Where the Internet will affect dealers the most

April’s issue of Ward’s Dealer Business truly was a pioneering effort. It marked the first time any independent, objective organization had taken a close look at how the Internet is influencing business at the dealership level.

But one industry analyst says the Internet will affect automotive retailing the most on the business side rather than the sales side.

Mary Ann Keller, the industry analyst who spent some time with Priceline.com, says the Internet’s biggest impact – particularly on the Megadealers -- will be on the business side rather than on sales.

"One of the things that I absolutely learned at Priceline is that the Internet is an incredibly powerful tool,” says Ms. Keller. “I think in the auto retail system we're only beginning to scratch the surface of what it can do. It's going to bring a level of sophistication to the way these businesses are run. I think it's going to be fundamental to managing costs much more effectively in this business."

She says most everyone was looking at the Internet as a sales tool.

"We were going to point, click and buy a car,” she says. “That's sexy. But the real thing about the Internet is that it's going to become a workhorse in how these businesses are run. And it's going to make managers much more efficient about how they run their businesses, about how they measure productivity. I believe the Internet is going to play a role in it. But I think we've also just started to scratch the surface of that.”

The e-Dealer 100 bolstered Ms. Keller’s theory that customers aren’t always eager to make a $20,000 commitment via a computer screen. Not many final sales are concluded on line, but an increasing number of dealerships on the list are seeing increasing sales from leads generated on line.

"The customers embrace the Internet in the car-buying process, but not the way a lot of the people who were the third-party intermediaries anticipated it,” she explains “The customers embraced it because it makes their ability to choose, to understand what's out there, to make a selection more carefully and perhaps more quickly, to understand what they might have to pay. All of that makes them a more enabled and empowered consumer and I think that makes them a better customer for the dealer."

Prognosticators have been making bold predictions about the Internet’s eventual role in the auto industry since before it became a household word. Some expected it to do everything but pump gas.

Yet, no one – until last month – had shown what dealers actually are doing with this new tool.

A few things became abundantly clear as the staff was putting the e-Dealer 100 together. First, no one is doing things in quite the same way. Second, the dealers who are using the Internet effectively are among the most successful. Third, the best dealer groups – many of whom are featured in this month’s issue – are embracing the Internet.

Brian Kendrick, CEO of the No. __ dealer group, Asbury Automotive, says recent developments have pretty much killed the rumor that the Internet would displace dealers.

“A lot of dealers will read that as the Internet threat has left,” says Mr. Kendrick. “That is absolutely wrong. The fact is that the Internet has changed everything. But it is a different form and a different execution that will make us successful. The Internet empowers dealers.

“As a strategy, there’s nothing wrong with exploring emerging technology,” he continues. “That’s a good thing and we’ve all learned an awful lot from it.”

One thing Mr. Kendrick has learned, which was confirmed by several members of the e-Dealer 100, is that the best leads come from a dealership’s own web site.

“The number one place where the customer is going to come through as a portal to our dealerships is through our own web site,” he says. “Just a year ago, most of the referrals were coming through third parties. Today, 60% to 70% are coming though our own web sites. That’s because of our own sophistication coming up.

“I do believe that there’s plenty of room for everybody to have a different idea about how to retail,” he says. “Web shopping is here to stay. And ultimately will evolve into several types of ways to do it.”