Recently, a close friend shared a car-buying experience that was, unfortunately, something we still occasionally hear about in the state and our industry. After negotiating with the dealer for nearly two weeks and settling on a price, he returned to the lot to close the deal — only to be met with nearly $10,000 in additional surcharges.

While my friend did not believe there was malice at play, this no doubt had a serious, negative effect on his customer experience. If the dealership had been open and transparent from the outset, that experience may have been much different. In fact, when the dealer learned of the situation, it was addressed immediately.

Why Is This So Important Now?

You are likely aware of recent news surrounding the real estate industry and a settlement their national association reached with the U.S. Department of Justice regarding alleged antitrust violations related to commissions.

Proponents of the settlement say the changes increase competition and much-needed transparency.

Yet if you talk to honest real estate agents, who are already used to doing business the right and transparent way by understanding the needs of their client, it’s business as usual. While these new rules are codified, many agents didn’t need the official change to do things the right way.

Still, you’d be hard-pressed to not find parallels in this real estate case to other industries — and definitely our own. And things are heating up, with auto dealers increasingly under the Fed’s microscope.

To be sure, the Federal Trade Commission’s CARS Rule is burdensome and the commission has failed to justify why changes to the way people shop for and purchase new cars is necessary. The FTC has failed to demonstrate how any of these changes would actually benefit consumers.

The rule would require massive amounts of time, complexity, paperwork — and cost — to automobile buying and shopping. NADA is challenging the rule in court and supporting federal legislation to prevent the FTC from implementing or enforcing this ill-conceived rule.

But the hard truth, however, is that auto dealers are historically not known as transparent entities to consumers. Whether that is true of your operations requires taking a hard look inward. The overwhelming majority of our VADA members do business the right way. And if you want to stand the test of time, you must embrace the idea of being incredibly transparent with your customers.

That means there should be no surprises for anyone who walks through your front door or visits your website. You must be up front on pricing and in your advertising — make it clear there are taxes and fees you plan to charge on top of MSRP.

When it comes to additional products and services, are you selling those that are the right fit for the individual customer, or the right fit for your F&I team to hit their monthly numbers? Customers should understand the value — or lack of value for their own unique needs — of those add-on products before they sign on the dotted line. That may mean a change in your F&I commission structure and the way they are sold.

Ask yourself how you met your revenue projections for the month. The devil’s in the details.

CARS goes too far, for sure.

But, collectively, Virginia dealers must also choose to operate with utmost transparency. And as the story we related to start this column shows, you have to ensure that your dealership culture embraces that transparency.

If you do that, like the honest real estate agents out there, there’s nothing to fear when it comes to the implementation of federal and state rules and regulations. The best dealers always find a way.

Get Back to the Basics

I understand there is pressure from all sides to generate a profit, especially in an ever-inflationary environment where margins are tight. The cost of doing business, not the least of which is labor, has gone up. But if you choose to hold onto the ways of yesteryear and are not willing to change with the times, you will be left in the cold.

Let’s ensure our industry thrives and shapes the future of automotive retail in Virginia and beyond for the better.