Lloyd 'Buzz' Waterhouse, the new president and COO of Reynolds and Reynolds Co., of Dayton, Ohio, thinks a significant number of car sales will take place completely online.
Waterhouse, who recently headed IBM Corp.'s e-business services, told Automotive News Staff Reporter Donna Harris that the obstacles to online car sales -such as handling the trade-in - soon will be overcome. Here are excerpts of their conversation.
Why create a separate e-commerce division?
You have to be where the market is going. Fifty-one percent of adults regularly use the Internet at work or at home. It is where they go to look for information.
But when it comes to completing a car sale online, aren't there significant obstacles - such as the trade-in?
There are more people ready and willing to have a car delivered or to pick it up locally (at some distribution point) than dealers currently recognize. Some dealers get it, but others are laggards. As far as the trade-in value is concerned, that can be automated through an estimating system. You can have a resale guide on the Web. I envision doing a lot of the estimating work and pricing beforehand (the actual sale). When the car is delivered (off site), the sales representative can walk around the car and fill in the blanks - even using a hand-held computer. The estimate can e-mailed to the person handling the transaction at the dealership.
How much of the car transactions could take place online in the future?
I have seen estimates that over the next five years it could range from 18 percent to more than 50 percent. I don't know what it's going to be, but it will be significant. For sure, a majority of people will do research online.
You have tackled Internet solutions. What do you see as the biggest online dilemma for dealers?
Dealers are trying to figure out if the Internet is a threat or an opportunity. How do they create brand loyalty, and who is going to own the brand? Will it be AutoNation through its portal? Will it be a third-party portal (such as an online buying service)? Will it be the dealer who puts his business on a Web site? Will it be up to the manufacturers to preserve their brands? I don't think it's clear to me (that) there is any one answer to that question.