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Car buying online: AutoNation launches next phase, complete with finance
It’s getting easier to buy cars online.
AutoNation, the country’s largest new-vehicle retailer, this month launched the second phase of its digital storefront, complete with financing.
The first phase last year let shoppers make an online reservation for a test drive of a specific car at a store. The new phase also lets you value a trade-in vehicle, figure out payments on a financing and apply for credit all aimed to make the final purchase at a store easier and quicker.
No other dealership group has an online shopping experience as complete as AutoNation’s, though U.S. shoppers clearly want to do more of their car buying online, auto analysts say.
Adding the finance piece to the online transaction is really the next frontier for the industry, said analyst Cliff Banks, founder of The Banks Report published in the Detroit area. If AutoNation is successful with this, it will make adoption by other dealers much faster.
AutoNation is investing at least $100 million in its digital storefront, and the effort already has been paying off, according to Chief Marketing Officer Marc Cannon.
Since the Fort Lauderdale company rolled out its AutoNation Express program a year ago, tens of thousands of people have reserved cars through the system, and more than half have closed a deal. That compares with a typical purchase rate of 10 percent to 12 percent for traditional shoppers, Cannon said.
What’s more, those online customers report satisfaction rates often topping 90 percent. Industrywide, a 70 percent to 80 percent rating from traditional shoppers is considered good, Cannon said.
Customer satisfaction is off the the charts, Cannon said. People really like this.
To be sure, customers using the AutoNation Express system are a small group of early adopters, and purchase rates and satisfaction rates probably will dip as the program goes mainstream, Banks said.
Yet there’s no doubt that shoppers want car buying to be more like ordering a book or shirt online. More than 90 percent of shoppers now start their car-buying process doing research online, analysts said.
To reach online customers, dealers use mulitple means, including their own websites and third-party sites such as Edmunds.com or Truecar.com that aggregate offers from different chains and stores.
The dealers can make more profit from their own websites, because they need not pay outside commissions. Yet most rely heavily on third-party sites for leads, according to analysts.
Other than AutoNation Express, it’s still kind of old-fashioned, said Jesse Toprak of Toprak Consulting Group of Santa Monica, Calif. You submit your information and hope someone will call you, and then you get inundated with calls from lots of dealers for many weeks to come.
AutoNation has been working to bring more customers to its website and to make sure that postings of its vehicles on third-party sites highlight its brand name. It has cut ties with TrueCar and features posts on AutoByTel, Edmunds and AutoTrader together with its AutoNation name and logo, Cannon said.
Those moves have slashed its reliance on third-party sites from roughly 14 percent two years ago to 9 percent now, trimming its outside commissions. The chain probably will keep that ratio, since postings with its name on third-party sites help reach customers who may not be know the brand, Cannon said.
Nobody else has a brand coast to coast, and that’s critical to build online sales, Cannon said.
To design its digital program, AutoNation’s marketing and information technology departments have been toiling hand in hand. That’s unusual, because tech typically develops the hardware or foundation first and then asks marketing to add the look or room interiors later, said Allen Stejskal, chief information officer and this year’s Automotive News All-Star for information technology.
There are whole conferences out there on how the [chief marketing officer] and [chief information officer] need to work together. We’ve already figured it out, Stejskal said in a joint interview with Cannon.
AutoNation’s next tech challenge is making sure the online buying system links well with systems in stores, so salespeople can quickly access buyer information to complete sales easily, Stejskal said.
Thanks to its joint efforts, AutoNation estimates it now gets nearly 30 percent of total sales from transactions that begin online from a customer either calling or e-mailing after seeing a digital ad or website. That’s more than double the rate in 2013 and possibly twice the industry average, Cannon said.
Most of our competitors don’t have the ability to track sales starting from digital sources, Stejskal said.
AutoNation, with revenues topping $19 billion last year, has the financial heft to invest in cutting-edge technology. It also has more inventory to offer than rivals to make its tech investments pay off, analysts said. A consumer browsing on AutoNation’s website can choose from multiple brands in stores in the same market: Ford, Chevrolet and Toyota, for example.
It doesn’t make sense to make that investment if you don’t have much to offer, Toprak said.
Analysts credit Chief Executive Mike Jackson for the vision to switch from lots of local dealer names to a single AutoNation name nationwide and then develop the digital storefront. Jackson recognizes that modern consumers like convenient shopping online with ample selection, clear pricing and ready finance.
The vision comes from Jackson, Toprak said. And he’s not going to stop here.
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