Buying from a Dealer Group: The pros and cons

 

By Marin Pretorius

There's strength in numbers, goes the expression. Nowhere is this more apparent than in the influence of dealer groups on the car marketplace. Here's how this influence can be used to your advantage when you're buying a car.

Variety is the spice of life

The biggest advantage of buying from a dealer group comes in the form of variety. Because the dealerships which make up the group are all part of a much larger holding company, it makes it easier to exchange stock between branches.

Here's an example: If you head to your nearest Toyota dealer (and if they happen to be part of a dealer group) to buy a metallic-blue Fortuner, chances are that they might not have one to your exact specification in stock. They might have a metallic-brown one, but that's not what you want.

Sourcing is easier

Fortunately, your dealership is linked to a whole horde of other Toyota dealerships in the group, and that's where your friendly salesman finds one on the group's stock list. A few phone calls and some paperwork later, and your dealership has either “bought-in” the vehicle you want, or swapped their brown one for the blue one you ordered. 

This doesn't only apply to new-car buyers either, because that same linked network inside the group could help you find a used car as well. Even your trade-in process is simplified, because the current trend is towards setting up a sort of inter-branch auction on your car, rather than just offer you a straight trade-in amount. 

What happens during the bidding process

This bidding process could work for or against you, however. If the car you want to trade in is either in low demand or over-stocked, this bidding process between the branches will likely yield a lower trade-in offer than you were hoping for.

The inverse also applies: if your trade-in is in short supply or very popular, you just might receive an offer higher than book value.

You'll be dealing with a large corporation

While you will still be able to negotiate a good deal with the salesperson, your possibilities are slightly more limited than they could be at a dealership outside of the group. The reason is simple: corporations have internal processes and policies which determine the boundaries of their transactions, and once you reach those boundaries, that's it.

You can still squeeze some discount out of the transaction, however – revenue and sales targets will forever be a part of any dealership, and it's often worth sacrificing a little profit to gain a lot more from meeting corporate targets.