Groupon: The Latest Experiment in Car Sales
Posted on Mon, Aug 01, 2011
In this economy, automotive dealerships are open to new ways to bring in customers. Groupon has an excellent track record in the retail world and a large base of loyal buyers. On paper, it looked like a good match. However, this first experiment appears not to have worked. In it, Groupon offered its customers a $199 voucher worth $500 off the purchase of a new car at LaFontaine Buick-GMC-Cadillac in Highland, MI. The deal attracted only four purchases - not enough to "tip" the deal, so those Groupon customers were refunded their money and the deal was called off.
Note that the dealership did end up converting two of those customers into sales, so the effort wasn't entirely fruitless. In fact, the effort may have been quite cost-effective when compared to the dealership's norm of spending roughly $370 in advertising per vehicle sold.
There is another major factor in the Groupon deal's "failure" (if indeed it was one): the fact that current-model and even current-year vehicles are available at substantial discounts on the used car side. Many certified pre-owned models are even backed by manufacturer warranties, and many used car dealers offer third-party warranty coverage on selected vehicles.
According to Edmunds, the average new car loses 11% of its value the moment it leaves the lot. That makes used cars from licensed dealers the ultimate coupon deal.
Source article: "Groupon vouchers for cars? No"
