Asbury sets its sights on more markets with new tool

With its new digital retailing platform unveiled last week, public retailer Asbury Automotive Group Inc. sees a path to selling in new markets without a physical presence in those places.

Such expansion would primarily be in used-vehicle sales, company executives said. It's one spoke of an ambitious new growth strategy that aims to more than double Asbury's annual revenue in the next five years to $20 billion and put the retailer at the forefront of the digital explosion in auto retailing happening across the industry.

The new digital platform, called Clicklane, is a "game-changer," Asbury CEO David Hult said last week as he rolled out the platform to industry analysts and investors.

"Our flexibility to meet customers online and have a tool to sell anyone a car anywhere is key," Hult told Automotive News. "But we actually don't have the goal to sell everyone a car anywhere because it's not cost effective to do business that way. So we want to take a more rifle approach."

Hult said Asbury, ranked the seventh-largest U.S. new-vehicle retailer by Automotive News, will identify high-population markets with heavy used-vehicle demand it can sell into with Clicklane technology and without brick-and-mortar stores. He mentioned Las Vegas and Los Angeles as theoretical examples. The Duluth, Ga., company is targeting $5 billion in annual revenue growth in the next five years through Clicklane alone.

Asbury's investment in Clicklane, which it declined to disclose, comes as digital retailing booms throughout the industry, a shift that has only accelerated as the coronavirus pandemic has changed shopping patterns. Online used-vehicle retailers such as Carvana Co. and Vroom Inc. have grabbed investor dollars and seen their stock prices soar despite not yet being profitable. Traditional franchised competitors also are making plays in digital retailing, with companies such as Group 1 Automotive Inc. and Lithia Motors Inc. launching major initiatives in the past 18 months.

Hult has closely watched rivals, even buying vehicles from companies such as Carvana to learn more about their processes. He said last week that Clicklane would set new competitive standards.

Clicklane is replacing a less robust tool, Push Start. By contrast, Clicklane can facilitate a car purchase in less than 15 minutes, Asbury executives said. It is omnichannel, which refers to offering a seamless buying experience to consumers whether they shop online, in-store or both.

The new platform also will be used to transform the retailer's digital approach at existing franchised stores. Gains at those stores are expected to deliver $2 billion in annual revenue growth as of 2025. An additional $5 billion in annual revenue is targeted through acquisitions.

Asbury is working with dealership vendor Gubagoo to launch Clicklane. The retailer's relationship with Gubagoo dates back to late 2015, said Miran Maric, Asbury chief marketing officer.

Clicklane was piloted at an Asbury dealership in Florida and is now active in several stores. Executives anticipate the platform will be rolled out across Asbury's network by the end of March.

Using a prerecorded session showing an actual customer purchase, executives last week demonstrated a Clicklane transaction.

It starts with the vehicle trade and allows customers to input payoff data for a current vehicle and apply equity in that vehicle to the new deal. Customers enter their desired down payment and select a credit score range ahead of a credit check.

The platform incorporates automaker rebates and tailors finance-and-insurance products to a VIN and to customer driving habits. Carried over from Push Start is a lending marketplace, now with access to more than 30 lenders.

Trade-in values and loan payoff amounts accurate to the penny are central to the platform, executives said. The process is secure and compliant, Maric said, and the offer presented to the customer at the end of the process "isn't an estimate."

"This isn't, 'Hey, come into the dealership for an appointment,' " Maric said. "This is a real approval."

Asbury's demonstration generated positive remarks from some analysts.

"We believe Clicklane represents the future of car buying, which will be adopted in some capacity by all well capitalized dealership groups operating at scale," Rick Nelson of Stephens said in a research note. The shift will enable "substantial market share gains at the expense of smaller independent dealerships in this highly fragmented industry."

The new omnichannel platform is Asbury's solution to scaling its used-vehicle business without investing in physical stores.

Developing a tool to sell vehicles to customers anywhere in the U.S. was Asbury's goal. But the retailer's focus on big metro markets makes more sense, Hult told Automotive News. That phase will begin once Clicklane is available across Asbury's existing dealership network.

The strategy is a departure from some peers' rapidly growing networks of standalone used-only stores.

AutoNation Inc. plans to expand from five used-only AutoNation USA locations to 100 by 2030. Sonic Automotive Inc. expects to add about 25 EchoPark used-only dealerships in the next five years, plus 20 EchoPark delivery and buying centers annually during that period.

Asbury terminated its own Q auto used-only dealership brand in 2017 to shift capital toward "alternative routes" to market that would yield higher profits, Hult said.

"No one knew what Q auto was," he said. "When we enter new market spaces, we will make it very clear — whatever we call it — it's a part of the Asbury Automotive Group."