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Could dealers benefit from an ethics code?
Consumers more willing to shop at a store with posted document, consultant says
The car business still has a trust problem.
Even though the majority of dealerships do right by their customers, a few bad apples can generate negative headlines that blanket the industry with nagging stereotypes about dishonesty, said Max Zanan, president of auditing firm Total Dealer Compliance.
Those stereotypes can shape perceptions. In a July survey of more than 200 consumers, TDC found that nearly 65 percent of them believe the business practices of U.S. car dealerships are not ethical.
“It’s decades of certain failed practices that left a negative impression on consumers,” Zanan told Automotive News. “Even though there are so many good dealers out there, the overall stereotype of the sleazy used-car salesman persists in the consumer’s mind.”
But Zanan thinks dealerships can counteract this perception by showing consumers they’re serious about ethical business practices. One way to start, he says, is for dealerships to display a code of ethics in their showrooms and on their websites.
Among those surveyed by TDC, more than half of respondents indicated they would be more likely to shop at a dealership if a code of ethics was clearly displayed.
Zanan said TDC randomly visited more than 100 dealer websites and found none had a code of ethics posted. In most cases, Zanan said, the stores he works with don’t have a code at all.
What should the code say?
It should make clear to consumers that a dealer advertises in an “ethical and nondeceptive manner,” Zanan said.
“Dealers spend a lot of money hoping to bring that consumer into the showroom. It’s mission critical to bring that consumer into the showroom legitimately without resorting to deceptive advertising,” he said. “If you look at [actions by the Federal Trade Commission], they are aggressively going after dealers that are engaged in deceptive advertising. That would be the first step.”
Zanan said a store’s code of ethics also should state that vehicle walkarounds will be conducted in an honest fashion. Consumers should know that they won’t be misled by salespeople who exaggerate a vehicle’s features and capabilities.
Dealers don’t have to draft a lengthy document, either. Zanan said stores can use the code of ethics from the National Automobile Dealers Association website and tweak it to reflect their business models.
Respect the code
Here's why dealerships are urged to display a code of ethics on their walls and websites.
• Nearly 65% of consumers believe that U.S. car dealerships' business practices are not ethical.
• More than half of consumers are more likely to shop at a dealership if a code of ethics is clearly displayed.
Source: Total Dealer Compliance survey of more than 200 consumers
Having a code of ethics is one thing, but it’s useless if staffers aren’t trained to follow its principles.
In addition to sales techniques, Zanan said, stores need to educate their employees on ethical practices.
Zanan said: “Consumers are more willing to shop at the dealership that clearly displays a code of ethics. It gives them a certain comfort. That comfort is a good starting place to change that perception of car dealers that consumers have.”