Dealer Group Online Sales Exceed Expectation
ATLANTA — Asbury Automotive Group Inc. is trying a low-cost approach to selling vehicles online. It has worked so well in the venture’s early months that executives are spreading it to more stores.
In March, Asbury, the nation’s seventh-largest dealership group, began experimenting with online selling software supplied by San Francisco startup Drive Motors. The software was being used in six dealerships: two luxury-brand stores, two import-brand stores and two domestic-brand stores. Asbury plans to add it at another eight to 10 stores in its 82-dealership network by the end of the summer.
The initial expectations were that the participating stores would get a lot of visits to the software application but that a lot of visitors wouldn’t transact, and the results are surpassing those expectations, Asbury COO David Hult said.
Hult said Asbury had no startup costs for the venture and pays just a nominal monthly fee to the software provider. Drive Motors CEO Aaron Krane told Automotive News that the company charges a fee of $695 per month per dealership regardless of store size or number of transactions.
While online sales are still a tiny part of Asbury’s business, the company is excited about the potential.
About half of Asbury customers using the software thus far have chosen to have the vehicle delivered to their home, meaning they never actually step foot into a dealership.
Some have bought from out of state, and Asbury has covered the cost of the vehicle transport. The software allows the customer to arrange a trade-in and financing and even buy finance-and-insurance products online.
Higher-than-expected sales of F&I products has been the other big surprise to executives. Though there are still too few transactions using the software to gauge a reliable average, in many cases, F&I sales have been at or above the store level.
Drive Motors’ software went live on Jan. 1. While some signatures have to be completed offline at delivery, the transactions are basically arranged online. There isn’t a mechanism for negotiations.
Asbury is the biggest dealership group using the software thus far, Krane said. His approach is to work with dealers vs. taking the disruptive approach seen with some other companies developing online vehicle sales. That has resonated with dealers, he said.
Krane wouldn’t say how many stores are using Drive Motors’ software, but he said the store count and volume of vehicles being sold are doubling on a monthly basis.
The profitability of those sales for many stores has exceeded average in-store profits, he said.
“They’re high-value because customers are willing to pay for convenience,” Krane said. – Published on AutomotiveNews