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Though the fate of Tesla’s attempts to break away from the dealer franchise model remains to be seen, there’s one piece of its business model dealers are gradually getting on board with.

January 2014, F&I and Showroom - Feature

by Stephanie Forshee - Also by this author

Dealer Bill Marsh Jr. is one of the roughly 400 General Motors dealers currently using the OEM’s new Shop-Click-Drive program, an online buying option rolled out in November.
Dealer Bill Marsh Jr. is one of the roughly 400 General Motors dealers currently using the OEM’s new Shop-Click-Drive program, an online buying option rolled out in November.
With Tesla doing battle with dealers in states like Texas, Massachusetts and Ohio over its online, direct-to-consumer retail model, General Motors’ decision to offer a similar buying method to car buyers may seem puzzling. But there’s a twist to what the domestic OEM is offering. Rather than cutting out its 4,300 dealers, GM is putting the fate of its new online buying option squarely in their hands.

But there’s good reason to believe GM was taking a page from Tesla’s playbook when it launched its Shop-Click-Drive program in November. Earlier this year, reports surfaced that GM created a task force to keep an eye on the electric vehicle maker. But GM officials are quick to note the company has no plans to sell directly to consumers.

“It’s completely different than Tesla, because the customers are buying the vehicles from dealers, not buying them from the OEM,” Ryndee Carney, GM spokesperson, tells F&I and Showroom. “The vehicle sales transaction must be completed by the dealership. The dealer controls how the application works on his or her dealership website, so it’s compliant with franchise laws.

“GM has no intention of selling directly to consumers, now or in the future,” she stresses.

Early returns have been modest at best, dealers report. But like GM, dealers like Bill Marsh Jr., who operates six locations in the Traverse City, Mich., area, view this new online buying option as an opportunity to develop a better connection between their online and showroom experience.   

“We see two things: that in the next five to 10 years there’ll be an increasing number of Gen Y [buyers in our area], because they’re going to be getting older and people want to raise their kids in an area that has good schools and safety and high quality of life,” says Marsh, one of the roughly 400 GM dealers using the program. “And two, you’re going to see older people — Gen X and Baby Boomers — become more acclimated to the Internet.”

Test Drives Required
Throughout 2013, Tesla’s online ordering and company store model has taken fire from dealer groups who are attempting to defend the longstanding dealer franchise system. Industry experts predict an eventual compromise between the electric vehicle maker and dealers.

During the Western Automotive Conference in Los Angeles this past November, J.D. Power and Associates’ John Humphrey, senior vice president of global automotive operations, acknowledged what a solid vehicle Tesla manufactures, noting several of his neighbors drive Teslas. “In my neighborhood, if I were to be in my microcosm, I would think Tesla rules the world,” he said. “I don’t know one person who owns a Tesla who does not like it.

“They build a nice car, but … I don’t know why [Tesla CEO Elon Musk has a] disinclination to just take a great product and … retail it the way everybody else does.”

Tesla declined requests for comment for this article. However, there is one comment the company has made that media outlets have keyed in on. It was made by Tesla executive Diarmuid O’Connell early this year when the company was doing battle with dealers in North Carolina. “How do you sell the future if your business depends on the present?”

General Motors, however, is working in concert with its dealers to prove that doing so is possible.

Shop-Click-Drive is a five-step process that allows car buyers to calculate their monthly payment, check out current incentives, get an estimate on their trade-in, purchase accessories, apply for credit, and schedule a delivery.
Shop-Click-Drive is a five-step process that allows car buyers to calculate their monthly payment, check out current incentives, get an estimate on their trade-in, purchase accessories, apply for credit, and schedule a delivery.

Marsh began testing GM’s Shop-Click-Drive program at his Buick GMC store in September. When customers click on the dealership’s “Inventory” tab on its website, they’ll find a “Create Your Deal” button next to each vehicle listed. It takes shoppers to a separate webpage to begin  Shop-Click-Drive’s five-step transaction process, which opens with a short introductory video explaining how the feature works.

Shop-Click-Drive first confirms the price of the vehicle the customer selected. The next page asks users if they would like to receive local offers, if they have a GM credit card and if they’re trading in a vehicle — the latter taking car buyers through a set of questions designed to help them estimate the value of their trade-in vehicle. Users can also calculate their monthly payment, check out current incentive offers, personalize their vehicle, apply for credit and schedule a delivery.

That Internet-driven process has delivered just two sales in two months for Bill Marsh Buick GMC. But Marsh is undeterred, especially since the investment he’s making into his online buying process requires no additional cost or labor. Plus, his dealership was already employing a no-haggle pricing guarantee, one of the promises Shop-Click-Drive makes to shoppers.

“We didn’t come into it with expectations that there would be a massive response. We see it as a gradual process,” Marsh says. “It may not be a dominant factor today, but it is only going to increase. And at some point, it’s going to increase dramatically. We don’t know when that is, but we want to be ready for it.”

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