Tred, a new start up company in Seattle, is turning the concept of car buying on its head by bringing the test drive to you. Why is that significant? Because now, a person can engage in every (productive) aspect of purchasing a car without having to set foot in the dreaded new car dealership.
Prior to the advent of the internet, unless you happened to find a review in an auto magazine, you couldn’t find out anything about a car without stepping into the dealer showroom. By the late 1990s, you could look up information about cars online. Saturn pioneered selling direct to the customer online shortly after. Ebay connected millions of car sellers and buyers. And now, many car dealerships offer online sales and have dedicated internet sales managers. So as long as you don’t care to test drive a car before plunking down your money, you had the ability to do so (indeed, an internet search yielded studies that showed up to 28% of cars are purchased without test drives, and even more people test drive only the car they buy but not the competing products). But most of us are not comfortable with spending a large chunk of our savings without sampling the product.
Enter Tred. In addition to researching, getting pricing, and purchasing a car online, with Tred you can have competing cars delivered to your home for a test drive for just $19. What does that money get you? A ride with a Tred representative (not a dealership employee), a packet of information about the car itself (including dealership forms), no haggle pricing, and best of all – no dealership salesperson. You might think that this would result in fewer sales without someone manipulating the customer’s decisions or pressuring the customer to “seal the deal.” But Tred is counting on their service to actually improve the take rate on vehicles that have been test driven. According to a Gallup poll from last December referenced in the article, “… car sales people ranked below members of congress in trustworthiness…” Therefore, the company is willing to bet that if they can remove as much contact with the dealership as possible from the process, they will increase sales for the dealership and improve the car-buying experience for the customer.
Tred’s financial backers also believe this to be the case. Some of their current investors even know a thing or two about selling cars, including Rick Wagoner, former CEO of General Motors; and Fraser McCombs Capital (their largest investor), whose equity pool includes capital from the owner of eight car dealerships in the San Antonio area. A principal from Fraser McCombs is quoted in the article saying that “A customer asking for a car to be brought to their house is in my opinion converted from a shopper to a buyer.”
What do you think about Tred’s new test drive service? Have you had any particularly bad experiences that have made you want to stay as far from a car dealership as possible?