While many dealers still believe that online sales are either losing money or not as profitable as traditional sales, in reality some of them are making money.
Can Dealers Make Money Selling Cars Online?
This is one of the questions I get asked most often at Internet conferences. I find it surprising how many dealers still think that online sales are either not as profitable as so-called traditional sales, or worse, they are losing money.
In fact, there are many dealers who make big bucks from their internet departments. The real question is not, “Can we make money?” but “How can we make money?”
To get some answers, I spoke to three internet managers out of 100 Ward e-Dealerships this year: Ashley Antonio of Paragon Honda in Queens, NY; Rick Kellogg with Bill Fox Chevrolet in Rochester Hills, Michigan (outside Detroit); and Sydney Haider of Galpin Motors in North Hills, California. (The conversation is part of the ward podcast, which you can listen to in full by clicking wardsdealer.com/podcasts/edealer100)
Six or seven years ago, when Internet car retailing was in its early stages, Kellogg said, it was common to think of online shoppers as “bums.”
“This has changed a lot,” he says. “But luckily for me, most of my competitors are still oblivious to the Internet.”
Antonio says Paragon Honda’s management was to blame for thinking the same way.
“We would think, ‘Oh no! “Great grief and low rudeness – we don’t want to deal with this. But that was obviously a myth, ”she says.
Paragon will now earn between $ 5,000 and $ 8,000 per sale. Antonio says her highest earnings come from deals done by third-party sites.
Paragon has set up a Customer Relationship Center (CRC) with BZ Results to process leads. Once a lead comes in, CRC tries to immediately contact the prospect by phone to arrange for a test drive. Prices are announced immediately, but there is an important difference, says Antonio.
“We will announce the price. This is usually a certain percentage of the invoice price. But we never set a payment price because you never know where the customer is, ”she says.
At this point, the sales staff start to work. According to Antonio, it is important to involve everyone involved in the sale in order to buy them in the dealership’s online pricing strategy. “Make it part of your culture,” she says.
It’s also important that sellers actually work on deals.
“And that includes expensive accessories,” says Antonio. “It all comes down to the fact that your employees are real salespeople, and not settle for low-quality fruits.”
Detroit-based Kellogg says most of the Bill Fox Chevrolet prices are fixed due to employee pricing programs. So most of his customers know what they want even before they go to the dealership. In fact, in most cases, the deal is done before the buyer arrives at the dealership.
Because of this, domestic revenues, especially in finance and insurance, are not as high as they could be.
“In this scenario, it’s a little more difficult to grow the back end,” says Kellogg. “An F&I manager doesn’t have a lot of rounds left by the time a customer walks into a store.”
However, in the first stage of the transaction, you can make money. “This will require creative advertising on our website,” says Kellogg. Each vehicle has the manufacturer’s suggested retail price and the invoice price.
“I prefer the buyer to get this information from us than on sites like Edmunds.com, which are usually wrong,” he says.
Kellogg is cramming his website with specials, and they usually advertise the base model with manual gear shifting.
More often than not, the customer decides to upgrade, which results in increased profits.
“You have to work smart on the deal, but you still have to be honest,” says Kellogg. “You should be aware that you may not be the only dealer talking to a customer.”
Many of Galpin’s competitors still adhere to the philosophy that the online shopper buys by price alone, Haider said. Galpin moved away from this strategy a few years ago and decided to sell the dealership expertise and deal with customers in the right way.
“If you work with them professionally, clients will allow you to make a profit,” he says.
However, Galpin does not allow the buyer to control the sales process. As soon as this lead arrives, Internet employees immediately try to get through to a potential client.
“We don’t allow the buyer to define or tell us what the sales process is,” he says. “Our job is to guide the client.”
Galpin, one of the best-selling dealership groups in the world, has up to 4,000 vehicles in stock to give buyers a choice.
“The real salesperson today is the consultant offering the choice,” says Haider. “Selective selling always increases profits. We are making extremely high profits from the vehicles we have that our competitors do not have. ”