A startup company that generates sales leads for dealers expects pushback from manufacturers after opening a second new-vehicle test-drive center at a shopping mall in Cherry Hill, N.J.
"Some automakers believe we are violating franchise agreements, [but] we are not," says Todd Marcelle, CEO and co-founder of the Philadelphia venture GoMoto.
GoMoto plans to set up permanent drive-and-compare centers in shopping mall parking lots around the country. There, consumers can get behind the wheel of competing cars from competing dealers.
The company opened its first center, with four competing mid-sized cars, at King of Prussia Mall outside Philadelphia last winter. It planned to begin operating the second center, at Cherry Hill Mall, on Friday, May 2, with more than 40 new vehicles from at least 10 local dealership groups and 18 brands.
Marcelle and his backers hope to make money by delivering sales leads to participating dealers -- passing along interested shoppers after a test drive. But he said there is resistance to the idea, with some manufacturers warning potential participating dealers that GoMoto's permanent test-drive concept resembles a vehicle sales outlet.
Marcelle says he expected some of the 10 participating dealership groups to receive cease and desist orders from their factories after the Cherry Hill site opens.
Franchised retailers are free to market themselves anywhere they please -- even putting up billboards across the street from a same-brand dealership. But factories maintain the peace between competing dealers by tightly controlling the locations where sales can take place.
"We are not selling cars," Marcelle says. "We are just getting interested shoppers in touch with dealers.
"Car dealers have been putting cars on display in shopping malls for 30 years," he says. "All we're doing is taking it to the next level -- enabling customers to get in and drive the cars, learn about them and connect with the dealer who sells them."
Marcelle, a Washington, D.C., entrepreneur, created GoMoto with two partners: New Jersey Volkswagen dealer Benjamin Catanese and Marc Rubino, owner of the vehicle marketing company Redline Automotive Merchandising.
GoMoto plans to charge dealers $750 to $1,250 for each vehicle they display at the mall. GoMoto employs the personnel who will conduct the test drives and distribute sales information about each vehicle.
"We don't want to disrupt the dealer franchise system -- we want to support it," said Marcelle. "They still have to go to the dealership to make a purchase."