Last week, the first Groupon ^[1] for a new vehicle purchase was announced — great news if you lived in Highland, Mich. and were looking for a new vehicle from LaFontaine Buick-GMC-Cadillac, which is the only dealership where the discount was applicable. Fast forward several days and the Groupon, which was canceled after failing to attract the 10 minimum customers, failed. And in retrospect, it’s not hard to see why. First, the original deal was skimpy: customers agreed to pay Groupon $199 (split 50/50 between Groupon and the dealer) for a $500 voucher off a new car; a total savings of about $300 just isn’t that much in the scheme of new-car prices. Second, cars–unlike massages, flowers, confections and other services and products that comprise the bulk of Groupon’s deals–are not impulse buys. Lastly, while the discounts offered by most Groupons are verifiable against a fixed price from a known local vendor, negotiation is built into the car-buying process from the start; in other words, customers can’t necessarily trust that a participating dealer isn’t raising a vehicle’s starting sticker price to offset the offered discount.

While Groupons have been a boon for companies providing car-related services such as washes or oil changes, the formula clearly needs some tweaking when it comes to the type of major lifestyle purchase represented by a new car. (Working directly with the auto manufacturers, say, or offering vehicles at a fixed price under the MSRP rather than a nebulous “$X dollars off”-type deal.) Still, the process wasn’t a total loss: of the four customers who signed up for the failed Groupon, two still bought new vehicles when LaFointaine general sales manager Robert Milner honored the voucher nonetheless.

Read more at Automotive News ^[2].