Digital sales tools another tension point

The pandemic has made clear that selling cars online is a prerequisite for dealers to compete in an industry under pressure from multiple fronts.

Yet the push to bring auto retailers into the digital age has some dealers feeling squeezed — and not just by the need to keep up with changing consumer expectations and disruptive rivals such as Tesla and Carvana. Automakers are investing in factory-branded digital sales tools and encouraging their dealers to adopt them.

Their efforts are landing in a market populated with similar tools from third-party software vendors as well as customized, branded shopping experiences from large public dealership groups. Automakers say they want to create consistency among their retailers and simplify transactions.

The rollouts haven't always gone smoothly. Last month, for instance, Stellantis made a push to get dealerships onto its rebranded digital retailing tool, E-Shop, but some retailers mistakenly thought they were being forced to drop their current provider. Stellantis says the tool is optional.

For some dealerships, particularly those that aren't yet deep into online sales, the auto brands' software could be an easy way to plug in the capability, experts say. And the industry shares the goal of eliminating pain points that leave customers dissatisfied — such as the time spent waiting at a dealership to finish a deal or the need to redo steps because online forms didn't transfer information to the in-store process.

Some retailers, however, say the automakers' forays into digital transacting raise concerns, including whether the efforts will be mandated and whether they'll be flexible enough for dealers to integrate their existing lender relationships and finance and insurance products.

The National Automobile Dealers Association relays dealers’ concerns about some of the automakers’ digital retailing tools, including the ways some were rolled out, directly to manufacturers, spokesman Jared Allen said in an email.

“One of the main areas of dealer concern is the potential for OEM digital retailing tools to be a conduit to further OEM control over the customer experience and retail process,” Allen told Automotive News. “Dealers have done a remarkable job of adopting digital retailing platforms recently — and most importantly, they did so in direct response to evolving consumer preferences, and often without direct OEM assistance. We continue to have constructive conversations with OEMs about the importance and value of maintaining flexibility and dealer choice wherever possible so that dealers can best meet the needs and expectations of their individual customer bases.”

Paired with brands' plans to bring more electric models to market — in some cases with preorders funneled through automakers' digital platforms — questions remain about how much control of the sales process manufacturers ultimately are after.

"If you don't want to participate, you're just not going to be there [for customers], so you're going to miss out on that opportunity," said Jason Cole, executive vice president of Cole Automotive Group.

For Cole, whose stores sell Nissan, Honda, Ford, Lincoln, Subaru and Kia vehicles in West Virginia and Kentucky, concerns about brands' sales platforms include flexibility — particularly around choice of lenders and F&I products — and cost competitiveness with third-party offerings.

One of Cole's brands, Nissan, this year launched Nissan@Home for consumers to browse, schedule a test drive or start a purchase online. Dan Mohnke, Nissan's U.S. vice president of eCommerce, said about one-third of the brand's 1,074 U.S. dealerships have signed up, and Nissan plans an advertising campaign for it this year.

Cole isn't sure whether he will sign up, but if Nissan puts a lot of money behind it, he doesn't want to miss out on prospective buyers by keeping his stores out of the pool.

"I don't think it's right what they're doing," Cole said, "but it's almost like they're forcing our hands."

Taking a restrictive approach with Nissan@Home wouldn't get dealers on board, Mohnke said, so the platform integrates with at least 60 lenders and allows dealers to control what inventory, pricing and F&I products they feature.

It's designed to bring more consistency and value to the dealership network, he said.

"We don't believe that we're ever going to get 100 percent of the dealers on the platform," Mohnke said. "We respect that dealers can make their own choice on this. But we do think that success is to get a majority of the dealers on the platform because then it does become a brand differentiation."

Automakers' desire for a consistent brand experience exists online just as it does in the showroom, said Brian Pasch, a consultant who works with dealerships on digital retailing. Yet flexibility is needed to win over dealers who worry about not being able to find a customer the best possible interest rate or who might be hesitant to speak up because they fear repercussions from the factory, Pasch said.

"The OEMs always have their carrot and stick," he said. "In this particular case, I think it's a bigger vision that they want to make sure that the car-buying experience, if more and more of it's going to be online, that it's consistent."

Ford Motor Co. is testing a digital transaction tool, Ford Express Buy, with the Mustang Mach-E electric crossover. Kumar Galhotra, Ford's president of the Americas and International Markets Group, has said it won't be mandatory for dealers as it rolls out to more models.

"What I've learned over the years: Us and our distribution network are part of the broader enterprise," Galhotra told Automotive News in May. "It's very difficult, and I'd say not appropriate, to force these things."

The desire for consistency extends to dealership groups, as well.

Germain Motor Co. promotes its internal brand, Germain to You, with virtual buying options across all of its franchises in Ohio, Michigan and Florida, COO John Malishenko said. It currently doesn't use any automaker-developed online sales platforms.

A uniform tool from an automaker has to accommodate a spectrum from single-point stores to large metropolitan groups, and as such is often difficult to customize, Malishenko said.

"We don't really work with any companies that don't give us the freedom to customize the tool to suit our situation," he said. "A Ford store in Dayton, Ohio, versus an Audi or Porsche store in Ann Arbor, [Mich.,] or a BMW store in Naples, Fla. — those are very different markets, very different customers with very different ideas of what they want."

Automakers' digital retailing tools might help smaller dealerships that can't justify the cost of building their own software, said David Whiston, a U.S. autos equity analyst with Morningstar Research Services in Chicago who covers the public auto retailers. The public groups have those resources and thus can control more of the process and experience themselves, Whiston said.

"They're not going to wait for the factory to tell them what to do on this," he said.

Asbury Automotive Group Inc. rolled out its Clicklane digital sales tool last year. CEO David Hult told Automotive News in February that Asbury has viewed the automakers' tools.

"Some are still working on them — they're not fully baked yet. None of them are where we are," Hult said. "In our conversations with them [about Clicklane], it's like, because we're transparent with them, 'As you can see, this is a little bit of a fuller solution, and this benefits our customers, which obviously benefits you because it's your customer. We really want to stick with this and keep it going.' And we haven't had any pushback."

Automakers want to understand who their shoppers are because that helps drive product directions and preferences for future models, said Carla Bailo, CEO of the Center for Automotive Research in Ann Arbor.

Questions about whether the dealer or manufacturer owns that customer data and how it should be shared are driving some of the concerns about digital retailing platforms, Bailo said.

Ultimately, no one tool has mastered the transaction, but the software will continue to evolve, said Justin Findlay, operations director of Findlay Automotive Group in Las Vegas, with 33 stores in six states.

Most of the sales software the group uses is built by third-party providers and approved by automakers, Findlay said.

"Change is always tough," he said. "You can choose to focus on the negative and be really suspicious about what's around the corner, or you can focus on, there's a lot of positives out there, and this change could be really good for our industry and for the dealer network."

Hannah Lutz and Jackie Charniga contributed to this report.