Technology Aids Megadealer Growth

More dealer groups are reporting their Internet sales totals. One reason is that tracking such sales is becoming easier, as lead management and reporting technology advances.

“Last year was the first we really began tracking our Internet sales,” says Ted Gessler, corporate Internet director for the Bergstrom Automotive Group in Wisconsin.

Another reason, though, is that more dealer groups also are realizing the advantages of using Web-based systems to implement common processes across all of their stores.

That across-the-board practice will soon separate the “haves” from the “have nots,” according to Jerry Marks, a former analyst and current publisher of the AutomotiveRetailStocks.com website and e-mail newsletter.

Marks says industry experts, who argue against common processes for multi-store dealership groups on the premise that the strength of the individual stores relies on the local markets, are missing the point.

“Common processes enhance business models, not hinder them,” he says. “They enable the general manager to focus on developing the talent in the store, and on taking care of the customer.”

He says dealer groups that leverage technology will create stronger operations. Technology has helped the Ward's Megadealer 100 to increase total revenue per store almost $4 million, to $63.3 million.

Total number of dealerships declined to 2,032, but total revenues climbed almost $5 billion, indicating the larger dealer groups are becoming more skillful at streamlining their operations.

AutoNation Inc. has adopted a process once reserved for Internet customers for all of their customers, according to Gary Marcotte, vice president of marketing for the group.

AutoNation instituted a common lead management and uses an in-house software system to handle all of its prospects, including Internet customers, phone leads and walk-in traffic.

Following AutoNation's lead, large chains such as Group 1 Automotive, the Sonic Automotive Group and United Auto Group are centralizing their operations and providing more direction to their individual stores as to what the processes should be and what technology to use.

Group 1 became the latest publicly owned dealership chain to switch to one common dealer-management system for its stores.

As profit margins decline, dealer groups that find ways to lower to their operating costs are going to separate themselves quickly from stores that fail to institute common systems, according to Marks.

Increasing the number of Internet sales can help dealers lower their cost of sales because, typically, Web-based marketing can be more efficient and less expensive than traditional media channels.

Beyond the publicly owned chains, large privately owned dealership groups such as Hendrick Automotive Group, Koons Automotive Group, the Herb Chambers Companies and the Earnhardt Auto Centers have been building their Internet operations.