INSIGHT54 • FEBRUARY 4, 2008 The online dealer

Survey: Dealers embrace Web — cautiouslyRetailers respondto growth ofInternet shoppingDavid Kushmadkushma@crain.com

As one auto dealer sees it, “tire kick-ers have become mouse clickers.”

Dealers say shoppers increasinglyare willing to forgo dealership visitsand buy cars and trucks via the Inter-net. And dealers are responding tothat preference.

But an unscientific AutomotiveNews survey suggests that some deal-ers are far more advanced than oth-ers at putting some aspects of thesales process online. And some deal-ers warn that Internet sales can haveas many drawbacks — includingsmaller profits — as benefits.

Nearly 600 franchised U.S. dealerstook part last month in the online sur-vey of their dealerships’ Web prac-tices. They say e-sales still represent arelatively small, if growing, share oftheir total sales: Almost three out offour dealers say their largest-volume

stores sell fewer than 25 new or usedvehicles online in a typical month.

Got it wiredAmong other key findings:

� Almost all dealers surveyed saythey post their stores’ used-vehicleinventories on their Web sites. Nineout of 10 post their new-vehicle in-ventories as well.� Nearly all dealers say their stores re-spond to customers’ online inquiriesthe same day they are received.� Five out of six dealerships buy used

cars and trucks at online auctions.� Four out of five dealerships adver-tise on third-party Web sites.� Three out of four dealershipsschedule test drives and service ap-pointments online.� Two out of three dealerships nego-tiate vehicle prices online.� Three out of five dealerships sellparts online.

Adam Simms, general manager ofToyota Sunnyvale in California’s Sili-con Valley, says his dealership doesmost of its business online.

“You’ve got to be able to deal withthe customer on the Internet as wellas the customer who comes into theshowroom,” Simms says. “The com-ing-in customer is never going away,but the number of people who areclicking is getting larger.”

Skip Davenport, a Ford dealer inGreer, S.C., says the Internet is “mak-ing the buying process a lot easier forthe customer.” But he doubts thatonline sales will ever make dealer-ship visits obsolete.

“You can buy groceries online, buthow many people do?” Davenportsays. Customers “want to come to the

physical location, they want to drivethe car, they want to meet the sales-people.”

Room for doubtOther findings of the Automotive

News survey suggest that the day re-mains distant when vehicle buyerscan expect to complete their pur-chases entirely on the Web.

Most dealers in the survey say theydo not accept trade-ins online. Two-thirds say they don’t use electroniccontracts for finance and leasetransactions. Nearly two-thirds sayfewer than one out of four buyersmake their first contact with the

dealership online.In a part of the survey that allowed

dealers to make anonymous com-ments, several complained that on-line vehicle sales are less profitablethan those made at the dealership.Web customers also tend to be lessloyal, they say.

“Online purchases are just num-bers, with very small gross,” a dealersaid. “But if we don’t take the deals,the store down the road does. Theonline shopper is killing bottomlines, thus having to force us to raiseour dealer fee. Have to make theprofit somehow.”

Another dealer lamented that “on-line communication has taken awaythe value and personalization of thecar-buying process.”

But for every dealer who said hewished “the Internet blew the frigup,” another called online sales “thesingle greatest frontier for increasingour business.”

One dealer advised: “Embrace theInternet or be prepared to be runover by it.”c

Ryan Beene contributed to this report

Keeping it personal How many new vehicles do yousell online in a typical month?

75-more

50-74

25-490-24

And the survey said

Does your dealershippost its new-vehicleinventory online?

0 20% 40% 60% 80% 100%

No

Yes

Does your dealershippost its used-vehicleinventory online?

0 20% 40% 60% 80% 100%

No

Yes

Do you negotiateprices online?

0% 20% 40% 60% 80% 100%

No

Yes

How quickly do yourespond to onlinecustomer inquiries?

Longer 0.4%

Within 2 days1.4%

Same day42%

Within an hour56%

How many usedvehicles do you sellonline in a typicalmonth?

75-more

50-74

25-49 0-24

Pen still mightierDoes your dealership useelectronic contracts for financeand lease transactions?

Yes35.7%

No64.3%

Almost 600 U.S. dealers took part in an Automotive News surveyof how they do business online. Here are some responses.

AN AUTONEWS 02-04-08 A 54 AUTONEWS 1/30/2008 1:20 PM Page 1