More car shoppers will fly to buy a bargain

Americans have become comfortable shopping on computers, phones and other devices from wherever there's an Internet connection, and then having goods — even perishable items, such as groceries — arrive at their doorstep within days, hours or even minutes.

Used cars and trucks are obviously larger and more complex things to buy, but dealers and auto-retail companies have been looking to cater to online shoppers, who often cast search nets far beyond their local geography. Some dealers will offer to book or even buy a flight for shoppers who are coming from afar. Some will promise to deliver a vehicle hundreds of miles away, in some cases enlisting the help of a third-party company.

Kendall Automotive Group, with two dozen stores in Alaska, California and Idaho, advertises on its website that far-flung shoppers can get to its vehicles in two ways. Calling it "Buy'n Options," the company said it will arrange a shipping quote for vehicles to be delivered to the customer's door, or will coordinate air travel and pick the customer up from the airport.

The air travel option primarily has been used by the group's Nampa, Idaho, store, which typically retails 100 vehicles out of state every month, said Michael Skillern, COO of the group. "Customers have been doing this at that store for a long period of time, but we didn't put it on our website or anything like that until about two years ago," he said.
So why that particular store? Competitive pressure.

"Dave Smith (Motors) is in Idaho, so we're a competing store here in Nampa, and in order to retain market share and remain aggressive, the pricing has to be commensurate," Skillern said.

Dave Smith Motors was a trailblazer among dealers selling outside of their immediate vicinity. The store has more vehicles in its inventory (about 3,000) than there are people (2,081 in 2017) in Kellogg, Idaho, where it's based.

So about 99 percent of its sales are to online buyers, said Rick Ford, CEO of RFJ Auto Group, which owns Dave Smith Motors. "We have a very minimal number of people just walking in," he said. In fact, if a shopper walks in off the street, a sales associate will sit them down at a computer to go through the vehicle selection process. Inventory is scattered at lots throughout the area.

The dealership, in northern Idaho's Silver Valley, has been catering to remote buyers since before the World Wide Web, when the local mining operations shut down in the 1980s and depressed the local economy. Founder Dave Smith began advertising inventory in media outlets in places such as Seattle and Las Vegas, offering aggressive pricing to attract buyers.

Now, Dave Smith Motors has about 15 shuttles running daily to and from airports in Spokane, Wash., and Coeur D'Alene, Idaho, Ford said. Some regional buyers simply drive to the store; others book ski trips along with their car purchase. Whether or not Dave Smith Motors pays for some or all of buyer's travel is part of a "secret sauce" that goes into the company's sales formula, Ford said.

Of course, long-distance sales are not limited to Idaho dealers in a price war. Courtesy Auto Group, with six stores in Arizona and California, advertises online that if buyers live outside the area, it will fly them in and reimburse their airfare.

"People will travel far and near to find a specific used car or less-than-a specific new car to come in and buy," said group principal Scott Gruwell. Used-car buyers typically want to see the vehicle for themselves before signing off, he said, while new-vehicle purchasers are more prone to buying remotely and having it delivered.

But people who fly to the dealership are the exceptions, Gruwell said, adding it happens once or twice a month, while delivery is more popular. Both methods are a catchall for digital shoppers.

The online shopping trend has also created opportunities for tech-focused companies that help dealers find customers anywhere. Offering delivery as an option is seen as key.

Some dealers, such as Courtesy, have dedicated staff handling delivery logistics themselves. Others partner with outside companies. Kendall, for example, works with Joydrive, a fast-growing platform that facilitates sales using dealers' inventory.

Kendall lists all of its new inventory and some of its used vehicles on the company's website.

Joydrive lists about 35,000 vehicles on its website, up from 15,000 in the second quarter. It has roughly 140 dealers in 14 states using its service, and it delivers nationwide, said company founder and CEO Hunter Gorham. Another 140 dealers are in the pipeline to join, he said.

"We have dealers out there that are like, 'Look, we understand that … 65 percent of American households have an Amazon Prime membership and want to do business a different way. We've also seen the growth of Carvana, and it's incredibly impressive,' " Gorham said.

To list with Joydrive, dealers have to agree to home delivery, a nonnegotiable price and a return policy of up to five days or 250 miles on the odometer.

Joydrive's focus is decidedly on new vehicles, as about two-thirds of its listed inventory is new cars and trucks. "Our biggest wedge, or differentiator, is we have the ability to be like Amazon, but for new cars — and that's way more complex than used," Gorham said.

Another company helping dealers become more geographically agnostic is CarGurus. It has sought to capitalize by promoting vehicle delivery, so long as dealers handle the logistics and agree to a seven-day return policy. On its site, CarGurus will note for shoppers whether free delivery is offered or break out the shipping costs and bake them into its deal rating calculations.

For dealers offering delivery, CarGurus will automatically supplement vehicle searches that turn up relatively few results. For example, a search for a 2017 Honda Accord in Boston would yield plenty of results. But if someone was searching for a black 2017 Tesla Model S with alloy wheels, the local results would be much less abundant.

"That's a far more specific search," said Tom Caputo, the company's chief product officer. "When those search results are limited, then in that local market we'll layer on delivery options to give the consumer greater choice to find the vehicle that they are ultimately looking for."

Dealers pay a premium for the service. CarGurus launched it in the second half of 2018, initially piloted with some of the largest national independents, Caputo said. This year it's been rolled out more broadly to include a range of small and large dealerships, including franchisees and independents. The company would not disclose how many dealers it's working with.

"I can say that we're seeing exciting growth and the dealer growth from January to today is three [times]," Caputo said.

Charles Smith, general manager at Mac Haik Dodge-Chrysler-Jeep-Ram in Houston, signed on to the service, seeing it as a way to compete beyond southeast Texas. "For us it was a good product to look at for a large dealer group with a larger inventory in an extremely aggressive market," he said, adding that it helped them reach markets that are less competitive. Smith, who oversees the franchise store and its two independent used-car lots, said the stores offer free delivery within 300 miles.

A.J. Maknati, general manager of Tricars, an independent luxury dealer in Gaithersburg, Md., said his store has deployed CarGurus' delivery technology as well. "It's just bringing another audience into your business," he said. "You're not competing within 10, 15 miles. You're competing in a larger market."

Lindsay VanHulle contributed to this report.