not to be, transparent in the car-buying process is still an unresolved question at many dealerships. Some dealers choose to be transparent, while others choose to hold their cards close to the vest. The thought process is that the less the customer knows, the more gross the dealership can eke out of every deal.

However, more consumers are demanding transparency in vehicle transactions. In Capital One’s 2023 Car Buying Outlook Report, car shoppers rated pricing and inventory transparency as the most essential factors for making a purchase decision. Yet, only 21 percent of those surveyed said the car-buying process was “very or completely transparent.”

Transparency Wins Deals

What do we mean by transparent? Dealerships may not disclose prices for used inventory, or they artificially inflate prices, then offer discounts and sale prices to attract customers. Dealers may undervalue trade-ins, or they may pressure consumers to purchase extended warranties and accessories.

The problem with these tactics is that when a dealership doesn’t practice transparency, chances are there is another dealership that is offering a more transparent purchase process. Where do you think consumers will shop if they have a choice?

According to the S&P Global Survey 2023, 70 percent of consumers say they are willing to work with dealerships farther from home if they offer more online purchase and comparison options. Specifically, consumers want to be able to negotiate vehicle prices, complete F&I paperwork, arrange test drives and negotiate trade-ins, all online.

The easier and more convenient your dealership makes the purchase process, and the more information you offer the consumer, the more likely they will purchase from your store—whether online or in-person.

Enhance the Shopping Experience

To make a purchase decision, a consumer needs more than just photos or videos and a few specs. To attract customers to your website and keep them engaged, provide access to a complete digital portfolio for every vehicle on your inventory pages.

A digital portfolio includes all the information a customer needs to make a decision, including window sticker data, vehicle history reports, the manufacturer’s brochure, photos, links to value proposition videos, the service reconditioning records from your dealership, and vehicle reputation information – all the details shoppers can’t get from the vehicle display page (VDP).

Links to these digital portfolios can also be sent out via email to leads. Consumers appreciate the information, as evidenced by email open rates as high as 70 percent on emails with links to digital portfolios included.

The Market is Changing

In the last few years, dealerships have made substantial gross per used vehicle due to consumer demand outpacing supply. However, things are changing, and quickly. According to Cox Automotive, in early May, the average auto loan interest rate for used cars was 13.55 percent, and the average car payment for used vehicles was more than $500 per month, according to Experian’s Q4 2022 automotive finance report.

Loan delinquencies are rising, and banks are tightening lending standards, which means fewer consumers are qualifying for loans.

The Federal Reserve has predicted that the U.S. will experience a mild recession in the latter half of 2023. Whether that prediction comes true or not, fear of a recession has put a damper on consumer spending. While demand for vehicles may still be high, some consumers are playing the waiting game to see if prices will drop further than they already have.

All these circumstances mean that dealerships are returning to a market with increased competition for fewer dollars. To thrive in this market, the ability to offer a transparent car-buying process to all consumers will be a crucial factor for success.