Ken Gilman, president and CEO of the Asbury Automotive Group dealership chain, says the industry still is “digesting the Internet.”
Dealers, though, continue to use the Internet to get their slice of share in their local markets. This year, the Ward's e-Dealer 100 sold more than 168,000 vehicles online. You can be sure those dealerships are capturing sales from dealerships that are not aggressively playing online.
“This year, Internet sales for more automotive retailers will go from ‘nice to have’ to a ‘must have’ due to the pure business economics,” says Dean Evans, vice president of marketing for Dealix, a division of The Cobalt Group.
He adds: “At a time when 25% of the U.S. dealer population is in the red and most manufacturers are not going to raise customer or dealer incentives as a way to increase sales, the dealers are having to fend for themselves more frequently.”
For all of the promise the Internet brings to the world of automotive retail, it has also sparked a clash of cultures.
Life in the dealership is fast-paced and transaction-focused. The mindset for a 100 years has been to sell the car today, and worry about tomorrow's sales tomorrow. It's a survival technique.
But then, along comes the Internet. It puts car buyers in touch with the dealership much earlier in the shopping and buying process.
Before the Internet, customers averaged about seven days to shop for and ultimately buy a car. The Internet has pushed that buying cycle out to as long as 90 days.
“Many of those consumers haven't even decided what vehicle to purchase yet,” says Steve St. Andre, president of FordDirect.
So now dealerships must guide those early intenders through the cycle and ultimately into a purchased vehicle.
On a large scale, dealerships are ignoring those early shoppers. Studies consistently show that as many as 45% of purchase requests that shoppers sent through the system (whether via auto maker, dealership sites or third-party websites) fail to get a response from the dealer.
One reason is that a sales person is reluctant to work leads from people he or she believes are early in the shopping process when there are customers looking to buy today?
One answer is to change the model of how dealers interact with shoppers throughout the process and how employees are paid.
“We do need to look at the way we deal with people online,” says Gary Marcotte, vice president for AutoNation Inc. “They have a different time horizon. And this model we have now, of forcing everyone too quickly into a car, isn't going to work for long. Our process is more abrasive than it needs to be.”
The trick is to create a culture in the dealership that accommodates both the buyer that is further out and the buyer that is ready today.
Many dealers are beginning to use business development centers that handle all incoming calls and e-mails, schedule appointments, and then let the sales people sell the car.
AutoNation is experimenting with such a system that centralizes the lead-handling process.