First-quarter figures
Results for public dealership groups in the first quarter vs. a year earlier
 AmountChange
Asbury  
Revenue$1.36 billion11%
Net$31.4 million–3%
   
Group 1  
Revenue$2.26 billion15%
Net$31.3 million42%
   
Lithia  
Revenue$1.08 billion19%
Net$24.7 million12%
   
Penske  
Revenue$4.05 billion21%
Net$67.9 million17%
   
Sonic  
Revenue$2.14 billion3%
Net$19.4 million–9%
   
Source: Companies
Dealership groups try to spur their own Web traffic and cut the 3rd-party costs

Public retailers want to take the wheel on leads

Dealership groups try to spur their own Web traffic and cut the 3rd-party costs

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Public dealership groups are moving to improve their own online lead development and reduce reliance on third-party lead providers.

Lithia Motors Inc. CEO Bryan DeBoer would like to eliminate third-party lead providers entirely. Penske Automotive Group Inc. Chairman Roger Penske said retailers may have relied on too many providers and probably should trim their rosters. Sonic Automotive Inc. executives said they already limit the number of lead providers the company uses and are trying to create more traffic on their own.

Their remarks follow AutoNation Inc. CEO Mike Jackson's earlier comments that the nation's largest dealership group would pull away from third-party vendors such as TrueCar, AutoTrader.com and Cars.com.

In effect, the public retailers are sending third-party providers this message: We are closely vetting your performance, and you must deliver every month for every store you represent.

"More power to AutoNation for getting to that state where they can take out those costs and deliver a car to a consumer without that third-party cost," Lithia's DeBoer told Automotive News. "Our ultimate goal is to move away from vendors as well."

About half of Lithia's 100 stores do not use third-party lead generators, and DeBoer would like to see that extended to all of them. As a Lithia store gains recognition in its market, it often will "trend away" from those providers because they just "add cost to the consumers," he said.

Penske Automotive is reviewing which third-party vendors it wants to partner with going forward, Penske said. "We're building an infrastructure," he said, "to stay in the business and be competitive."

Noting that cost is an issue, he added, "AutoNation has come out and said, do they need to have an outside provider? We have partners we're using, but we'll keep looking at those to make sure it makes sense."

Sonic won't drop its lead providers but is working to bolster its own lead capabilities.

"We're not solely relying on our lead providers to drive traffic to our stores," said Jeff Dyke, Sonic's executive vice president of operations. "We're relying on our store Web sites as well."

Sonic expects its percentage of self-generated leads to increase substantially once it rolls out its One Sonic, One Experience initiative, which launches in July at a Toyota store in Charlotte, N.C. The Sonic name and logo will go on its stores and be prevalent in its advertising.

Sonic also will remake its online experience to dovetail with the new in-store experience, Dyke said. A customer will be able to select a car, initiate a purchase online and choose whether to have the car delivered at a store location, home or office, he said.

Unless retailers have a single brand to advertise, it's hard to get enough leverage to internally drive consumer traffic, Sonic President Scott Smith said. Sonic plans a branding effort following AutoNation, which put its own moniker on most stores last year.

"Since they've put their brand up on their dealerships, they've been advertising now for several months as AutoNation," Smith said. "I see their point of view, and if you're going to spend $200 to $300 a car with a lead provider, why not just spend $200 to $300 per car on your own brand."

Despite efforts to reduce reliance, retailers acknowledged that lead providers can provide value.

Sonic uses AutoTrader.com and Cars.com and doesn't plan to back away. Dyke called them "great partners." But Sonic dropped TrueCar in January after TrueCar sued Sonic for trademark infringement over the retailer's use of the term "True Price." "If we weren't getting a return for the investment that we make in AutoTrader, we'd already not be using them," Dyke said.

Asbury Automotive Group Inc. CEO Craig Monaghan said Asbury is "very dependent" on its vendors for its success. The company will continue to use TrueCar, AutoTrader.com and Cars.com, but the vendors must continue to deliver, he said.

"We've got to always be better tomorrow," Monaghan said. "We have to be more cost efficient, and we work with them to try to do that together." c

You can reach Amy Wilson at awilson@crain.com.


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