Sid DeBoer, CEO of dealership chain Lithia Motors, is something of a visionary.
He wants Lithia to become the Amazon.com of the car business. “That's how customers are going to buy cars — on the Web,” he says.
A few of them already are. Many currently are doing much preliminary work before heading to the dealership to wrap up the deal and take delivery.
“We're trying to sell cars differently, in a low-cost way,” DeBoer says.
Many auto industry observers think the Internet will drive down dealership ad and marketing costs. That may happen some day. It isn't happening now.
Instead, the Internet has created an extra layer of automotive marketing, one that requires its due share of payment.
In the pre-Internet days, dealers advertised in newspapers and on radio and TV to get people into their showrooms.
Now, dealers advertise with those so-called “traditional media” to get shoppers to dealership websites as a prelude to eventually getting them to the showroom.
Perhaps that ultimately will change, and customers will beeline to the websites or get to them via search-engine marketing (an expense unto itself, and often not a cheap one). But for now, a lot of offline advertising is spent on trying to get people online.
Dealers' websites have come a long way from when they were electronic sales brochures. The good ones now offer rich content and functionality, allowing users to look at inventory, pricing, finance offerings and the like.
Still, many dealership websites are counter-intuitive and hard to navigate, says Joe Lescota, automotive marketing chairman at Northwood University in Midland, MI.
The opportunities to sell cars online are huge, he says. “But websites are going to have to get better.”
There are wide differences of opinion on how best to use traditional advertising to get people to dealer websites.
Michael Baker, CEO of the Baker Auto Group, a chain of 10 new-car dealerships in San Diego, says radio spots are the best way to push people to his websites.
“You'd think it would be TV because it's visual, but radio works for us,” Baker tells me. “The reason is that you can repeat your URL in a radio ad. But the web address has to be simple and easy to remember.”
In contrast, Melissa Goodis, interactive media manager for Crispin Porter and Bogusky, an ad agency in Miami, says TV advertising most effectively routes prospects to a dealership website.
Maybe it depends on the market. But are people really that different? Are residents of San Diego more tuned in to radio opposed to the TV viewers of Miami?
Although the Internet hasn't made car dealers superfluous — as some seers wrongly predicted last decade — it has changed some basics of auto retailing.
For instance, today's car buyers expect pricing information and transactional transparency from the get-go, altering the way many dealerships do business.
“We built a culture that wanted to maximize gross profit,” DeBoer says. “But our research found that customers want information up front.”
The Internet gives it to them, as well as dealer wholesale costs for vehicles. Even the National Automobile Dealers Assn. website offers up dealer invoice prices.
Presumably, some offline car buyers always will want to partake in “the dealership experience.” But the Internet could make that group an endangered species.
Accordingly, some dealers wonder if they need to build those stunning (and expensive) dealerships that auto makers insist upon.
“I don't think big showrooms help sell cars,” says Mike Maroone, president of AutoNation, the nation's largest dealership chain. “Two-thirds of our customers are on the Internet.”
But the showroom remains the place where the vast majority of car deals are consummated. At least for now.