Along with buying a house or funding a college education, purchasing a vehicle is one of the biggest layouts of cash most consumers will make. Unlike the house or education, it’s a purchase that fills buyers with much more anxiety and stress.
General Motors launched a subsidiary with a unique dealer structure to try to combat that common reaction. People who bought the now-defunct Saturn brand of vehicles loved the no-haggle price. In J.D. Power and Company's annual surveys of dealership satisfaction, Saturn consistently ranked higher than any other non-luxury car brand.
Sadly, GM discontinued the Saturn brand and ended its outstanding franchisees on Oct. 31, 2010. However, AutoNation, the largest U.S. retailer of new cars, did away with old-school haggling in 2014 in favor of an online storefront and set pricing on new and used cars.
The trust between the consumer and car dealer has been broken for some time. With car sales moving to online, there is an urgent demand for car dealers to regain the customer’s trust by becoming more transparent and fully compliant with federal regulations, according to Total Dealer Compliance, a car dealership compliance-auditing firm.
In response, TDC is launching a certification process aimed at easing consumer fears. Having the badge will ensure that the dealership does not engage in deceptive trade practices, adheres to advertising guidelines, adopts and adheres to a code of ethics, does not practice aggressive sales tactics and conducts regular compliance training for all employees.
You’d like to think most, if not all, dealerships are already doing all of the above, but perhaps consumers would benefit from reassurance.
Certified dealerships must have policies to safeguard customers’ non-public information. Dealers will have written policies and procedures that instill a culture of compliance and they will respect customers' privacy and will not resell the information to third parties. They will also have an identity-theft prevention program.
Here’s how it works: Following an onsite audit of each dealership, TDC will review all findings and provide a detailed action plan. This action plan, as well as the code of ethics, will be implemented within each department and will be tested each quarter by follow-up audits. This certification will be awarded by TDC, once all modules are complete and tests are passed. This independent auto certificate means that customers will no longer rely on an individual’s word. TDC will control the entire certificate issuance, management and revocation process.
Auto dealerships should proactively seek this certification, while customers should be looking for the badge on the dealers' website, says TDC President Max Zanan.
“There is an urgent demand for car dealers to regain the customer’s trust by becoming more transparent and fully compliant with federal regulations,” Zanan says. “This certification ensures that the dealership adopted a code of ethics and adheres to the federal advertising guidelines, reinforcing a dealers' personal commitment to quality service and high ethical standards.”
Five New York City dealerships were chosen to be the pilots for the certification process. Going forward, TDC will charge dealerships $2,500 for the audit and report.
TCD did not work with automakers to develop the certification. It is not aware of any compliance certification program that goes across automakers. There is a certification program for individuals that work in the finance department of a car dealership, but there is no program on the market that certifies the dealership itself, he says.
“Because of the franchise model, individual dealer principals are responsible for day-to-day operations and their respective policies and procedures,” Zanan says. “Automakers should be more involved when it comes to compliance because compliance equals transparency and an overall improved customer experience.”
Certification should translate to less stress and fear for consumers. Time will tell if automakers and their dealers think it’s worth the investment.