GM pilot program shows that shoppers resist buying without seeing and trying
Robert Sawyers: Most clickers bail out before the credit application.
To attract Web-savvy customers, General Motors is experimenting with easy-to-use online shopping. Consumers can cut time at dealerships, for instance, by filling out credit applications online and getting preliminary values on trade-ins.
But initial results from GM dealers show that nearly all shoppers are a long way from buying a $30,000 vehicle sight unseen. It's the latest piece of evidence that the migration to online auto shopping is proceeding surely -- but slowly.
For about a year, Chevrolet has been bringing select dealers in Michigan, Minnesota and Wisconsin into a pilot called Shop-Click-Drive.
Based on positive dealer feedback, Chevrolet is looking at expanding the pilot to another market in the coming weeks, GM spokeswoman Ryndee Carney said.
The program allows a customer to buy a vehicle from a participating dealership's Web site by clicking on a button that takes the shopper through five easy steps:
Choose a vehicle by reviewing inventory.
Get a value on a trade-in.
Fill out a credit application.
Select extended warranties and accessories.
Schedule delivery either in-store or at the buyer's destination of choice.
Other than the credit application, it's not much different from buying cigars or cosmetics online except in one fundamental way: the sticker.
"It's one thing to buy headphones online; it's quite another to buy a $30,000 car," says Robert Sawyers, 45, general manager of Sawyers Chevrolet in DeWitt, Mich., near Lansing.
He said most users who have started the car-buying process through Shop-Click-Drive have ended the session before filling out a credit application. That's when they decided that they were seriously close to buying a car sight unseen, Sawyers said.
Sawyers Chevrolet enrolled in the Shop-Click-Drive program in June, he said. Sawyers said the store is happy with the program, though not thrilled.
Only four customers since the launch at the store have gone through the entire process and bought a car online, he said. That's not to say it isn't an asset. Most of the customers who start by clicking the tab prominently displayed on the dealership Web site go far enough into the process to leave contact information that Sawyers' staff can pursue, he said.
The store received seven leads from the program in November, 12 in December and nine in January. He said Sawyers Chevrolet converts to sales about 15 percent of its Shop-Click-Drive leads.
The Shop-Click-Drive program is not for everybody, but it offers a valuable option to buyers who prefer the convenience of Internet shopping or want to spend as little time at a dealership as possible, said Lenny George, general manager of Berger Chevrolet in Grand Rapids, Mich.
"People who are shopping online for towels or Apple gear expect to be able to buy online. Why should auto dealers be any different?" George asked.
As an early adopter of Shop-Click-Drive more than one year ago, George said, he had to allay some concerns from dealer acquaintances that the program was aimed at replacing stores and salespeople. He said his experience has shown those concerns to be baseless.
It's simply another way to convert shoppers to buyers, George said. A shopper who hits the prominent Shop-Click-Drive button on the Berger Chevrolet Web site never leaves the Web site to conduct his or her shopping, he said.
And the store retains the profit from any loan origination since the credit application is routed directly into the dealership's RouteOne financing tool, which allows the dealership to select a lending institution from which to secure a loan.
If the shopper gets all the way through the five steps, he or she almost assuredly will buy a vehicle. "They are an assumptive close," George said.
And the program is producing leads, he said.
In December, for example, the button accounted for 40 of the store's 192 Internet leads. The store sold eight vehicles from the 40 leads for a close rate of 20 percent, George said. For all of December, Berger Chevrolet sold 177 new vehicles.
GM's Carney said dealer results have Chevrolet exploring the expansion of the program to at least one more market.
"Chevrolet, Buick, GMC and Cadillac are always talking with dealers about how they can meet and exceed the expectations of customers who research and shop for vehicles online. Recent research shows that a growing number of consumers would like to do more online," she said.
Other carmakers are experimenting with online buying, too. At the National Automobile Dealers Association convention in early February, American Honda Finance Corp. announced an exclusive, long-term deal with Dealertrack Technologies to roll out new sales-financing tools, including those to ease loan origination.
The tools are expected to streamline vehicle financing at Honda and Acura stores throughout the United States, said Dealertrack CEO Mark O'Neil. He said Honda and its dealers will determine whether to roll them out online or in-store.
Sawyers said it is OK that the program is an evolutionary step, not a game-changer.
Part of the benefit of the program, he said, in addition to some modest incremental sales, has been the process changes that Sawyers Chevrolet has made to participate in the pilot.
For example, the store is now posting more photos with new-vehicle inventory as recommended by the program, Sawyers said. He said he also had to adjust the prices of parts accessories online to make sure they would be attractive to Shop-Click-Drive buyers. "What we had to do were not bad things," he said.
George, who oversees 30 salespeople at Berger Chevrolet, said he doesn't see online vehicle buying ever replacing the dealership. He has two designated people handling the Shop-Click-Drive shoppers.
George said: "People still want to come in, get in their car, touch it and smell it."
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