Dealers wonder where they fit into telematics equation

An informal survey of dealers across the United States by Automotive News revealed there are many questions — and much skepticism — about who benefits from the telematics revolution. Many dealers say they’ve been left out of the equation.

Barron Meade, general manager of Meade Lexus in Southfield, Mich., said, “Dealers are the last to benefit from any technology that comes out.

“I think that (telematics is being pushed) because it’s an additional potential source of revenue for the manufacturers,” he said. “I want to know if there’s any value in it. If there is, we can sell it.”

Meade estimates that less than 5 percent of the 1,800 vehicles he hopes to sell this year will be equipped with Lexus Link, OnStar’s rebadged onboard communications system. It is available as an option on LS 430 sedans for about $1,100.

Russ Darrow III, owner of the Russ Darrow Group in West Bend, Wis., has a similar view.

“We’ve had a few (sales) from people who have read about it and want the latest and greatest devices that are coming,” he said. “But I think this movement is being pushed by the technology companies and the media.”

Dealers aren’t going to order cars with telematics devices unless they are proven sellers, he said. “There’s too high a risk of being stuck with it unless you have a certain kind of luxury car where you feel there’s a consumer demand.”

Russ Darrow Group sells 6,500 new and 7,000 used cars annually. The group has 10 new-car stores. Brands include Chrysler, Jeep, Dodge, Honda, Isuzu, Kia, Nissan, Toyota and Pontiac.

Where are incentives?

Carroll Smith, owner of Timmers Chevrolet in Houston, said disinterest in OnStar is tied to a lack of factory incentives to encourage customers to resubscribe.

OnStar is available on more than 50 General Motors models. New-vehicle buyers get the first year free, then pay a fee for services ranging from roadside assistance and navigation to e-mail. That fee is $199 to $399 annually, depending on the service.

“With OnStar, I’m a salesman at heart, and it’s hard to get enthused about working hard to sell something when there’s no compensation,” Smith said. “Having said that, if we had people coming in asking for OnStar, we would find it valuable and use it in our marketing.”

Smith estimates Timmers will sell about 2,000 new and used cars this year, but only a few customers have requested OnStar.

“Another frustration with OnStar is that some customers tell us that it takes too long to activate it, and they don’t bother activating it,” Smith said. “We’ve had people who buy new cars with OnStar in it and say they don’t care if it’s there or not.”

That is not the case everywhere.

In Wyoming, OnStar gives owners peace of mind, said Tim Joannides, dealer at Halladay Motors in Cheyenne. “People like the navigation system,” he said. “We’re two hours from Denver. Owners use it if they go down there.”

But is the dealership making money as a result of OnStar? Joannides said he isn’t sure. But, he added, “When people trade in their vehicles, they want it again.”

Halladay Motors, which sells 800 new vehicles a year, carries Cadillac, GMC, Oldsmobile, Daewoo, Suzuki and Nissan products.

Cost matters

Cost is a big issue with consumers, salespeople say.

“The sticker shock is high for our customers,” said Eric Wong, general manager of Peyton Cramer Infiniti of Torrance, Calif. “It’s frustrating because there’s not a lot of incentive for salespeople to push these things. They hardly make any money, and it takes a lot of time to demonstrate these (features).”

When Wong saw that customers at his AutoNation-owned store weren’t rushing to buy navigation or voice activation systems, he had to find a solution. The dealership started stocking the showroom with cars equipped with the technology.

“Now, about 50 percent of our customers ask about it, and 10 percent to 20 percent actually buy it,” Wong said. His store sells 550 to 600 new cars a year.

Being in an affluent or high-tech market is no guarantee that in-vehicle telematics will drive sales.

“It’s interesting that in a high-tech town like Austin, there is little demand for high tech in vehicles,” said product specialist Glenn Mayhugh of Mercedes-Benz of Austin, Texas. “People just want to drive a nice car.”

Mayhugh’s dealership sold about 900 vehicles last year and Mayhugh expects to sell about the same number this year.

Lack of interest

Some dealers said most consumers are not interested in telematics.

Linda Marcrum, general sales manager at Thoroughbred Motorcars ( in Nashville, Tenn., used to order Jaguars with navigation systems.

“Now I order very few Jaguars with it,” she admitted. Building inventory requires a great deal of time, plus customer knowledge, she said. Once in a while Marcrum orders a Jaguar with a voice-activated communications package. But that drives up the vehicle’s price — $1,700 on an XJ8 Vanden Plas or $2,200 in an S-Type.

“There are so many things on new cars that it can take up to three hours per delivery,” she said of the time salespeople must set aside to explain features. “No one retains all the information. As for telematics, you don’t want to go home and have to study to learn how to use it.”

Thoroughbred also carries Audi, Saab and Porsche brands, though Marcrum would not reveal sales figures.

Manufacturers and other dealers contend consumers are hungry for telematics offerings.

“I had an e-mail recently from an owner in the Los Angeles area who said he passed on a Lexus because of the (telematics) technology available in the BMW,” said BMW spokesman David Buchko.

Howard Orloff Jaguar-Volvo sales consultant Tom Eckardt in Chicago said customers who buy Jaguar’s telematics systems love them. A voice-activated phone with entertainment system runs around $2,500. A stand-alone navigation system is $2,300. The complete package is $4,300.

“When we have them, we sell them,” he said.

Orloff sold about 350 new Jaguars last year.

Letting the dealer do it

Some dealers wonder if future telematics devices shouldn’t be provided as dealer-installed equipment.

“The technology is changing so fast that by the time the manufacturer brings a device out, the second or third generation of it may already exist in the aftermarket,” said Beau Boeckmann, vice president of Galpin Motors ( of Van Nuys, Calif.

“Quite often, we can install devices as an aftermarket item, doing it for less money than the manufacturer, while getting a better markup and providing the customer with a better product.”

Some cell-phone options on certain cars still cost as much as $2,500, noted Boeckmann, whose dealership sells 1,000 to 1,200 new Fords each month, plus another 300 to 800 Lincoln, Mercury, Jaguar and Saturn vehicles.

“It’s ridiculous, especially when cell phones are being given away for free elsewhere every day.” it.

You can reach Jenny King at

ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.