A startup that generates sales leads for dealerships by giving consumers test drives in competing new vehicles continues to stir debate as it plans its national ramp-up.
GoMoto, which opened a test- drive center on May 2 in a Cherry Hill, N.J., shopping mall, is working to open similar sites this year in Houston, Milwaukee, Philadelphia, and Washington and on New York's Long Island.
The Philadelphia company's co-founders say they are prepared for a wave of questions from dealers, automakers and industry regulators.
"We are not brokers," said Benjamin Catanese, a Volkswagen dealer in New Jersey who is one of the founders. "We're not selling cars. We're just directing interested customers to showrooms.
"The opportunity here is sales-lead generation. I think you're seeing a clear message from dealers right now that they're unhappy with the quality of sales leads they're buying."
Referrals to dealers
The startup's business plan is simple: Local dealerships pay GoMoto $750 to $1,250 for each vehicle they display in the company's test-drive centers. When a consumer expresses interest in a purchase, GoMoto arranges a visit with the dealership.
If two or more dealerships of the same brand participate, GoMoto divides the leads based on a prearranged plan.
GoMoto employees do not try to sell vehicles or discuss incentives or promotions. But kiosks are available for consumers to view dealership Web sites.
The industry is not entirely comfortable with the concept, said Todd Marcelle, GoMoto CEO and co-founder. Marcelle, a Washington, D.C., entrepreneur, created GoMoto with Catanese and Marc Rubino, owner of the vehicle marketing company Redline Automotive Merchandising.
"We recognize that we need to do a lot of explaining," Marcelle said.
On May 14, the New Jersey Coalition of Automotive Retailers' board of trustees put GoMoto on its agenda and invited Catanese, an association trustee, to talk about the venture and answer questions from about 75 local dealers and guests.
Not a broker
Catanese said some New Jersey dealers thought GoMoto was acting as a broker and the meeting allowed the company to correct that impression.
Others at the meeting -- as well as some who have met with GoMoto around the country -- are convinced that the concept runs afoul of rules limiting a dealer's franchised territory. The standard retail franchise prohibits dealers from selling or displaying vehicles outside their area of primary responsibility.
"I'm a dealer," said Catanese, who owns Volkswagen of Salem County in Monroeville, N.J.
"I'm not trying to circumvent the franchise system.
"What we're doing is no different than a dealer buying a sales lead for an online customer. The big difference is that my sales lead just stepped out of a test drive."
Jim Appleton, president of the New Jersey dealer association, confirmed that the May 14 meeting was "a spirited discussion about the business model and whether it complies with state laws and regulations governing the sales of autos."
He declined to discuss details of the meeting, which was not open to the public. But he said the association continues looking into whether the Cherry Hill GoMoto site complies with state rules on off-premises sales.