You can't beat our prices! Everything must go! No reasonable offer refused! You don't need a hard sell to be convinced that the Web is reshaping the way people are tackling one of their most personal, most important — and, all too often, most unpleasant — buying experiences: buying a car. Just look at the statistics: A 1999 J.D. Power survey reported that the percentage of new-car buyers who make some use of the Internet before they buy a car is up to 40% — compared with just 25% in 1998. Such sites as Autobytel.com, Autoweb.com, Microsoft's CarPoint, and Cars.com are just a few in the growing roster of sites designed to give car buyers more information — and, in theory, more clout with dealers. Autobytel alone claims that purchase requests on its site generate sales of $1 million an hour.
But why rely on statistics when you can read testimonials from satisfied customers? Take, for instance, Tracy O'Such, 38, vice president of executive recruitment for Cablevision. She recently decided to upgrade from a 1991 Mazda Protegé to a new Mercedes. She did some research, visited a dealer, went for a test drive, and did some pricing research on the Web to get a realistic estimate of what she was willing to pay. When the dealer refused to meet her offer, she walked — to the Web.
O'Such tried priceline.com (www.priceline.com), the name-your-price service that at first sold only airline tickets but has since expanded into other products, including cars. She placed her bid, and within 12 hours priceline notified her that it had found a dealer willing to match her price. Here's the kicker: It was the same dealer that O'Such had walked out on the day before! "I couldn't believe it," she says. O'Such got her 1999 Mercedes C280 for about $3,500 less than the manufacturer's suggested retail price (MSRP). "I'll never go to a dealer again, except to test-drive a car. After I do that, I'll just go to priceline, put in my bid, and wait for my car to come to me."
Road warning: Not every virtual car deal goes that smoothly. The Web does indeed promise to reshape the relationship between customers and dealers. But that change is still in its formative stage. Today, the Web is most powerful as a tool for educating buyers in the range of choices they have, in the strengths and weaknesses of a particular model, and even in such little-known details as the price the dealer paid for the car you want to buy.
Still, if you envision a bidding war for your business — 10 dealers fighting to sell you a Ford Explorer — expect to be disappointed. But if you want to be able to negotiate from a stronger position, then the Web is the place to start. Consider this edition of @work as a road map for buying a car on the Web. On it, you'll find evaluations of the top car-buying services and tips from an industry insider on how to get the best deal, as well as directions to useful sites that can help you wherever you are along the car-buying highway. So fasten your seat belt, and get ready for an eye-opening ride.
Where to Start When Your Car Won't
Monday morning and you're late for work. In a panic, you spring out of bed, throw on some clothes, grab your briefcase, and jump into your 10-year-old car that's got 150,000 miles on it. You turn the key — and, for the third time in a week, nothing happens. You need a new car. But should you go for the Saab 900 that so many of your friends are driving? What about the roominess and reliability of a Ford Explorer? How much can you afford? What kind of car would you design for yourself if you could?
Go to the Web: It can help you get answers to all of those questions — and it's a great place to start when your own car won't. CarWizard's data engine on Lease Source (www.leasesource.com/workshop) looks like the dashboard of a car. But what's really impressive is the data engine's features: The "Make/Model" search is perfect if you already know what car you want to buy. There's also a "Type" search on vehicle categories (pickup, convertible, SUV, van, and so forth). Plus, the site suggests vehicles based on your seating-capacity and drivetrain preferences as well as on the number of miles you drive per year. The "Payment" search lets you specify a monthly loan payment, a down payment, and loan terms. After you key in your choices, you'll get a list of suitable cars.
Still feeling lost? Then visit CarMatch on Personalogic (www.personalogic.com), a division of America Online. This site's Q&A format guides you through a series of questions on such particulars as car type, price, size, safety ratings, and preferred manufacturer. A running tally is shown on the left-hand corner of your browser that lets you know how many cars are in the database and how many make the cut, based on your specs. When you've completed the questionnaire, you'll get a list of vehicles, in order of most to least suitable, that fits your profile. You can then email the list to another address or save it on your hard drive.
Once you've narrowed your choices, you can begin more in-depth research. Here's where the Web pulls out in front of old-fashioned information-gathering techniques. Edmund's (www.edmunds.com) is a comprehensive source of auto reviews and pricing, as well as information about customer and dealer incentives and rebates. Its Web site makes it easier than ever to get access to all of the information that you need. The Kelley Blue Book (www.kbb.com), which traces its history back to a Model-T dealership that opened in 1918, has a Web site that provides information on the values of new and used cars. Another valuable resource is IntelliChoice (www.intellichoice.com). The site provides side-by-side comparisons of features and prices for up to four competing models and also offers reports on dealer-invoice prices, safety and performance data, and lifetime-ownership costs. That information may cost you, but it's well worth the price.
Some of the most useful innovations in new-car research come from the automakers themselves. Sharon McNeill, 36, director of corporate marketing for Documentum, a software company in Pleasanton, California, knew that she wanted a 1999 BMW 540i. What she didn't have was the color — or the time to visit a showroom. So she went to BMW USA (www.bmwusa.com). When she entered the site's "Virtual Center," McNeill saw a grayed-out, side-view picture of a 540i. Next to it was a view of the interior. She experimented with a number of exterior and interior color combinations, to get a sense of what the car would look like, and chose the options she wanted. Meanwhile, the MSRP was being revised in real time. After putting together her titanium silver metallic 540i, she got a "virtual walkaround" of the car. Once she was satisfied, she clicked on an email button to locate a nearby dealer. "I did this because I knew I wanted a BMW," McNeill says. "So why not go directly to the company?"
This design-your-own-car feature is available on many carmakers' sites, including Ford, Volkswagen, and General Motors. gm BuyPower (www.gmbuypower.com), for example, provides pricing and financing information on all gm makes, models, and options. In addition, prospective buyers can search dealer inventories and schedule test- drives. Interested consumers can even email a dealer to hold, locate, or order a vehicle.
Most of the sites discussed so far relate to new cars. But there are plenty of services for used cars as well. Two that can help you steer clear of lemons are Carfax (www.carfax.com) and Vehicle History Report (www.vehiclehistory.com). If you have a car's make, model, and vehicle identification number, Carfax and Vehicle History Report can give you a vehicle's history. A report includes information on whether the car you're considering has been a rental, whether it's been in a major accident, and whether the odometer has been turned back. Carfax reports that are requested over the Web cost $19.95, and $29.50 if ordered by phone. Vehicle History reports cost $19.95.
When It's Time to Buy
Sure, the Web makes researching new-car choices faster and easier than ever, but the process can still be daunting. And then you get to look forward to the transaction itself!
Despite the popularity of such Web-based car-buying services as Autobytel and CarPoint, there's one thing they do not do: They do not let you conduct virtual negotiations with a large number of dealers. Most of the sites have selected and trained specific dealers with whom they do business, and you normally deal with only one (sometimes two) of those dealers. You get the best price that a dealer is willing to offer. If you think you can do better, then you're on your own. Each of the services has its own strengths and weaknesses, but nearly all of them are built around the same principle — dealer selectivity, not dealer choice.
There are other avenues on the Web, though, that allow you to detour dealer showrooms altogether. Sites like CarsDirect.com (www.carsdirect.com) and carOrder.com (www.carorder.com) let you order directly from the manufacturer. After you select a base model and your options and colors, your order goes to the manufacturer, and the car is delivered — wrapped in a ribbon — to your home or office. So that avenue makes the most sense when you want to buy a model that is in demand — cars on which you're unlikely to get a price break in the first place. CarsDirect requires a $250 refundable deposit when you submit an order, whereas carOrder's deposit is $500.
Another route around dealers is to use the Web to hire an agent to negotiate on your behalf. The American CarBuying Service (www.acscorp.com) is one good option. To use the service, fill out a form on the Web site that details your car's specs (make, model, year) and submit the request along with a $75 retainer. Within two business days, a company rep will contact you with a "target-quote report." That report details the lowest price that the service was able to negotiate, a complete pricing breakdown (target price, MSRP, dealer cost, rebates, and savings), financing options, reliability ratings, crash-test results, and insurance-cost ratings. The report also includes the service fee for the transaction. That fee varies according to the vehicle — for a 1999 Toyota Camry le, it is $299.
Of course, as if agreeing on a price isn't exhausting enough, you also have to figure out the smartest way to finance your car. Is it better to lease or to buy? If you lease, what kind of terms make sense? If you buy, where's the best place to get a loan?
The Web offers a rich collection of resources to help answer those questions. If you've never leased a car, steer your browser to LeaseSource (www.leasesource.com). The site's "Lease Profile" has seven questions to help you decide whether leasing is the best choice for you. The contract summaries help you make sense of the fine print found on most leases, including such sticky details as mileage charges, wear-and-tear standards, purchase-option fees, and insurance requirements. You can also "run the numbers" to estimate lease versus loan payments, and to compare financing options of leasing versus buying, using the "Buying & Leasing Kit."
Whether you decide to lease or buy, financenter.com (www.financenter.com) is also worth a look. Think of it as the calculator of your dreams. The "ClickCalcs" feature shows you whether you should lease or buy, finance or pay cash, use a home-equity loan or a car loan, take a rebate or a special financing deal. The results are presented in a graph, a table, or in an all-text format.
If you decide that a loan is the best way to go, check out BanxQuote (www.banx.com) and Bankrate.com (www.bankrate.com). Both sites give you information on where to get auto loans in your area. Bankrate's site includes a summary of the auto-loan market. An easy-to-read chart provides current rates for new-car loans — three, four, and five years out — as well as loans for used cars. All you do is select your state, city, and repayment terms from pull-down menus. The site then lists names and phone numbers for online and brick-and-mortar institutions, their rates, and their fees and conditions.
The most aggressive and innovative sources of online credit include PeopleFirst Finance (www.peoplefirst.com), Giggo.com (www.giggo.com), and CarFinance.com (www.carfinance.com). PeopleFirst, for example, which pioneered "Web-based blank-check lending," offers car loans at competitive rates to borrowers with excellent credit. You can fill out the application online and be approved within minutes — really. The next day, you get a blank check, which lets the dealer know that you've been preapproved for a loan — a nice bit of additional leverage.
Beyond the Showroom
The Web offers one last form of roadside assistance — maintaining your car once you've bought it. Most of the car-buying sites (Autobytel, CarPoint, and Stoneage.com) offer free services that notify you when it's time for an oil change, for a tune-up, or for some other kind of routine maintenance. Autobytel even offers users their own personal Web page, called "My Area," where they can keep a list of the vehicles they already own. Autobytel uses that information to send out emails with maintenance notifications and updates on recalls and safety notices. Users can also create a "Wish List" of cars they'd like to own and receive reviews and other information on those yet-to-be-owned vehicles.
Some of the major car companies are creating similar services. If you own a Ford, Mercury, or Lincoln, for example, you should be sure to visit the "OwnerConnection" on the Ford Motor Co. (www.ford.com) Web site. The password-protected area is like having a family member on Ford's board of directors. After registering, you'll have access to owner-only specials on Hertz rental cars, owner's manuals and warranty guides, a personalized maintenance-schedule calculator, and current news on your car. Too bad the "OwnerConnection" is not available on other nameplates owned by Ford, such as Mazda, Jaguar, Volvo, or Aston Martin.
The troubleshooting guide on Auto Site (www.autosite.com) is a must-visit for any car owner — or at least any owner troubled by an odd smell or a disturbing ping. The guide lists symptoms according to what you see, hear, smell, or feel, along with starter problems, tire problems, and the like. Pick a symptom, and the site walks you through a series of questions and then gives you four or five possible reasons for the problem. This is a valuable tool for increasing your bargaining power with another necessary evil of automobiles — the mechanic. But we won't get into that topic now. We'll save that discussion for another edition of @work.
Associate Editor Gina Imperato (email@example.com) prefers to travel by subway or by bicycle.
Action Item: The More Things Change...
Back in the Dark Ages of buying a car, the first resource you consulted was Consumer Reports. Now that the Web is transforming how you buy a car, the first resource you should turn to is Consumer Reports Online. This Web site offers plenty of free information. But if you want an in-depth report, you'll have to pay. An online subscription costs $24 a year, or $2.95 per month. It's worth the price.
Coordinates: Consumer Reports Online, www.consumerreports.org
Sidebar: Me and My Car — The Buyer
The Buyer: Angela Stevenson, 46, cofounder and president, Tropical Pig, a prize-fulfillment house
The Web Tool Microsoft's CarPoint (www.carpoint.com)
The Ride: "Near the end of the lease on my Chrysler Sebring, I started a search for my dream car, a VW Beetle. But friends told me that it wasn't practical. So I compared the Beetle with the Mercury Cougar. That's where CarPoint was a big help. It had intelligent reviews of both cars.
"The Cougar gave me more car for my money, including a six-CD changer, leather seats, and a V6 engine. After I got the Kelley Blue Book invoice price, I went back to CarPoint and plugged in the model that I wanted. The salesman who called was a dream. Because of his relationship with CarPoint, he could not sell the car for more than 3% above invoice. I got it for even less. The process took three weeks."
The Green Light: "When you go into a dealership blind, you don't know who you'll be working with. There are plenty of dealerships closer to where I live, but this salesman was an absolute pleasure. And the first and only time I met him was when I went in to pick up my car."
The Red Light: "After I started with CarPoint, I began thinking, 'Maybe I can get a better deal somewhere else.' So I tried another dealership. The salesman there wasn't nearly as helpful as the person I spoke with through CarPoint. His information was, to put it kindly, inaccurate. I realized that I should stick with the dealership from CarPoint."
Sidebar: Me and My Car — The Seller
The Seller: Melissa MacKinnon, 29, senior account manager, CDNow
The Web Tool: The Excite Classifieds & Auctions service (http://classifieds.excite.com)
The Ride: "I was planning to move from Philadelphia to San Francisco, and I did not want to ship my 1994 Nissan Altima out there. I needed to get rid of it quickly and painlessly.
"I did a lot of research on car sites to find out how much my car was worth. I checked out CarPoint, Kelley Blue Book, and the National Automotive Dealers Association Web site.
"I put an ad in the Philadelphia Inquirer and in Excite Classifieds. A week went by with no responses from the newspaper ad and only a few from the Web. Then I got an email from Excite that said, 'Maybe you should lower the price.' So I dropped the price by $1,000, and that's when things began to pick up.
"The first person to show up was a student. She had done her own research on the Web and wanted to negotiate too much. The next person came from New Jersey. He wanted the car for his 17-year-old son. After test-driving the car, he gave me a cashier's check right then and there."
The Green Light: "The service was so easy. The buyer and I would have never found each other if I had not used the Web."
The Red Light: "If I had to do it again, I'd probably post an ad on more than one site. That way, I could test different prices on different sites to find out which price was most successful."
Sidebar: From Gear-Head to Web-Head
Paul Maghielse has gasoline in his veins. The Detroit native runs Omega Stamping Co. with his brother. The company sells seat belts and other seat-related parts to suppliers for DaimlerChrysler, Ford, and gm.
Maghielse, 39, also knows the Web. Indeed, he is the resident auto guru on Motley Fool (www.fool.com). He offered Fast Company some tips on how to avoid being taken for a ride.
Dealers need you more than you need them. "A car is a commodity. That's why I'm not thrilled about buying a car over the Internet. The Net is a great source of information on pricing and availability. But it can diminish your chances of getting a great deal. Dealers do not compete with one another on these sites — each site has specific dealers it works with. If you're persistent enough, you might get a better deal in person than over the Net."
Never buy when you try. "Buying a new car can't be a totally virtual experience. You still need to test-drive it, and that can lead you into dangerous territory. Before you set foot on a lot, promise yourself that you will not purchase the car after the test-drive. Take the car for a spin, ask your questions — and leave!"
The longer it sits, the cheaper it gets. "The faster a model is selling, the harder it is to negotiate a killer deal. About 60 days is the standard length of time for a car to be in inventory. If a car's been sitting on the lot for more than 120 days, you have a better chance of getting a great deal on it."
Sidebar: Classic Cars, New Medium
Do you dream of owning a '68 Ford Mustang? Can you see yourself behind the wheel of a 1959 Rolls Royce Mulliner? Then let Teri Olcott show you the way.
Olcott, 34, is the human guide in charge of About.com's Vintage Car Guide. Her job is to identify and organize the best Web resources on classic cars. She is more than qualified for the job. At age 15, Olcott got her first classic — a 1965 Mustang, which she spent an entire summer rebuilding. She eventually graduated from Mustangs to Mercedeses, of which she now owns five. When she's not driving around in her bright-yellow 1975 Mercedes 280, she's working on her About.com site.
The best part of Olcott's site is NetLinks, a library that makes it a snap to find classic-car data. The links are arranged in categories, such as American cars, German cars, hard-to-find parts, and maintenance sites. Click on a category, and get a list of the links and a brief description of what you'll find.
Looking to sell your classic car? Olcott recommends the Gold Book (www.manheimgold.com), which has price data. Looking to buy a classic? Olcott recommends Hemmings Motor News (www.hemmings.com), which she calls "one of the best car magazines for finding vintage cars."
A version of this article appeared in the October 1999 issue of Fast Company magazine.