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The Ward's e-Dealer 100 is a story about dealers — and their successes. Much recent media attention has been directed at the dot-coms — specifically third-party sites — and their pending doom. The resulting message may be that on-line automotive retailing is a fantasy.
Hardly. There are dealers who sell cars on line, and are very successful at it. That is the genesis of the Ward's Dealer Business e-Dealer 100. The ranking is an industry first — it is the first charting of information about what the dealer community really is doing on line.
The Ward's e-Dealer 100 ranks dealers based on the number of car sales initiated using the Internet. It's a departure of sorts from our Dealer 500 and MegaDealer 100 rankings, which are based on sales revenue. We believe, however, that the number of units sold on line is the best snapshot of the dealers' Internet sales activity.
Every unit represents a transaction, and vehicle transactions are occurring on line in growing numbers.
Maybe it's not at the same rate as some people in the Internet world want you to believe. But as a percentage of total volume, there is definite growth.
Our definition of an Internet sale has evolved. Originally, we were hoping to provide the industry with a narrow definition — that everything about the sale is done on line except for the paperwork.
We learned that most dealerships, though, define the Internet sale as one in which the contact is initialized on line and the process is handled by a designated Internet staffer at the dealership. The process often includes both phone calls and e-mails — many dealerships do not see occasional use of the telephone as intruding on the Internet process.
We opted, therefore, for the dealers' definition — and judging by the results of the ranking, the dealers know best.
The e-Dealer 100 reveals that more and more people are using the Internet to buy cars. California's Anderson Honda, number one on the 100 list, sold 2,346 vehicles on line last year. That's nearly half of their total volume.
Ken Smith of Dave Smith Motors in Kellogg, ID, says his Internet business is about 20% of his total and expects that could rise to 35-40% by the end of 2001.
The trend is there, but very few dealers are getting on board, according to industry analyst Mark Rikess.
“Our research shows only 10% of dealers are actually in the game,” he says.
That's despite the NADA reporting 92% of all dealers have web sites now. But maintaining a web site is not the same as using the Internet as a key part of the sales process.
Ward's e-Dealer 100 is a list of the dealers who are playing the game hard and playing to win. The Internet will not increase the total number of cars sold to consumers. What's changing is how dealers are interacting with customers to sell those cars.
Manny Souza, Anderson Honda's Internet manager, says his incremental business — defined as customers coming from at least 15 miles away — increases about 3%-4% each month. Those are customers he is probably taking from a dealer without an active Internet presence.
How are these dealers playing the game? First, the dealer must realize where the customer is — whether it's the showroom, the dealership's web site, the manufacturer's web site or the third-party referral sites.
A Dohring Co. survey of consumers' car-buying habits says that 52% of American men intend to use the Internet for their next vehicle purchase. That compares to 32% last year. Thirty-eight percent of women, compared to 22% last year, say they'll do the same thing.
Dohring's survey indicates that fewer people this year are using on-line buying services (20%) compared to last year (42%).
However, Randy Rahe, vice president of e-commerce for AutoNation Inc., says AutoNation uses an array of third-party lead generators. "There is a place for them. The customers are looking there, and we need to be where customers are,” he says. AutoNation as a group sold about 63,000 vehicles on-line last year.
About half of the dealers on the Ward's e-Dealer 100 list depend on the third-party sites for 50% or more of their leads while half depend on them for 50% or less. Yet every dealer on our list gets referrals from third party sites for at least some of their leads.
In contrast, of all the dealers in the U.S., 53% say they use a third-party web site, according to a survey by Automotive Retailing Today.
It's not just about getting those leads, though. As the profiles on the following pages show, it's what the dealer does with the lead that determines the sale. The Internet is a sales tool, not a member of the sales staff.
Each of the top 100 dealers use sophisticated systems for responding to and tracking leads. What matters is what dealership personnel do with that technology.
“It's the store process that is important,” says Dennis Rushing, Internet manager for McNamara Pontiac/Isuzu in Florida. “You have to leverage the technology you have. We're a small dealership without all of the resources, but because of our system, we're successful. It's about constant follow-up and fast response times.” The dealership sold 488 cars on line last year.
Mr. Rikess reports that dealers able to contact customers three to five times before they enter the dealership will experience 85% closings among those customers.
Ward's e-Dealer 100 sold a combined 61,356 vehicles on line last year.
Vehicle sales don't occur without a franchised dealership's involvement. However, many consumers and the national media are unaware of who actually is selling or who can sell cars on-line. It's dealers.