Vendors scramble to bolster digital auto retailing tools


Despite years of development, mergers, partnerships, startups and stall outs, digital auto retailing software hadn’t truly been tested in the U.S. until a deadly virus forced radical changes in how people purchase vehicles.

As COVID-19 cases surged nationwide last year and government mandates shuttered dealership showrooms, software giants and startups alike realized dealership clients needed more from their products than they had to offer — a way for customers to completely purchase a vehicle online.

For dealers scrambling to remake how they sold cars, the end-to-end digital retailing race had many front-runners, but no clear winners.

“Like every other dealer back in April and May, we called everybody,” said John Altman, COO of Beyer Auto Group in northern Virginia. “We decided that we didn’t like any of them. None of them really had a good solution, like they’d really gotten there yet.”

So many retail technology vendors hit the ground running last spring to bolster digital retailing platforms and add tools to meet the growing demand for contactless vehicle sales. They accelerated development, sped up product launches and conceived new features to help dealers sell vehicles online. But experts say the journey to a full digital experience remains a work in progress.

Even dealership groups with established vendor relationships and a start on digital retailing sought more robust platforms when stores were forced to close.

Beyer Auto Group examined 12 software vendors early in the pandemic, Altman told Automotive News, but not all seemed ready for the challenges ahead.

“Some of them had really good presentations and were ready to go. Some of them looked like they had just figured it out the night before and were just trying to get into the arms race,” Altman said.

Even as dealers searched for new options as the coronavirus initially rolled across the U.S., they also worried about expenses as sales and revenue plunged. Many digital retailing vendors slashed their prices for a period, particularly for dealership groups with multiple stores. But over the course of the pandemic, many retailers ultimately found themselves paying more for software as they experimented with various platforms or added new features.

Keith Jezek, president of Cox Automotive Retail Solutions, which includes the Dealertrack, HomeNet Automotive, vAuto, VinSolutions and Xtime brands, said his team worked hard to launch new functions.

“We rushed things to market that were on the back burner,” Jezek said. “We had stuff that was on the map for 2022 that we moved forward on in a couple of months.”

Dealers were trying out the new offerings — sometimes for no initial cost but also with no expectation of what the cost ultimately would be.

“I had one literally say, ‘We don’t know what our pricing is. Just come on free for three months,’ ” Altman said.

LAcarGUY Family of Dealerships experimented with several vendors — Roadster, Modal, TagRail and Cox Automotive, among them — across its 12 stores in metro Los Angeles. In the early months of the pandemic when customers couldn’t go into stores, demand for digital retailing tools and remote delivery soared, and the group sold about 250 vehicles online.

“We really thought we were on to something, that we had cracked the code,” group owner Mike Sullivan said. “We hadn’t cracked it at all. COVID cracked the code.”

As soon as showrooms reopened, in-store sales returned to normal, and digital sales retreated to small numbers. Home deliveries fell off a cliff, said Brad Burlingham, vice president of marketing for the group. Still, the tools are trimming transaction time even for largely in-person sales. Even with less demand for online deals, LAcarGUY remains “all-in” on digital retailing, Burlingham said, and is working to determine which are the best tools and how to use them.

Certain car-buying steps are more important than others and should be part of digital retailing platforms, said Jon Sederstrom, managing director of strategic initiatives at J.D. Power. A purchase can’t happen without knowing the real price of a vehicle, for example. Digital retailing processes also should include trade-in valuations, loan or lease offers and online contracting, he said.

How these features get embedded in software depends a lot on the demands of dealership clients, several vendors said. Slow adoption of existing features reflects a marketplace that still relies heavily on in-person customer interactions at physical dealerships.

At RouteOne, dealership requests prompted the pull-ahead of a single signing ceremony step — a feature previously unnecessary in an environment where customers willingly entered the dealership to finish paperwork, said Amanda George, RouteOne’s senior vice president of product, customer solutions, integrations and marketing.

RouteOne and competitor Dealertrack both now offer the process. But “we didn’t think there was dealer demand this time last year,” George said.

Jenn Reid, vice president of strategic partnerships for Market Scan Information Systems, doesn’t have a uniform prescription for dealers seeking advice on the best software vendors or digital retailing platforms for their stores.

“The answer is always going to be, it depends,” Reid said. “What problem are you solving for?”

Some platforms offer more robust finance-and-insurance processes, while others excel at the customer interface, she said. Rapid developments in electronic signature technology and e-contracting last year shifted vendor skill sets during the crisis, as did an emphasis on messaging platforms for mobile-dependent consumers and videoconferencing features for remote F&I product presentations.

The changes benefited dealerships but didn’t fully address the vendor selection quandary. Most digital retailing platforms only thrive when there’s seamless integration with automaker systems or data providers, sources said. If the various pieces don’t work together, the dealer often must start the vetting process over.

At Beyer Auto, for instance, Altman said he discovered too late that one platform provider didn’t connect with the group’s F&I vendor. Such disconnects aren’t any less common even after the product acceleration prompted by the pandemic, Reid said.

“It’s important that you have the best solution. But you’ve got to balance that,” she said. “The odds that there’s going to be one dominant player like an Amazon in the near future is unlikely.”

Dealers couldn’t care less about which vendor solves the end-to-end process first, so long as it’s easy to use and effective, said Ron Frey, president of investment and advisory firm RL Frey Inc. Moreover, dealerships will benefit when several companies offer what they need.

“I don’t ever want to be in a spot where I’ve got really one solution provider that controls everything. Either they stop innovation, change direction or get greedy on prices,” Frey said. “Whatever we consider best in class today — in 18 months, it’s not going to look the same.”

Natasha Del Barrio, CEO of Texas megadealer Bert Ogden Auto Group, said she leveraged the group’s size — 18 stores and an average of 2,500 vehicles sold monthly — to negotiate 50 percent discounts on vendor prices and obtain month-to-month contract terms at the onset of the pandemic. The short-term agreements benefited the group by keeping it nimble, Del Barrio said. After 60 days, Bert Ogden was able to cut some vendors loose and try new options.

Del Barrio estimates she signed more vendor contracts last year as Bert Ogden piloted new tools and amended software agreements than she had in the prior two or three years combined.

“It was a weekly thing for me,” she said.

For many dealers, the search continues.

Beyer is currently piloting Darwin Automotive, Roadster, Digital Motors and eLead Solutions in its eight stores. But after months of trials, Altman said he is still looking for more from them.

“My hope is that one of these vendors that we’re experimenting with is going to rise to the top,” he said. “A lot of our customers are opting just to come in [to the store]. We haven’t found a way to make it work.”