GM and Ford's Credibility Gap

As Ford and General Motors prepare to launch online car buying Web sites with their dealers in an attempt to get back some of the business the dealers are losing to third parties, the new entities will have a tough hill to climb when it comes to advertising these services as being just as consumer friendly and unbiased as the independents.

Why? Because the rise of the independents has happened precisely because of the lack of credibility and trust car dealers have earned over the decades. Consumers are flocking to the Internet to arm themselves with information to do battle. Are they really going to want to arm themselves with weapons provided by the enemy?

The reason the car dealers and car companies want to be in this business is obvious. They don’t like having to pay the independents for leads and commissions. But that has nothing to do with the consumer. GM and Ford and their dealers would like to think they are putting the consumer in the center of this business model, but that’s rubbish. They are putting themselves at the center. And that is usually where business models fail.

A new ad campaign in Europe by Renault is a good example of how ham-fisted an advertising campaign to push honesty can be. In a bid to become a leader in Europe's small but growing market for online used car transactions, Renault has just shown the first ads for its service that focus on the site's willingness to be an "honest broker.''

TV and print ads created by Leo Burnett Co., Paris, aim to educate consumers that Caradisiac is an intermediary, and not a seller itself -- while building confidence in the site. All ads in the campaign feature Caradisiac's signature slogan: "We're not here to sell you a used car, but to help you buy one."

That’s nice.

Online Bibles

The ads aim to deflect two built-in handicaps in the business plan. First, despite the fact that consumers visit some seven Web sites before making a purchase decision on a car, they remain dubious about what they read on the Internet, and even more wary of conducting large transactions online. Maybe that’s why they visit as many as seven. And second, no one — not even potential buyers — really believes used cars are a good deal.

To get around these issues, one ad shows a used car, its back tire on a Bible and the slogan: "The truth, the whole truth and nothing but the truth." Is that meant to show that the car’s "hand" is on the Bible, or that the car is running over the Bible?

Caradisiac is the idea of former Renault manager Cedric Bannel. Aside from the biggest shareholder, Renault, the site's other main investors include leading financial institutions Nomura, ING Barings and Commerzbank.

The site lists more than 10,000 used cars on sale at showrooms and dealerships across France, and is now expanding its offer to include vehicles displayed in other countries, notably Spain and Belgium.

Leo Burnett won the business after a final pitch against BDDP & Fils, Paris. No budget was announced, but it is known that Renault has opened its deep pockets for the site's French and European launch.

The motivation for manufacturers and dealers to challenge the independents is clear. But credibility is short. Polls show that car dealers still rank below home improvement contractors for trust, and that while people are excited about making the largest purchase they make in their lives—a house, they dread the second biggest transaction—a car.

In its Vehicle Shopper Survey, J.D. Power identified one-third of all new car shoppers as "armed and unfriendly," a young, educated consumer who places car dealers one notch above the devil. If they feel even a bit of pressure, or if they sense that the salesperson is not being upfront, they're outta there. That segment is growing, not diminishing.

The dealer's finance and insurance department is often what consumers dread most when buying a car. Numerous studies show that what people especially hate is the haggling in the F&I department. In CNW Marketing Research’s "Consumers, Cars and the Internet" study, nearly 70 percent of respondents said they would prefer to finance their car online — and avoid the F&I guys altogether.

Dealers aren't just weary of paying all that commission and lead generation monies to Internet independents, they are wary of losing the finance income as customers start to handle the process themselves on the Internet.

The New York Times last week reported on a widespread practice whereby dealers mark up the finance rate a consumer pays without full, or at best oblique, disclosure. It is a practice heartily defended by the industry, but still under attack by regulators. Inattentive buyers don’t see the extra charges, which are blended into the final paperwork.

It will be a mighty gap, indeed, for dealers to bridge, to convince consumers that their online information is as good as the true independents.

Firestone steps out of the box

Most of Firestone’s advertising for the past ten weeks has been about recall information and apologies, but it stepped out of the penalty box last week to tout its racing tires almost as if nothing has happened.

Too soon, if you ask me.

The blokes at Bridgestone/Firestone are giving into the "We are still in the tire business, and we need to advertise product" voices. Don’t listen. You still have a lot of work to do, and it’s a bad idea to begin pitching racing tires before the recall is wrapped up and stories keep popping up about what the company knew and when it knew it.

The company began advertising its racing tires in national newspapers last week. The headline: "We race at over 200 mph with confidence and control on Firestone tires." There are hundreds of people who have died or been injured going a lot slower on Firestone tires, and until you can get that issue in the rearview mirror, it is tactless to advertise confidence at 200 mph.

It is simply not the time to start shaking your finger at a disbelieving public that you, the company, have confidence in your rubber at 200 mph or better.

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