Meet Brian Stafford.
He is a new breed at the NADA convention. He is a dot-com - one of the zillion or so dot-coms who inhabited the convention.
He is creating a new auto-retailing 'concept.'
He has no auto-retailing experience.
His venture is financed entirely by a computer software company.
He wants to buy up 100 dealerships.
He has $100 million in cash (no kidding) to get started.
He is 23 years old.
Welcome to the 21st century.
'In the long run,' says Stafford, a fresh-faced Los Angeles native who is still driving his first car, 'there are going to be a lot of different retailing models out there that work. People are a little confused about what we're trying to do, but what you'll see is that our concept can exist side by side with the traditional method of selling cars.'
The industry's dot-com confusion, as the young computer entrepreneur puts it, may be an understatement. As dealers and factory executives met in Orlando, Fla., last week, the dot-com subject was audible everywhere.
Industry power chiefs such as General Motors Chairman Jack Smith and Toyota Motor Corp. President Fujio Cho reassured dealers they have no intention of making an end run around franchisees to sell cars directly over the Internet. Ford Motor Co. promised dealers that its recent linkup with Yahoo! is intended as 'a communication deal, not a distribution deal.'
But dozens of companies, such as Stafford's carsDirect.com, based in Austin, Texas, probed the soft perimeters of the policies. As Stafford explains, 'We don't want to eliminate dealers. We want to become a dealer.'
The dot-coms have stolen the limelight of the retail business. Their myriad business pitches have convinced dealers and factories alike that something is changing. But changing to what appears to be far from clear to the industry.
'The majority of the dot-com companies on the show floor are engaged in one battle, and the battle is to be the winner in helping sell new cars,' says John Holt, co-CEO of Seattle's Cobalt Group Inc., the parent company of the Web-based selling site DealerNet.com.
BUYING A PLACE
Stafford's own strategy goes like this: Stafford is holding $100 million from Trilogy Inc., a privately held 10-year-old Texas software provider. His mission is to get into the auto retailing business. Trilogy already has spun off Internet-based ventures in the appliance business, the employee recruitment field and the gift-registry business.
Stafford's venture is already selling vehicles online - it sold 2,000 in December - using 'partnerships' with a handful of franchises that Stafford declines to identify.
Buyers configure the cars they want online. The carOrder.com staff obtains the specified vehicle from one of the dealerships, puts it on a flatbed truck and ships it to the consumer's address.
But Stafford's bigger mission now is to buy approximately 100 small, rural, typically underperforming dealerships, with a total of about 200 franchises. Rather than paying the sort of blockbuster prices for huge-volume metro dealerships that AutoNation Inc. and other consolidators wowed the industry with in recent years, carOrder.com expects to pick up the little struggling stores for closer to $1 million apiece.
'We've got to have the bricks and mortar,' says Stafford, a former Web-site designer who says he now works seven days a week building the new retail concept. 'The people with the bricks and mortar hold the power of this industry.'
According to Stafford's plan, approved by Trilogy management when Stafford was 21, the carOrder network will spread region by region across the country - California, Texas, the Northeast, the Midwest and then the Southeast. Pesky issues such as customer satisfaction and floor traffic will cease to matter. Vehicle sales will come over the Internet, not from 'drive-by' shoppers.
The Web site will generate the business and the customer satisfaction will be on the Internet staff's shoulders - not the scattered dealerships who supply the vehicle. The art of customer satisfaction for the Internet concept will be how well it communicates with online shoppers, how flawlessly it delivers the vehicles and how efficiently it handles service work.
'All I can say is, `Good luck,'' said one small-town Iowa Ford-Lincoln-Mercury dealer, shaking his head dismissively after hearing about the concept.
LINE FORMS HERE
But others were listening eagerly. Stafford and his equally youthful fellow managers had meetings arranged with 700 dealers during the NADA convention and the two weeks that follow. The 700 dealers represent 1,200 franchises.
After one meeting last week, Stafford acknowledged that some of the dealers were not interested. Some left the meeting with a new desire to become Internet active on their own. Some rejected the idea but offered experienced advice to the industry newcomer. And others, Stafford, reported, were interested in talking more.
Stafford claims the venture now holds 35 letters of intent from dealers who want to sell out. But he has not yet approached the factories involved to begin what could be a bitter battle to win official approval. As Stafford was talking to dealers last week, NADA was pressing manufacturers to sign agreements that they would not transfer any franchises to dot-com companies.
Other issues remain murky. Two years ago, for example, Saturn Corp. refused to let AutoNation hold its franchises because AutoNation wanted to put its brand name above Saturn's. And last summer, GM's moves to try loosening up state laws on e-commerce spurred a contingent of powerful retailers to ask the factory to back off. More than a dozen states strengthened their auto franchise laws last year amid this era of change, and several more will probably review their laws this year.
Stafford acknowledged the atmosphere of rumor and suspicion. 'We want to go through all the correct channels,' he insisted. 'We want to play by the rules. We want to be a dealer.
'We realize that most consumers will still want to drive into a traditional retail store and shop there,' Stafford says. 'We're creating a shopping concept for a small subset of the industry.
'But,' he adds, 'it will be a huge opportunity for these small rural stores. If the typical store does 5 percent Internet business, we think our stores could do 60, 70, 80 percent. They will still handle some walk-in traffic, but the potential for their growth is from a different source.'
Meanwhile, other dot-coms are attracting attention.
New York-based CarDay, an online seller of used vehicles, has raised $25 million in funding from Goldman Sachs, Odeon Capital Partners, Citigroup Investments, Sierra Ventures and Deutsche Asset Management Inc.
CarPoint, the online buying referral system of software giant Microsoft, told retailers last week that it was responsible for delivering $650 million in vehicle purchases to its dealer subscribers last year.
Even a spokesperson for Kelley Blue Book, the 82-year-old auto pricing guide, said at the convention it is shifting to Internet-based data. For the first time at the convention, the industry legend did not bring its books to hand out to booth visitors.
'The Internet is falling into place and into perspective. We aren't scrambling with it but moving through it and onto the next level,' said Frank Ursomarso, president of Union Park Automotive Group in Wilmington, Del. 'Dealers are not fearing the Internet as they were at previous conventions.'
Phillip Hartz, senior vice president for manufacturer relations for the 100-dealer chain United-Auto Group, believes the various e-commerce models will sort themselves out on a market basis.
It's still early in the evolution,' he said. 'The retailer, manufacturer and dot-com are still understanding the role they play. We're all trying to figure out the customers' needs, and one of us will figure out the end game.'
Stafford confesses he doesn't know how his plan will work out in the end. Distributing Toyotas in Florida, for example, will require the blessing not just of the factory's U.S. sales arm, but also of the factory's independent regional distribution company, Southeast Toyota Distributors Inc.
'You can't just be a dot-com company in this industry,' Stafford said. 'We have to be part of the retail structure. And that means being a franchised retailer.'