Soon people all over the U.S. may be able to come home with groceries for the week, new school clothes for the kids, and even a brand new car – all from one store: Walmart. That’s right – the biggest retailer in the nation is making moves to sell new, used, and pre-owned cars. The goal is simple: offer car buyers a simplified, haggle-free way to purchase and finance cars. So, we wondered: what might buying a car from Walmart actually be like?
Walmart is Now Selling Cars
Last year, Walmart piloted a car sales program in Florida. On April 1, they plan to expand into Houston, Dallas, Phoenix and Oklahoma City, according to Automotive News, and thereafter potentially to other cities nationwide.
The retail giant will partner with CarSaver, an online automotive retail platform that partners with dealership groups such as AutoNation.
Walmart’s program, though in the early stages, already boasts impressive savings. During the pilot program in Florida, customers saved an average of more than $3,000 off the sticker price of vehicles.
Buying a Car from Walmart: How It Works
As we’ve written, a non-dealership entity cannot simply sell new cars directly to consumers. Franchised dealerships are the only businesses that can sell new cars in the U.S. And the rules, of course, apply to Walmart, which is not a franchised dealer.
Walmart’s relationship to CarSaver will be that of landlord and tenant, just like their relationship with businesses like McDonald’s that set up shop inside their stores. Therefore, CarSaver will set up operations inside Walmart stores and on Walmart’s website on behalf of local dealerships:
- CarSaver will implement a digital platform that will allow car shoppers to choose from new, used, or pre-owned cars.
- Shoppers can then explore financing options and find insurance through a touch-screen kiosk or on its website.
- Staffers from CarSaver will be present to explain the car-buying and financing program to Walmart shoppers and bilingual auto advisers available by phone to offer support for those shopping via Walmart’s website.
What CarSaver (and, by extension, Walmart) is promising is the convenience of hassle-free and haggle-free shopping. If you buy a car from Walmart, you won’t have to shop around at several dealerships and compare prices and negotiate. What this means?
- The cars won’t actually be at Walmart (nor will they come from Walmart).
- Instead, explains Automotive News, CarSaver will schedule an appointment between buyers and a local, certified dealer fewer than 15 miles from the Walmart store.
- Customers then follow up with appointments at the dealerships to make the purchase – if they so choose – based on the price and financing from CarSaver’s Walmart kiosk.
- Walmart customers don’t pay CarSaver for the service. Instead, if the dealership completes a sale they’ll pay CarSaver a small fee (of $350 in most states).
Does This Mean Walmart Will Put Small Businesses out of Business?
Walmart has often been criticized for putting smaller business out of business and for underpaying its staff (allegedly to the point that many seek public assistance to survive), but it appears its partnership with CarSaver won’t take revenue from local dealerships since they will essentially act as a go-between. Instead, in this case, Walmart might help local dealerships increase their sales.
Walmart Isn’t the Only Company Doing This…
Although Walmart isn’t competing with dealerships, it’s still competing. Costco has been in the business of facilitating simplified, no-haggle car sales among its customers and dealerships in a program similar to Walmart’s for years, and they’ve found great success. Costco sold more than 465,000 vehicles nationally in 2015, according to Forbes, which puts the company on par with top car dealerships in terms of volume.
But Costco is a membership-only store, and there are far fewer Costco locations nationwide than Walmart locations. Costco has a reported 85 million members and just over 400 warehouse stores in the U.S., but that pales in comparison to Walmart, which boasts 3,500 superstores nationally with 140 million weekly visitors. In fact, 90% of the U.S. population lives within 15 miles of one, meaning the potential reach of Walmart’s program is huge.
The car selling program at Walmart is in its early days, and it remains to be seen whether or not it catches on, but the potential exists for a major shift in the way many people think about buying cars.
Would you buy a car from Walmart? Why or why not?