How Pfaff took the hassle out of buying a new vehicle
Even in this era of instant digital information, the automobile dealership remains a key player when it comes to buying a car, SUV or truck.
A recent Deloitte Global Automotive Consumer Study found that 79 per cent of consumers rated “customer experience at the dealership” as a somewhat or very important factor in choosing where to buy a vehicle. This even though most respondents complained they disliked the length of the purchase experience, the amount of paperwork and, most of all, haggling about price. While Canadian consumers are demanding increased transparency how they buy things, as well as more respect for their time, the way they’ve been purchasing cars have not changed much in 50 years.
Until now. Already an industry leader in customer service, Pfaff Automotive Partners started rolling out a new way of selling cars and motorcycles to its 18 locations over the last year. In doing so, the company has set out to reinvent the customer experience that’s so important—and sometimes so annoying—for Canadians buying new and pre-owned vehicles. It may change the way Canadians buy cars.
“Auto retailers have been stuck in the past, bartering every single time on every car, though our market research shows customers don’t like it. So we’re doing this for customers, number one, making it as easy and as convenient as possible to make a purchase with us,” says Chris Pfaff, CEO of Pfaff Automotive Partners, a family company founded in 1964 in Newmarket, Ontario. A Canadian retailer of new and pre-owned vehicles, its brand offering includes Volkswagen, Toyota, Chrysler, Dodge, RAM, Jeep, Mazda, Audi, BMW, MINI, Porsche and McLaren, among others.
Pfaff’s new retail model starts with the “best price first,” meaning new and pre-owned vehicles are priced based on market conditions, with final pricing provided upfront, without the need for negotiation.
“Customers get frustrated wondering, ‘Am I getting as good as deal as everybody else?’” says Pfaff. “With our future retail model, you don’t have to ask for a discount, we give it to you up front.”
Historically, the practice of haggling over car prices was partly due to the fact that dealer margins were much larger, with more room to wiggle. At the same time, consumers had much less information about what they should be paying. In these days of tighter margins and abundant information, Pfaff says it makes little sense to start a potential long-term relationship with an intense round of bargaining.
“Young people and women are especially interested in the model,” says Pfaff. “Some are intimidated by negotiation, and when we tell them we have the best price up front, it appeals to them. Younger people, salespeople included, enjoy the process more.” Time in the dealership can be spent finding the most suitable vehicle and taking test drives, not crunching numbers.
Over the years, other car companies have adopted no-haggling policies with varying degrees of success; it’s not uncommon in the used-vehicle world. To make sure its new retail model gained the confidence of consumers, Pfaff made fundamental changes to the way it does business. Most importantly, the company changed how its sales staff are trained and paid. Sales are now calculated on a per-unit basis, which removes any possible incentive to sell consumers a higher-priced vehicle. This reinvention of commissions, as well as the company’s culture, allows customers to better trust that sales staff are dedicated to finding them the vehicle that suits them best.
“The risk when we started out was how consumers would accept it and how our salespeople and management would accept it,” says Pfaff. “But the consumer reaction has been fantastic, and the employee reaction has been fantastic.”
For increased transparency, Pfaff’s Future Retail Model also eliminates pre-loaded and administration fees; all the costs are in plain sight. They also provide a written offer to buy your car, even if you don’t purchase a Pfaff vehicle—no strings attached. The company also offers a three-day/300-kilometre money-back guarantee on all vehicles and a 30-day/1,500-kilometre exchange policy on pre-owned vehicles (there are some restrictions).
Though there were some risks in adapting the new model, Pfaff says that with so much change in consumer expectations, the greater risk was not doing anything.
“You’re going to see a future when people are buying vehicles online, from start to finish, and they’re going to want the price up front,” he says.
Pfaff Automotive Partners was founded by Pfaff’s father Hans J. Pfaff, and has ever since set the bar in the industry for customer service, both in sales and in its leasing, tuning and collision repair businesses.