Sandy Schwartz is president of Cox Automotive, the world’s leader in vehicle remarketing services and digital offerings for auto dealers.
He oversees Cox Automotive’s 25 brands that include Manheim (auctions), AutoTrader.com (vehicle listings), Kelley Blue Book (vehicle valuations and listings), Dealertrack (dealership-management systems and auto financing aggregation),VinSolutions (customer-relationship management systems), vAuto (inventory management), X-time (online service scheduling) and Dealer.com (website services).
Schwartz speaks of the need for auto retailing to meet customer expectations of a quicker and more streamlined buying process.
Cox’s latest industry offering is Accelerate. It provides online car shoppers with more digital functions. Those include Internet users’ ability to calculate actual monthly payments, receive trade-in values on their vehicle, secure online financing, review F&I products, accept deal terms and reserve a vehicle.
Accelerate debuts its new auto-retail platform in Las Vegas where 24 dealers will use Accelerate initially on their Autotrader listings, followed by KBB.com listings.
In a WardsAuto Q&A, Schwartz talks about the changing world of digital car shopping, new customer expectations and how he runs a business with more than two dozen brands. Here is an edited version.
WardsAuto: You had said previously you need to look at the future, but today is very important. How much of a balancing act is that?
Schwartz: For us, it’s a huge balancing act. We spread some of our bets and investments for learning. But today, there are tons of advances for dealers to make and for us to make on their behalf. Today, meaning the next two or three years.
WardsAuto: What are some of those advances?
Schwartz: Our digital retailing is one of them. The experience for a buyer from the minute they start looking to the minute they sign (the purchase agreement) has got to get better, faster and more efficient.
The shopping experience on, say Amazon, is more intuitive, less bulky and easier. We have to be realistic. Buying a car is not like buying a box of diapers, but at the same time, there are parts of that process that can get smoother.
(At Manheim), we facilitate millions of car sales in the wholesale marketplace. We want to have it so that a dealer or consigner can do their entire auction transaction on their smartphone. That includes looking at inventory, bidding and processing a transaction without tons of paperwork.
So, we’re talking about every part of car buying and selling. In the next two to five years, we’ve got to get some of the bad stuff out of the system.
WardsAuto: What would some of the bad stuff be?
Schwartz: “Bad stuff” probably is a poor choice of words…
WardsAuto: The inefficient stuff, then.
Schwartz: To be able to narrow down your choice right away online and find out immediately from the dealership what you qualify for. We talk a lot at Autotrader about not returning search results of cars to people who don’t qualify for them. Right from the start, let’s make sure someone knows what their credit score is, what that qualifies them for and start that process early.
There’s also a lot of paperwork that can be done online before people go offline. Our research tells us people still want ultimately to go to the dealership. But they don’t want to go for a 3- to 5-hour experience. They want to be there 90 minutes or less. A lot of them want to spend that time learning about the tech stuff on cars and how it works.
WardsAuto: You’ve said you think (the franchised-dealer system) is important and essential. Why? Tesla doesn’t think that.
Schwartz: They sure don’t. First of all, dealers are amazing people and they do great things for their communities. The soft side of me appreciates that. But the more important thing is that someone has to stage, deliver and service the car. People want a relationship for things like that with their dealer.
Dealers have an important place. It’s going to change over the years. But dealers and OEMs need to work better together.
WardsAuto: What could they do to work better with each other?
Schwartz: They should understand each other’s businesses better. But I don’t want to make it out like there’s this huge war. The path forward is manufacturing a vehicle, then getting it into the consumer’s hands. OEMs and dealers could work better in the course of doing that.
WardsAuto: Can you think of anybody in the industry that has more combined automotive data than Cox Automotive? Each brand individually has impressive data bases, but in total it’s awesome.
Schwartz: I can’t think of anyone else who has as much. I can also tell you I wish we were better in what we do with that data. We’re working on it. We’re getting better at it.
WardsAuto: In the old days, some dealers would overprice vehicles and hope someone would come off the turnip patch and buy it. But now we’re in the age of automotive pricing transparency.
Schwartz: Guess what? Some dealers still do that.
WardsAuto: Not a lot.
Schwartz: Not a lot but there still are a few.
WardsAuto: Can a dealership sell F&I products online as effectively as it can sell them in person?
Schwartz: The industry isn’t quite there. But someday we can. Today, dealers realize F&I is a big profit center and they want hands-on. But here’s what is going to happen. Once people see what the (digital F&I) buying experience can be like – and again, we’re not quite there yet – they won’t settle for being brought into a room as the only way.
Here’s an example of something we’re working on. Car consumers don’t necessarily like tutorials, but if they were to spend a few minutes watching an online video explaining the value of wheel and tire warranties, that could be beneficial.
On the other hand, every dealer believes if they can get you face to face they can sell you more.
WardsAuto: Which probably isn’t incorrect.
Schwartz: It’s totally correct. But there are ways you can get closer to alternatives other than customers sitting in an F&I office for two hours. It’s a balancing act.
WardsAuto: You were asked what keeps you up at night. You said you sleep well, but worry about what keeps your clients up at night. What keeps them up?
Schwartz: No.1, dealers clearly are worried about shrinking margins. No.2, they worry about losing control, whether because of digital retailing or OEM involvement. I used to say in my early days as a manager that the best way to get control is to give it up to people, and you’ll get it back.
Again, I don’t want this to sound like dealers are doing terrible job, but they’re at a tough point. There will be a survival of the fittest. We won’t see a 25% washout, but the good ones will survive, and that won’t only be the big ones, although they’ll have a general advantage because of their economies of scale.
Another thing that keeps them up at night is how much should they invest in brick and mortar, especially with a lot of OEMs wanting them to build Taj Mahal dealerships.
WardsAuto: Cox Automotive has 25 brands. How do you manage to spin so many plates?
Schwartz: First of all, it’s not me. We have great people working for us. The bigger question for us is where should the brands intersect and where shouldn’t they intersect. A tough part is prioritizing how much money we spend on product, and where do we spend it?
We’ve just spent $300 million on a state-of-the-art paperless system for Manheim and inventory services. Is that more important than artificial intelligence on Autotrader where someone can say, “I’m looking for, say, a Ford Mustang that’s got this, this and this” without typing it in.
It’s less about keeping the plates spinning, because people run the businesses day to day.
WardsAuto: Is the acquisition strategy to cover all the bases or buy things that will interrelate to existing properties?
Schwartz: We look at that all the time. We have a heat map of things we need. There are always things that come up that we’re interested in. But today, we have the products we need to do what we need to do for dealers, OEMs, their captive financial units and consigners.
Look, there will always be the two guys in a garage building something that’s faster. And we could say, “Maybe we should buy that.”
But overall, there are no big gaps at Cox Automotive, where I’d say, “God, if we only had that.” We feel good about what we have, but I’ll tell you, we’ve got to get them working better together.