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Personal Finance > Autos
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Car dealerships get nice
Moves are afoot for kindler, gentler dealerships. Want a Danish?
September 30, 2004: 4:04 PM EDT
By Peter Valdes-Dapena, CNN/Money Staff Writer

NEW YORK (CNN/Money) - You know what the inside of a car dealership looks like, right? Like a linoleum parking lot with some ugly desks.

Mazda Deaership in Bountiful, Utah  
Mazda Deaership in Bountiful, Utah

Well maybe you haven't been car shopping lately. These days, at dealerships for such brands as Audi, Mazda and Volkswagen, you might see fewer cars but fancier architecture and furniture. There might even be a cafe -- think gourmet beans and coffee that hasn't been fermenting all day.

Auto manufacturers and dealers have realized something that other retailers have known for a long time: The space surrounding a product affects how much people will pay for it.

Retail Revolution

One of the biggest movers in this retail revolution is Mazda North America, which has been plotting a dealership makeover program for years.

That plan is now getting under way. To date, 13 Mazda dealerships have been made over in what the company calls its Retail Revolution initiative.

By the end of the year, Mazda says it will open 21 redesigned dealerships. By 2007, it hopes that 200 of its approximately 700 dealerships will incorporate the new designs.

A general lack of walls creates an airy feeling. In some cases, even the business manager's office is right out in the open (though some local laws prevent that structure).

Besides catching your attention from the outside -- cars sitting up on a lift inside an enormous glass box should help with that -- and creating a uniform image for Mazda, the design is also supposed to make customers feel less intimidated and nervous.

"We want to the whole transaction to be very transparent," said David Falk, Mazda's retail environment manager.

They would also like you to stay until you've bought a Mazda.

"If you can get a customer to commit on that first visit, that's where your closing rate is highest," said Falk.

Mazda cafe  
Mazda shoppers can sit and have a cup of coffee in the cafe.

Auto salespeople have been known to use various tactics to get customers to stay in the dealership until a deal is closed. Techniques have often involved gaining possession of something without which the customer will not leave -- say a credit card.

Now, they are trying something gentler. At the cafes, for example, not only is the coffee free, but sales staff are trained to leave customers alone when they go there.

There also are computer kiosks -- with full Internet access -- so customers can do research. For Mazda, that keeps the sales process moving along while Web savvy customers do their "homework."

"Seventy percent of our Mazda customers spend an enormous amount of time on the Internet prior to coming to the dealership," said Mazda North American Operations president and CEO Jim O'Sullivan.

Finally, recognizing that test drives are key to selling cars, the Mazda Revolution dealerships have a special area near the front entrance with a full set of cleaned and fueled-up car to take out.

The test drive route isn't just any old trip around the block. Mazda engineers actually map out a specific test drive route for each dealership to use. The route is supposed to allow customers to feel the handling, acceleration and braking attributes of the car.

The fact that the cars are ready to go means discussions of things like the monthly payment can be left for later, while the customer hops in for a whiff of new-car smell.

Others jumping on board

Other car companies, including Volkswagen, Audi and Toyota, are pushing dealership makeover plans.

"We based it on what a small German town would consist of," said VW spokesman Tony Fouladpour of VW's "Marketplace" initiative. Every dealership has a central area surrounded by various "shops." Customers coming in the front door can immediately see everything the dealership offers from cars to the service bay.

Early results indicate that these redesigns are working for dealers. The cost of making each sale is lower at redesigned exclusive dealerships, said John Hill, network development team leader or VW.

Auto dealerships and manufacturers are hoping you will be more likely to buy their products, to pay more for them and be more likely to come back for parts, service and accessories.

But are these redesigns really working for customers?

A more pleasant environment in which to transact business is surely a plus. And open access to information and a nice cup of coffee are welcome attributes in the formerly musty world of auto showrooms.

Just remember not to cozy up to the point of forgetting your own interests. Many dealerships these days have round tables instead of square desks for salespeople and their customers to sit at. That way, you and the salesperson are never, on opposite sides of the table (at least literally).

In some ways you aren't figuratively at odds, either. You want to buy a car and he wants to sell you one. Collegiality approach is certainly more pleasant than confrontation, but don't forget to negotiate. You just have to remember that your interests and his won't always square, especially over price.

And if you want to take some time to consider your options, you might want to brew yourself a cup of coffee at home.

This story was originally published in August, 2004. It was updated in September, 2004.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.