Last week, while I was helping my daughter negotiate to buy a new car, I received an e-mail from CarWoo!, a new over-the-Internet auto-buying service, alerting me of its new product that was about to be announced.
After several weeks of searching, my daughter had just found the specific car she wanted and was able to negotiate what we thought to be a good price, according to the dealer at invoice. But she agreed to delay her purchase for a few days to see what this service could do.
CarWoo!, a Silicon Valley startup, offers a clever new twist on car buying that's different from other car buying services. You fill out a form describing the car and options you want and CarWoo! sends it to a number of dealers without revealing your identity, and you wait for their bids. As the offers come in they're neatly summarized on a website created for you, listing the pricing information along with a picture of the car. That makes it easy to compare the multiple offers and respond back anonymously with questions or clarifications. And, cleverly, each of the dealers can see the other offers, which should encourage them to come back with even better deals.
I've used a variety of car-buying approaches over the years. I've done comparison shopping, used buying services, and walked into the dealer on the last day of the month to make an offer. On one occasion I accessed the dealer's inventory listing from its website and made an offer for a particular car. But I've never enjoyed the process and found it was difficult to do real comparison shopping without visiting and negotiating with multiple dealers and then going home and doing my own comparisons.
CarWoo! charges $79 for its Plus plan that contacts three to five dealers and $39 for the Basic plan that brings in bids from two to three dealers. The fact that you pay gives the dealers some assurance they are working with a serious buyer.
I used the Plus plan and filled out the request for bids on a 2011 328i BMW with specific equipment that had a sticker price of exactly $43,000. Within a couple of days I received four bids. Three dealers had the car in stock, while another needed to order it.
Two offers came in at $40,300 and $40,495, compared to the deal we had struck with our original dealer of $40,190. Two more offers came in for cars with some additional options that brought the retail to $44,040. Their bids were $41,200 and $41,635.
Now I wasn't aggressive as I could have been, such as e-mailing them back and forth to encourage them to counter one another's bids. I did respond to one dealer that kept e-mailing me about what I thought of his price and told him that his price was too high, and he came down slightly.
While none matched the price my daughter and I got from the dealer that we worked with over a few weeks, one came within $110 with hardly any effort at all. It turned out it was the same dealer, but a different sales person.
Never once did I need to call the dealers or visit a showroom. Had I accepted one of their bids -- it's binding on them -- I would still need to meet with them to wrap up the details, but I'd be walking into the dealership with a guaranteed price in hand.
CarWoo! takes no money from the dealers and works on behalf of its customers. The dealers are likely to make better offers to 'woo' consumers since they don't have to waste their time and energy on leads that rarely result in a sale.
Much of the success of this service depends on how the dealers react to seeing competitive bids, and that likely varies by the car's demand. I would have expected to see the dealers being more aggressive, undercutting one another, but that just didn't happen in my case.
A couple of suggestions for improvements to the site would be to make it easier to display the details of the equipment on the cars offered and to better evaluate the differences between all four bids. I'd like to see a more comprehensive questionnaire I would be able to fill out, listing the specific options requested for the car, and would like to get more details back about the car being offered. Currently, you just list your preferred options in a comment box.
If I were buying a car from scratch I certainly would consider using CarWoo! It puts the buyer in charge and avoids most of the new-car-buying hassles -- no calls, no e-mails, no dealer visits. CarWoo! also offers a free, no-questions-asked guarantee and will return your payment if you are unsatisfied.
Baker is the author of "From Concept to Consumer," holds 30 patents and is an Ernst & Young Entrepreneur of the Year. Phil can be heard on KOGO AM the first Sunday of each month. Send comments to firstname.lastname@example.org. Phil's blog is blog.philipgbaker.com.