Can a dealer deliver a car the way a pizzeria delivers a pizza?
Jim Gramm, general sales manager of Maryland Motors Chrysler-Plymouth in Rockville, Md., is determined to find out. Gramm changed his radio and TV commercials to promote doing the entire vehicle sales transaction over the Internet and delivering cars to the customer's doorstep. He launched the commercials in late January just after setting up the dealership's Web site.
The commercials say: 'You can make your own airline reservations. Mail a letter without a stamp. Or check the temperature anywhere in the world. All through the Internet ... www.MarylandMotors.com now brings auto buying to your home. ... We even deliver right to your door.'
So far, Gramm has learned that most customers are not ready to do the entire sale online. They like to browse and gather information on the Net - even negotiate prices using e-mail. But they balk at filing an online credit application and want to kick the tires before signing a contract. Customers seem concerned about privacy when they offer financial information, he says.
In February, the first full month promoting the Web site, the dealership received 16 inquiries off the site, resulting in four car sales. None of the customers who purchased wanted the vehicle delivered to the home.
'One customer said, 'I think it's great, but I am not buying a pizza,'' says Gramm of some customers' reluctance to buy a high-ticket item sight unseen.
But some sales prospects seem more open to online transactions. And Gramm believes that within a few years, delivery-to-the-door will become more common. 'They like the low pressure,' he says.
Although the Maryland Motors Web site is new, Gramm is not an Internet novice. He has experience getting Internet leads through Auto-By-Tel, an Irvine, Calif., buying service that matches dealers with online customers.
Gramm signed up with Auto-By-Tel more than two years ago and attributes 18 percent of his new-vehicle sales to online referrals. The dealership last year sold 1,000 new vehicles - about 180 through Auto-By-Tel referrals. It has two full-time sales representatives devoted to fielding Internet inquiries.
Average profit margins for online sales run about $1,000 on the car and $300 on finance and insurance. Transactions outside the Internet are more profitable, grossing an average $1,200 per car and $400 in the F&I department.
But marketing costs are less online. Gramm spends an average $100 per car through Auto-By-Tel, compared to $210 per car using traditional advertising.
Gramm says the heavy promotion of the Internet at his dealership in the Washington, D.C., area is a competitive edge. His traditional clientele has been almost exclusively from Maryland. Now he is attracting customers from Virginia, New York and North Carolina. Says Gramm: 'I sold to a guy in Germany and to a guy in Iceland.'