Like many other dealers, Doug Waiken was once skeptical about how helpful the Internet would be for selling cars and trucks.
'A few years ago, I didn't like the Internet, but I realized I couldn't stop it, so I'd better get on board,' says the president of Waiken Motors, a multifranchise dealership in Canton, Ohio.
Waiken is now one of the biggest cheerleaders for two independent Web vehicle services: Autobytel.com and AutoVantage. He was among the first retailers to sign up with both services several years ago.
'These third-party services provide information the manufacturers don't want people to have,' and that's invoice prices, he says. 'Dealers don't know how to sell on the Internet because they're not in control anymore,' he says. 'The dealers are petrified.'
Control is an area of contention between the retailers and the manufacturers.
Rick Perrella, a Saturn retailer in Albany, N.Y., predicts: 'My personal opinion is manufacturers will eventually take control of (Web) leads because they control the brand name. Who does the customer belong to, the manufacturer or the dealer? That will be key long-term and something that will have to be eventually decided.'
Saturn Corp. and its retailers will do what's best for customers, Perrella adds.
Saturn is in the midst of a seven-month pilot program in five cities. The General Motors subsidiary has inked deals with AutoVantage, AutoWeb and Edmund's Online. The three services send consumer requests in the five cities from their Web sites directly to Saturn, which in turn forwards them to the dealers in Atlanta, Baltimore, Minneapolis, Phoenix and Orlando, Fla. Dealers say they pay $28 per lead back to the factory.
PROTECTING THE BRAND
Mike Lazarus, president of Bi-County Saturn in Amityville, N.Y., isn't worried about Saturn gaining power over his Web prospects should the program be rolled out nationally. The factory merely 'wants to control the process people experience on the Web,' he says. If the test program goes national, it would protect the Saturn brand, Lazarus says. 'Right now, the brand is Autobytel or Priceline.com or whatever.'
Lazarus, a multifranchise dealer, says he learned the hard way three years ago that the cost of the third-party services was more than the gross profit on car sales generated by the services. He says he lost money after a one-year deal with CarPoint, so he dropped the service. He did concede the outside site got more hits than manufacturers' sites.
Lazarus says the Web is perfect for Saturn because of its no-haggle pricing.
Stewart Lasher, a Saturn dealer in Livingston, N.J., has never signed up with any third-party Web car services. He says Autobytel is 'not customer-friendly.' Investing in a vehicle franchise isn't cheap, and dealers shouldn't be scared into having to 'buy' their market areas from Autobytel, he says. 'If you don't want to buy your market area, someone else will.'
Saturn dealer Larry Denney in Columbus, Ohio, says he has stayed clear of third-party Web car services because they are very similar to brokers. He predicts they will disappear over time. He's pleased with the performance of his Saturn of Columbus stores' Web site.
Waiken says the Internet is going to progress as fast as its weakest link: 'The weakest link is the dealer.'
FEES GET PAID
Another control issue has less to do with friction between the factories and the dealers.
Customers 'want to be in complete control from their homes' when they go vehicle shopping on the Web, says John Cater, a Lincoln-Mercury dealer in Yorkville, N.Y.
He believes customers in the long run are paying dealers' costs for the third-party Web services. 'Even though Autobytel doesn't send the customer a bill, all the fees are in the price of the car,' Cater says.
Waiken says his company's gross profits on a vehicle sold via the Internet are within $100 of a vehicle sold in his showrooms. His profits are up 40 percent this year vs. a year ago because of Internet business.
He says sales volume and profit numbers have improved because of the Web services. The independent services generate better leads than the manufacturers' Web sites. For every 100 leads Waiken gets from one of the two Web services, he says he closes roughly 20 sales. But from the same number of leads from manufacturers' sites, he closes only five sales.
Waiken employs 12 full-time people to handle Web traffic and tries to get back to a consumer's e-mail within three hours.
Cater has changed his tune about the Internet. In 1996, he declined to sign up for even a basic $100 Web site for his store offered by Ford Motor Co. He says he didn't think then that his rural location near Utica required it. Internet shoppers, he says, could visit the manufacturer's site to learn about his dealership's location and phone number.
Cater Lincoln Mercury's first Web site recently was activated. 'In three years, a lot of changes have happened,' Cater says. He has assigned one staffer to handle requests for information from customers visiting the new site.
Perhaps Cater had a bigger incentive.
Starting Jan. 1, Lincoln Mercury will send all dealer information via the Web. Currently, the company sends dealers data via satellite linked to printers in the stores.
Cater's looking forward to the convenience of the new system. 'Every morning, I have to go through stacks of computer paper,' he says of the satellite-based method. 'Now I'll just scroll through the computer screen and print out what I want.'
The Web-based communications will be two-way. For example, dealers will file warranty claims to Ford over the Internet.
WORRIES OVER THE FUTURE
Consultant Sheldon Sandler describes Saturn's pilot program as a sign of the times.
The manufacturers want to control customers and dealers, and if the factories control Internet leads, they can dictate more uniform processes to dealers who want the leads, says Sandler, CEO of Bel Air Partners LLC, a Princeton, N.J., investment firm specializing in auto retailing.
'If I were a dealer, I'd be concerned with what's happening now,' he says. 'Manufacturers are trying to figure out ways to more efficiently take control of the distribution process.'