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.”

[PAGEBREAK]

General Manager Lisa Rechsteiner says her Bay City, Mich.-based Graff Chevrolet has sold four vehicles since it began testing GM’s Shop-Click-Drive one year ago. The program has also delivered 11 leads in that time.

General Manager Lisa Rechsteiner says her Bay City, Mich.-based Graff Chevrolet has sold four vehicles since it began testing GM’s Shop-Click-Drive one year ago. The program has also delivered 11 leads in that time.

About two and a half hours south of Marsh’s store is Graff Chevrolet in Bay City, Mich., where Lisa Rechsteiner, general manager, is also realizing modest results. In her store’s first year as a pilot dealer, Graff Chevrolet sold four vehicles online — from start to finish. In total, Shop-Click-Drive has directed about 11 leads to Graff Chevrolet’s showroom. “We view it as another tool to bring guests to our website, and ultimately into the showroom,” she says.

Rechsteiner says that when her Chevrolet store sold its four vehicles through Shop-Click-Drive, the shoppers did still largely interact with the dealership. For instance, her store’s salespeople delivered test drives at the customers’ homes. And in cases where a salesperson was not available, she sent a product specialist to conduct the test drive.

That process may seem like a threat to the salesperson’s role, but that’s not how Rechsteiner sees it. “It will be several years, if ever, that there will not be a need for that human element when buying a big-ticket item, so our team has no fear of being pushed out,” she says.

Losing Them
Early results also reveal a few bumps in the road for the future of online retailing. Marsh, for instance, says a major deal-breaker for car shoppers using Shop-Click-Drive is when they’re prompted to complete the online credit application.

“That’s when almost every customer is leaving the process,” he says, noting that his area is home to a large population of Baby Boomers.
“Those customers are not as Internet savvy and are not as interested in necessarily completing a 100% online transaction,” he adds. “I believe that’s the big reason we’re not seeing results in this early stage of the game.”

But there is evidence that consumers are becoming more comfortable with the idea of applying for financing online. According to a study conducted by AutoUSA Internet Sales Solutions, a subsidiary of AutoNation, 52% of dealer respondents ranked credit apps as the No. 1 lead-conversion tool on their website, while 37% of respondents said trade-in calculators were the best conversion tool.

Even so, Marsh believes consumers are still five to 10 years away from embracing a 100% Internet-driven sales transaction, likening the pace to consumer acceptance of the electric vehicles. “None of the manufacturers are doing very well with electric cars, but they’re doing it because they see it as an investment in the future,” he says. “We believe it represents the future.

“As a Ford dealer back in the 1980s, I remember the first car that came out with dual airbags. We couldn’t give that car away,” he adds. “It took a year or more for the public to get acclimated to the idea. They thought when they went over a bump, the airbag was going to go off.”

Following Suit
Not all manufacturers are as anxious as GM and Tesla to take the sales process completely online, Ford being one of them. “People are doing all their homework on the Internet,” Elena Ford, Ford Motor Co.’s new head of global dealer and consumer experience, told The Wall Street Journal in November. “But they can’t drive the car. [Customers] want a good attitude; they want good service; they want people to be respectful and polite, but you have to go to the dealer to drive the car. They have to go to the dealer for service.”

Of the other manufacturers contacted by F&I and Showroom, including Chrysler, Ford, Honda and Toyota (Hyundai declined to comment), none were prepared to confirm their interest in delivering a 100% Internet-driven sales transaction process.

“We naturally encourage our dealers to have a greater online presence with their own websites and provide customers with the ability to do much of the shopping and buying experience online,” Chrysler spokesperson Ralph Kisiel responded.

As of press time, roughly 1,000 car buyers tried out GM’s new buying option, with only about 10 of them actually completing the entire transaction online, according to GM’s Carney.

“It’s a big-ticket item, and I just think they feel more comfortable having a personal relationship with their neighborhood dealer when they make a purchase that large, but research cumbersomely does show us — especially among Millennials who are more comfortable purchasing anything online — they prefer to do more business online,” Carney notes. “So this is just another option to try and enable dealers to be able to either reach new customers who may not be visiting their dealerships or to satisfy the increasing number of customers who want to do more online.”

0 Comments