Special Report

Ward’s
e-Dealer 100

Think again if your image of a typical Internet car shopper is someone in the market for a shiny new vehicle.

The chances are more than twice as great such a consumer is looking online for a used car.

So say two industry veterans, Chip Perry and Joe Lescota, citing data they say contradict some popular misconceptions.

Perry is president and CEO of AutoTrader.com. Lescota is a dealership consultant and automotive marketing chairman at Northwood University in Midland, MI.

They play the iconoclastic role of myth busters at a seminar during last month's 2008 National Automobile Dealers Assn. convention in San Francisco.

The session — “Exposing the Myths of Used-Car Internet Sales” — starts out debunking the notion that tech-savvy, new-car shoppers are surfing the Web for vehicle information and inventory, while their used-car counterparts are offline trudging through pre-owned lots.

In fact, online used-car shoppers outnumber new-car buyers 25.9 million compared with 11.6 million, say Perry and Lescota, referencing J.D. Power and Associates and other research firms.

Although in 2007 the percentage of new-car shoppers using the Internet was 70%, compared with 61% for used-car buyers, the gap is narrowing. It was a 60%-43% breakdown in 2001.

“The reality is there is a tremendous opportunity to sell used cars via the Internet,” Perry says.

Another cited myth: Car dealers should disregard third-party lead sources and only focus on their websites, because that's where the best leads come from.

Wrong, says Perry. “Consumers view third-party (automotive) websites as much more influential. Successful dealers are taking advantage of third-party sites.”

But Lescota says dealer websites will have to get better. He and Perry rap websites that tend to be configured in an unintuitive way, often requiring several clicks to get to the used-car listings.

A good dealer website with used-car inventory requires only a few basics, from equipment to personnel. They are:

  • A digital camera for visually depicting cars in stock.

  • A cable to upload those inventory photos.

  • A good used-car manager.

  • Staffers with good phone skills, because most online shoppers switch to the telephone at some point in the process. “Consumers still prefer human interaction,” says Lescota.

He and Perry say modern times have created another Internet car-buying myth: It's all about “search.”

They say search sites are good at driving car shoppers to manufacturer, dealer and third-party websites, but not at steering them to specific vehicle inventory.

Perry says that is why consumers in one survey gave little credit to general search sites, such as Google, when asked about sites that most influenced them in picking the dealership where they ended up buying a used vehicle.

The study says shoppers rely more on auto-specific websites such as AutoTrader.com and Cars.Com as well as dealer sites to find specific vehicles and dealers.

Asked why they bought at a specific dealership, most respondents (26%) said a previous experience at the store influenced them the most; followed by 21% who cited family, friends and co-workers; and 17% who said Internet sites.

Lescota, a former dealership manager, says one of the biggest myths is that Internet car shoppers, after doing extensive online research, go to a dealership knowing just what they want and so require little sales consultation.

In reality, most online customers have narrowed their vehicle choices but still want professional sales help in making a final decision, he says.

Accordingly, dealership sales personnel should be more than “lot lizards,” he says. “Sales people need to know how to counsel. They need to know the inventory and the product and be a full-service agent.”

Another myth says it's disadvantageous to put vehicle prices on the Web. Rather, a dealer should wait until customers call or come in before giving them prices.

“That's a crock,” Lescota says flatly.

Perry advises against dealerships maintaining a floor sales staff exclusively handling walk-in customers and an Internet staff dealing only with online shoppers.

“We need to educate the entire staff about the Web,” he says. “Then we can create specialized teams. But let's get rid of ‘that Internet customer is mine; that walk-in is yours.’ Internet leads should be distributed to the entire staff.”

Otherwise, Perry fears Internet departments may end up akin to working behind velvet ropes, separated from the rest of the dealership.