Asbury expands online sales experiment

ATLANTA — Asbury Automotive Group Inc. is trying a low-cost approach to selling vehicles online. It has worked so well in the venture’s early months that executives are spreading it to more stores.

In March, Asbury, the nation’s seventh-largest dealership group, began experimenting with online selling software supplied by San Francisco startup Drive Motors. As of early August, the software was being used in six dealerships: two luxury-brand stores, two import-brand stores and two domestic-brand stores. Asbury plans to add it at another eight to 10 stores in its 82-dealership network by the end of the summer.

Asbury declined to share how many transactions it is completing with the help of the software. But the initial expectations were that the participating stores would get a lot of visits to the software application but that a lot of visitors wouldn’t transact, and the results are surpassing those expectations, Asbury COO David Hult said.

“We’ve been amazingly surprised,” Hult said. “It’s pretty rare when we have a day where we don’t do several transactions on this software.”

Hult said Asbury had no startup costs for the venture and pays just a nominal monthly fee to the software provider. Drive Motors CEO Aaron Krane told Automotive News that the company charges a fee of $695 per month per dealership regardless of store size or number of transactions.

Asbury’s low-cost approach, though still experimental, is a striking contrast to those of some competitors, who are spending many millions of dollars to develop in-house systems. For instance, AutoNation Inc., the nation’s largest new-car retailer, is spending upward of $100 million to roll out its AutoNation Express online sales system.

For Asbury, going outside is a better use of resources, CEO Craig Monaghan said.

“We sell and service cars,” Monaghan said. “We philosophically do not believe that software development is our expertise. Instead, we’d prefer to partner with third parties. If we can have influence to help design software that works in our environment and then be a first mover and a power user of that software, we think that’s how we gain our competitive advantage.”

While online sales are still a tiny part of Asbury’s business, the company is excited about the potential, Monaghan said.

“The world’s changing, and the willingness of consumers to complete a transaction online has changed dramatically over just the past two to three years,” he said. “We’re trying to position ourselves to be there for the consumers who want to transact in that manner.”

About half of Asbury customers using the software thus far have chosen to have the vehicle delivered to their home, meaning they never actually step foot into a dealership.

Some have bought from out of state, and Asbury has covered the cost of the vehicle transport. The software allows the customer to arrange a trade-in and financing and even buy finance-and-insurance products online, Hult said.

Higher-than-expected sales of F&I products has been the other big surprise to executives. Though there are still too few transactions using the software to gauge a reliable average, in many cases, F&I sales have been at or above the store level, Hult said.

Drive Motors’ software went live on Jan. 1. While some signatures have to be completed offline at delivery, the transactions are basically arranged online, Krane said. There isn’t a mechanism for negotiations.

Asbury is the biggest dealership group using the software thus far, Krane said. His approach is to work with dealers vs. taking the disruptive approach seen with some other companies developing online vehicle sales. That has resonated with dealers, he said.

Krane wouldn’t say how many stores are using Drive Motors’ software, but he said the store count and volume of vehicles being sold are doubling on a monthly basis.

The profitability of those sales for many stores has exceeded average in-store profits, he said.

“They’re high-value because customers are willing to pay for convenience,” Krane said.