For decades, the time-honored tradition of buying a car has involved a trip to your local car dealership to roam the lot and see if there’s anything that catches your eye for the right price. Often times, the search starts on a Saturday morning and, if you’re lucky, wraps up just before dinner time. Additionally, the hunt for a vehicle that’s new to you almost always involves a car salesperson, who similarly roams the lot on a Saturday stalking his next customer to haggle with.
Feel yourself growing increasingly uneasy by the picture that’s being painted? Sadly, that’s only the cliff notes version of what people everyday experience when they go to a dealership to buy a car. In particular, the interaction with a car salesperson is typically what induces the most visceral reaction in people when they recreate their own dealership experiences in their mind. Usually motivated by little more than maximizing the commission on the vehicle they’re looking to sell you, a car salesperson’s very nature can create conflict when it comes to aligning your car buying goals with their car selling aspirations.
But why does this conflict exist in the first place? You can buy a pair of shoes without being hounded by a salesperson. Shouldn’t you be able to buy a car the same way?
We’ll address the second question in a moment, but the first question can be answered by the carrot and stick mentality that exists with virtually any sales position: commissions. In order for dealerships to get their big ticket items off the lot so they can make room for the next biggest and best thing, they need informed and persuasive personnel to help pitch these items and turn a profit. In the automotive sales industry, profit is commonly defined as the difference between the final sale price of the vehicle and the vehicle’s invoice price. From there, the car salesperson gets a percentage of the profit (often between 25 and 30 percent, according the Houston Chronicle) on whatever vehicles they sell. The higher the amount above invoice pricing per vehicle sold, the greater the commission rate for the car salesperson.
It doesn’t take much to see the inherent conflict of interest that exists here between buyer and seller. Add in the fact that car salespeople also often receive incentives for selling certain models, selling a certain number of cars within a given time period, or selling you value add-ons such as VIN etching or nitrogen in your tires, and it’s no wonder why the motives of both parties are constantly at odds. A lack of trust in the purchase process leads to feelings of disdain for the act of buying a car. The end result is a bitter taste for you, the hopeful car buyer.
At Carvana, we’ve made it our mission to redefine the car buying status quo by creating a better way to buy a car. With no dealerships or salespeople, there’s no pressure from us to push you into a specific vehicle in order to meet a sales quota. You have the ability to browse, buy, trade-in, and finance a vehicle at your pace without the uncertainty of knowing whether your best interests are being taken to heart. And with our inventory residing online, we have reduced overhead costs drastically. That means there’s no mark-up games with invoice pricing on vehicles, which translates to $1,681 in average savings for you per vehicle purchased.