Drive to Web shaking up auto retailers

With today’s car buyers quicker to look online for deals than to shop at their local dealerships, auto dealers have been forced to change the way they do business.

Not only are they Internet-savvy, many car dealers have begun tailoring their businesses — and their mind-sets — to an online presence. Car dealers no longer expect their buyers to come from their immediate geographic areas, and the sales force no longer exclusively works the showroom floor.

Nowadays, buyers from just about everywhere track down the best deals they can through the Internet and are willing to travel to get them. Meanwhile, an entirely new type of car salesman is bringing them in: e-commerce experts who handle everything from responding to Internet inquiries from potential buyers to updating inventory on the dealership’s Web site.

Dealers and automotive industry organizations struggle to quantify exactly how much business is won or lost based on the Internet. Most agree, however, that the Internet is certainly helping dealers who have made it an integral part of their business. And dealerships that have learned to harness the Net are taking business from those who haven’t.

Herb Chambers Companies sold $348 million in 2006 solely through Internet leads, said Jay Gubala, e-commerce general manager at The Herb Chambers Companies.

“It just became pretty obvious that the Internet would change the way cars are bought and sold in America,” he said.

“Sales nationally have been relatively flat or up 5 percent, according to J.D. Powers, but New England’s sales are down,” Gubala said. “Yet, our sales are up 19 percent. Business is very good due to several factors including the Internet. You don’t necessarily go to your local dealer anymore to buy your car. You go where autodealer.com told you to go or where cars.com tells you to go.”

The Internet is not just a trend for new car sales. Joann Sueltenfuss, executive director of the Massachusetts Independent Automobile Dealers Association, estimated that 90 percent of used car sales come through the Internet.

“Today, customers do everything but test drive a car online,” she said.

Buyers, dealers and vehicles connect online in several ways, starting with the auto dealers’ and manufacturers’ Web sites and third-party Web sites, such as cars.com, which offer pricing and vehicle location information. The venerable car-buying guides Kelley Blue Book and Edmunds also are available online, listing nuts-and-bolts information.

Despite the popularity of the Internet among car buyers, many auto dealers have entered the online world with caution.

Some have feared losing local car buyers who will take their business wherever the price is lowest. They also have feared that consumers will educate themselves online about value and pricing only to whittle down a car dealer’s profits.

Further, some have resented that the Internet depersonalizes car sales, which traditionally have been conducted face-to-face.

“It rubbed us the wrong way initially,” said Dana Goodfield, owner of Dana Automotive in Northampton and president of the Massachusetts State Automobile Dealers Association. “But there is a silver lining. When people knew what a car cost us, they stopped offering us prices that were lower even than what we paid for the vehicle. An educated buyer is easier to negotiate with than one who isn’t.”

“Nearly 40 percent of dealers don’t respond to Internet leads,” said David Kain, a Kentucky-based specialist who trains auto dealers in Internet and business development. “Yet, one of the key variables consumers use the Internet for is to de-select a dealer. The consumer is thinking, ‘If they’re that bad on the Internet, imagine what they’d be like in person.’ And that’s how they knock dealers off their list. It’s a quiet erosion of the market for the traditional dealership. It’s very difficult for them to sell. Floor traffic is becoming very light. You can go into a dealership now and see few people on the lot.”

The Internet is speeding up the sales process: Dealers who focus on their Internet sales leads can respond quickly to large numbers of online queries, as long as they have the staff in place.

“I have the one-30 rule: within one minute of a lead coming in, they get a template response to their e-mail and, within 30 minutes, they get a personal call,” said Edward Naczi Jr., former head of e-commerce at Honda North and Kia of Danvers.

Even the auto dealers that are the most gung-ho about the Internet express caution about the accuracy of information car buyers obtain online. Several dealers shared a similar experience: the buyer who bargains for a new vehicle based on the trade-in value of his current car, which he calculated by typing information into a Web site.

Yet, when a dealer calculates a lower trade-in value for the same vehicle based on industry standards, customers are disappointed — and sometimes worse.

“The Internet is not foolproof,” said Rick Mastria, owner of Mastria Buick, Pontiac, and GMC in Raynham. “The Internet can be a guide, but it can just as easily be off the mark.”