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GM's 'Shop-Click-Drive' program to eliminate showroom visits?

November 8, 2013
General Motors says it’s expanding an online car-buying program that could all-but-eliminate a need to shop in a dealership showroom.
Emphasizing that the dealer still must administer the sale — which could be done outside the dealership — GM said its Shop-Click-Drive setup rolled out Nov. 6 out to all 4,300 Chevrolet, Buick, GMC and Cadillac dealers in the U.S.
Wary dealers who suspect the system is meant to undercut them, or limit their chances to apply salesmanship to in-person customers, don’t have to offer the program. But a dealer committee helped design Shop-click-Drive and it’s expected to become popular.
“You have all those millennials out there and they’re used to buying stuff online and they don’t understand, ‘Why can’t I buy a car online?’” said GM spokeswoman Ryndee Carney.
Even though, strictly speaking, it’s still not quite buying a car online because a dealer has to be involved.
The automaker calls it a “dealer online retailing tool” that piggybacks onto the dealership’s own website. As GM describes it, the online system allows shoppers to outfit a vehicle with preferred equipment, get a price estimate, check for incentives and financing deals, get a rough trade-in value for their current vehicles and even apply for loans.
GM ran it as a pilot program at 100 dealerships in eight states for about a year. Carney said about 1,000 vehicles have been sold that way and “fewer than 10” buyers decided to handle the transaction entirely away from the dealership.
Dealers found it gave higher-quality leads than those from third-party sites. Shop-Click-Drive shoppers were turned into buyers about 30 percent of the time, considered a high rate of “closing,” GM said.
“The dealers like it because they’re getting very high-quality leads and they’re closing these leads at a much higher rate than other third-party leads that they get from other sources,” Carney said. “It’s not like Tesla at all.”
Jac Nasser, a former Ford CEO, pushed the concept years ago and confronted hostile resistance from dealers. Dealers, who are well connected in state legislatures where protective franchise laws have been established, are now fighting Tesla Motors’ attempt to sell its luxury electric cars without a dealer network.
“We want to make it easier and simpler for dealers to connect with customers who are looking to combine the convenience of online shopping with the personal service of a neighborhood dealership,” GM’s Vice President of U.S. sales, Kurt McNeil, said in a statement.
The car company is nervous that Shop-Click-Drive could be seen as a move toward niche automaker Tesla’s controversial approach of selling directly to buyers, skipping dealerships. GM says it wants no part of that. Even if it did, it’d be tough luck.
Dealers have insulated themselves from exclusion via strict state franchise laws requiring a sale to be handled, in some fashion, by a dealer.
Some dealers in the pilot program offered a concierge-like service, delivering cars for test drives and handling paperwork at the buyers’ home or office, if a sale were made. Carney said GM is encouraging, but not requiring, all dealers who use Shop-Click-Buy to offer that type of concierge service.
It’s unclear whether dealers widely will embrace that type of service. They make a large share of their profits from so-called F&I, or finance and insurance.
Their specialists sell the buyers a loan, marking up the discounted interest rate the dealers obtain from lenders, and sell extended warranty and service contracts at large markups Their F&I specialists believe they can be more persuasive in person than online.