NEW YORK — In their battle to stay competitive in an online world, brick-and-mortar franchised dealerships are getting some help.
Two-year-old car-leasing app Honcker is giving dealers their own online marketplace. Users can find locally available models at competitive prices and close a deal with a few clicks. And 6-year-old AutomotiveMastermind is using predictive analytics to help dealerships figure out what their customers might be in the market to buy — and keep them from shopping elsewhere. Both companies are growing quickly.
In February, Honcker raised $23 million from Barry Diller-led IAC to fuel its national expansion. The Manhattan startup has nearly 400 dealerships on its platform, including big names in the New York area such as Bram Auto Group and Atlantic Auto Group.
"We are trying to offer dealers a solution that feels like Amazon to them and to their customers," said CEO Nathan Hecht. "And it's working."
Hecht founded Honcker after his first attempt to lease a car from a dealership. He previously had used a broker, but the process involved too much back-and-forth over model and price. The dealership wasn't any better. He spent the day going over packages and left without a car.
Honcker is designed to be quick and efficient. "The price you see is the price you pay," Hecht said.
Just as important, the dealerships, which deliver the car to the user, maintain their relationship with the customer — which they lose when they sell through a broker. That allows them to grow their service-and-parts business, a traditional profit center.
AutomotiveMastermind is likewise helping dealerships with customer retention.
"Our technology focuses on analyzing customer behavior and understanding how to engage at the right time with the right message," said CEO Marco Schnabl. "Rather than calling you a month before your lease ends, I might engage with you a year before." By pitching customers earlier and with a sense of their preferences, the dealership can sell products at a higher price point — and a greater profit.
In September, global data giant IHS Markit paid nearly $400 million for a majority stake in AutomotiveMastermind. The Manhattan company is being used by about 70 percent of New York's luxury dealerships, Schnabl said.
"Building a long-lasting relationship is a sustainable business model," he said. "Selling cars at a loss to a broker is not."