PORTLAND, OR – As vehicle buying has evolved from exclusively in-store to more online shopping, car dealerships likewise have evolved to meet customers’ expectations and needs. With 296 locations in the U.S. and Canada and $22.8 billion in revenue in 2021 – up from $13.1 billion in 2020 – Medford, OR-based Lithia Motors is the third-largest dealership group in the U.S. behind AutoNation and Penske Automotive Group.
Lithia launched Driveway in September 2020 to allow customers to shop the company’s tens of thousands of new and pre-owned vehicles online. Now Driveway is offering online car shoppers something at once old and new: a storefront experience.
Earlier this month Driveway launched its first brick-and-mortar location in Portland, OR, that’s a hybrid of online shopping and the dealership experience.
“The reason we started Driveway is, we believe a portion of people are going to go online to buy a car and want it delivered, and we want to be a part of that” Bryan Osterhout, senior vice president of operations for Lithia and Driveway, tells Wards at the store’s grand opening.
Lithia also believes there’s a gap between online and dealership shopping that Driveway’s first physical location will fill.
“With Driveway we’re in the early stages and had a lot of success,” Osterhout says. “We’re learning a lot along the way from our customers and realize they want the option to go online, buy a car and have it delivered to them. But they also want the option of, say, starting the process at home and coming into the dealership and buying a vehicle.”
Phil Brooker, platform general manager for Lithia and Driveway, adds: “We're breaking the traditional mold. If you want to buy a car in-store, we’re more than happy to help you. If you want to buy one online and (have it) delivered to your house, we’re more than happy to help you with that, too.”
No Cars and Modern Décor
Unlike a traditional dealership, Driveway’s Portland location doesn’t have a showroom filled with cars and salespeople. Instead, it features modern furniture and décor.
“We want customers to feel like they’re in their living room,” says Shane Robidoux, store director at Driveway Chrysler Dodge Jeep Ram of Portland.
All Driveway sales associates use iPads and laptops to interface with customers, allowing them to sit next to customers instead of across from them at a desk, Robidoux adds. “The customer has control. We’re just there to help them.”
Says Brooker, “We want to serve people around their needs and we’re empowering our staff to make it a unique experience for each person.”
Driveway offers what Lithia calls “no-haggle pricing transparency” – the price a customer is shown is the price they pay for a vehicle, Osterhout says.
“For years the No.1 complaint we get is the amount of time it takes to buy a car,” he adds. “We don’t put customers in an F&I office for two hours and go back and forth figuring out whether we can do a deal. We show them the price on screen and say, ‘This is what the payment is, and this is what the interest rate is.’ That builds a lot of trust.”
Lithia and Driveway “spend a ton of time pricing cars to make sure that we have the right price so that customers can come in, buy the car and the whole process is quick and fast – and feels good,” Osterhout says. “We started with what our customers have told us they want in reviews and surveys.”
Lithia’s nationwide inventory of more than 50,000 vehicles also allows Driveway customers to choose a vehicle from anywhere in the country and have it delivered to almost any location, with a 7-day money-back guarantee.
“You don’t have to buy what’s on our lot,” says Brooker. “And we have what we call last-mile delivery.” If a Driveway customer in Oregon wants a vehicle that’s in stock in Texas, it’s shipped to the Portland store and delivered to the customer, he says.
Brooker describes Driveway as “a learning incubator and we’re going to get to the point of comfort before we extend it. Shane and his team are learning every day what customers want and need and are asking for.”
Lithia expects to open additional Driveway storefronts, Osterhout says. “Our plans are definitely to roll it out in other markets,” he says, although he doesn’t reveal timing.
“Our leadership has a vision that if we’re serious about helping our customers, we have to help them on their terms,” Osterhout says.