It seems that just a minute ago I was on my way to selling my five thousandth vehicle through the Internet (mostly to folks who never saw the inside of my dealership). My closing ratio was pushing 14% and my profit per unit was well above the low end of what was being generated, face-to-face, in my showroom.

I was puffed up and proud that my cyber team was well ahead of the wave on Internet sales. Heck, I even published “The Car Dealers Internet Bible” on the subject and sold a truckload of copies on www.yousellcars.com, ebay and at the NADA convention; last year alone I traveled over 80 days teaching dealers and their managers how to get online.

It was GREAT!!!

But then, in a flash, something happened and the rosy road of easy riches turned into the prickly path of hard work. Two bats of an eye after I was crowned Mr. Cyber Sales, my lead sources dried up, my closing ratio atrophied and my pricing went to invoice minus. Today the leads generated by my third-party Internet referral services have gone from a combined high of 1,300 per month to 400.

At the same time, my stocks plummeted and we entered a war, indicating that the change was bigger than just what's shown on my financial statement. The tough part was that my employee morale was even lower than consumer interest in domestic cars. I needed to do something in a hurry.

A quick scan of the marketplace unearthed new facts. First, everyone now has a web site and an Internet manager; even the guys who don't, do. So finding someone to deliver a vehicle with cyberspeak is not at all novel. Exit first, the novelty buyer.

Next, as a response to the plummeting market share, all the domestics and a few imports put forth really well-launched, nationally advertised, cheap financing programs.

Not only were the deals good, but, they were conceived with dealer participation leaving little wiggle room for negotiation. Because the most attractive aspect of the 'Net is “No Hassle/Low Price,” the availability of a national deal took a lion's share of what had been the Internet's domain. Exit second and third, the price buyer and the one-price buyer.

What remained were devoted repeat customers, those who love the Internet and a few scattered others. What was once 20% of my business was now simply icing on my retail cake. But, just beyond the next wave was a bigger payday waiting to be discovered.

It seems that just as the web shopping car buyer was being frozen out of the cyber retail equation, so too were the ample supply of finance customers being diverted from non-captive banks. Gone were those juicy high scoring yuppies on which many financial institutions had been gorging. After all, the national programs were directing all the best customers to their captive finance source.

Hmm. This meant that there were secondary banks who were hungry and on the hunt. Deepening their hunger was the unprecedented spread between their cost of money (remember the Fed rate is now under 2.5%) and usury (the highest rate allowable by law, usually in the 20-30% range). Enter, deep buying, special finance, and (here's the kicker) non-recourse money for the highest margin business in the business — the credit-challenged.

Almost as soon as my cyber team was looking for another group of folks to point their retail strategy toward, this opportunity was created by the same set of circumstances that was killing their previous market share. We had only to focus our skills and to find a lead generation source to help us drive the new market our way.

Happily we identified a group of companies that aggregate leads in the world of special finance. We bet that their prior success was less about technology than about the three pillars of retail: personal service, improved value and, most importantly, overcoming the fear of negotiating.

We'd apply the lessons learned from Internet sales and business development to this emerging opportunity.

We are now in our fourth month of rising lead counts (up to nearly 600 last month). We have a closing ratio that is consistently above 15% (22% last month). And we are, again, surfing ahead of the wave. (Did I mention that our average GP is over $2,500?)

But, it gets better. As we rehabilitate these folk's credit with a fresh start, we have also improved the amenities on our web site to give them a place to go next. We now welcome both the credit-challenged and the cyber devotee onto that site with content that is more attractive and that gives them better reasons to visit and to recommend it.

Among the new features that are being added are a state-of-the-art online appraisal.

Since a fear of being “ripped off” on a trade is perhaps the second most powerful concern among shoppers, this tool provides a compelling reason to go online.

A second attraction that I'm adding is an online department store of automotive consumer products. I've been working with the folks at Prindle to build an online automotive boutique that can be imbedded into any dealer's site.

So, for those of you who are wondering whether dealers are ok, they are. And if you are wondering if Internet matters, stay tuned. This slightly beat up cyber marketer is, once more, scoping the retail horizon.


Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. He is president and CEO of Brandow Companies.