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Ask HN: Shouldn't there be a better way to buy a car?

9 points by djsamson ↗ HN
I was sitting in Finance class today and my professor was explaining how he decided on buying a new Mazda Miata. But instead of paying the asking price or going to our local dealer and negotiating, he called and submitted the price he'd be willing to pay to every Mazda dealership in our area, even some up to 500 miles away. He figured even with flying out somewhere and driving it back he still ends up saving money.

This got me thinking. Why isn't there a disruptive startup that helps prospective buyers submit bids to dealerships? A buyer would determine what type of car/features he would want and submit it to the service. Then the startup would automatically send the information/bid to however many dealerships of that brand was in the selected mileage he was willing to travel to. This would make car dealerships of the same brand compete with each other which would result in a lower price for the consumer.

This startup could monetize from either angle. I'm guessing car buyers would be willing to spend a small fee ($25-$50) if it meant saving them hundreds or thousands. Meanwhile, dealers might even pay for the "leads."

Is there already something like this? Is this viable?

13 comments

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stjarnljuset
Carwoo http://carwoo.com does something similar where the buyer submits what kind of car they're looking for, and local dealerships will submit bids, after which you can send them a counteroffer. The last time I used it was 2 years ago so wouldn't know if they've changed features since then.
djsamson
Carwoo sounds interesting and it is similar to what I was thinking. But I think I might be imagining something more aggressive, where the startup sends an e-mail/fax/phone call to dealerships on the customers behalf. Acting as their "agent" almost. Also, it seems CarWoo only includes partnered dealerships. With the method I described a buyer would be able to contact every dealership of their interest. The only issue with this is that since the startup would be more "customer oriented" rather than dealer, it would probably have to charge customers (unlike Carwoo) instead of charging dealers like CarWoo.
stjarnljuset
I think I paid ~$60 for the service that they're offering for free now.
shanecleveland
I was thinking along the same lines after just reading the headline. Have the dealership come to you and compete on price. I would guess that dealerships would rather not work this way. But they may see it as a good way to get buyers in the door. I would want to know there wouldn't be any bait-and-switch trickery going on.

Here is an interesting take on the use of Game Theory with the technique you describe:

http://www.getrichslowly.org/blog/2012/04/26/the-best-way-to...

AND

http://bigthink.com/ideas/41819

Perhaps this idea can be packaged into an app.

erik_landerholm
That's exactly what we do (http://carwoo.com) and it's free to shop one car.

Acting as a buyer's agent is tough as you are considered an autobroker and there is a ton of state level laws around this kind of business. Some of them are extremely archaic, but are kept in places by an extremely powerful lobby organization.

If you are interested look up the battle TrueCar became embroiled in recently because of some decisions they made in their business model. The end result was they lost over half their paying dealer network and half their revenue in a matter of a couple of weeks. They were disallowed from operating in a dozen or more states over night.

They have recently had to completely change their product to come into compliance. Their aint no lobby like an auto industry lobby! :)

It's a very complicated industry to move into successfully. We have done a good job (IMO) of navigating the mine field while offering a compelling service to Consumers and Dealers.

erik_landerholm
Also, we used to charge consumers for their first 'deal' (as we call it). This allowed us to create the nation's largest New Car Dealer Network, but most consumers are unwilling to pay for this kind of service. It did allow us to build a huge network quickly (by auto industry standards) which allows us to avoid most of the 'no coverage' issues that all other automotive sites have.
stjarnljuset
So if you're no longer charging consumers for their first deal, are you charging dealerships?
erik_landerholm
yes. It's a freemium model for dealerships ATM, but we reserve the right to change it whenever we feel like it! :)

The pay service allows dealerships to see data and have access to tools that help them be more competitive and make better decisions.

NO one ever gets to pay for placement or for access to our customers.

thejteam
So I went to carwoo.com.

Gripe#1: Why do you need my cell phone number? I know you say you won't give it to dealerships. I don't know why you need it either.

Gripe#2: Why do I have to choose a color? That is not an especially important factor for me.

Gripe#3: Your distance to dealership computations are as the crow flies. I happen to live near a large body of water with only a single bridge across that is 70 miles away from my house. A dealership on the other side will not be 50 miles from my house.

ScottWhigham
I recently tried CarWoo for a Subura I'm trying to buy. Everything was great except that the three offers I received where, on average, 206 miles away. I live in Dallas, Texas - a major metropolitan area - and it's not worth it to even talk to someone 206 miles away unless I'm saving $1000+ over local sales. The offers were "fair" but just didn't get me over that hump.
dwj
I used carcostcanada.com to buy my Ford Edge 5 years ago - it works in the way you describe. Our local dealer wouldn't even match the lowest quote I got from the site. Even with a bunch of haggling, his best price was $1k more than the no-haggle price I got from the internet!

The point is: these sites already exist, and you really should use them to buy your next car. Haggling is so inefficient.

moocow01
Isnt this what carsdirect.com does?