Web traffic: Car dealers embrace Internet sales to accommodate customers who have done their research

Sue Ann Hampton drove nearly 310 miles -- from her home in the Upper Peninsula of Michigan to the West Beltline in Madison -- to buy a 2009 Nissan Murano, in tinted bronze metallic, from Kayser Nissan earlier this month.

When she arrived, she didn't even take it for a test drive before signing the purchase papers.

Hampton said she'd already learned everything she needed to know about the stylish SUV crossover through her many e-mailed questions to Kayser salesman Clay Luttrell and her own online research, including reading reviews and doing analysis and price comparisons in a four-state area.

"If you really do your homework on the Internet, I don't see how you can go wrong, when you know what you want," Hampton said. "You can go right down to the penny on what cars should cost and what their value is. You basically know if you're getting a good deal or not."

Area dealerships pressed to make truck and car sales in a down economy have been happy to comply with many customers' preference for the Internet and take extra steps to make the sale.

In Hampton's case, Luttrell tracked down a Murano in tinted bronze, the rare exterior color she wanted. After discovering there were only about 45 such vehicles in the whole nation, he quickly had one in Iowa City brought in for her.

"When I have a customer who might buy over the Internet, I try to be as thorough as possible," said Luttrell, who does only Internet-based sales and created Kayser Nissan's Web site in January 2008. "There's a method I go through to make sure that when they show up, the car is exactly what they want. And in a year and a half, I've never had anybody show up and not take the car."

Increased online communication with potential buyers -- using blogs, e-mails about sales and service specials, dealership Web sites and e-newsletters -- is just one strategy that dealerships are using to spark purchases.

Other tools include bigger cash incentives, information about a federal tax credit for sales tax paid on new car purchases, low interest rates for qualified customers and more focus by dealers on used car sales and repeat customers.

‘They have to sell smarter’

For the first four months of 2009, new vehicle sales in Dane County were down 25.2 percent compared to the same period a year ago, with 4,402 vehicles sold. Throughout the nine-county south-central Wisconsin region, the drop was 27.8 percent, according to Reg-Trak, of Waterloo.

“They are having to do more with less, fighting for their sales,” said Bill Sepic, president of the Wisconsin Automobile and Truck Dealership Association. “Certainly they are being creative in what they’re doing.”

“They have to sell smarter, know more about the product, because today your average customer is better educated in terms of the vehicle than they were 10 or 20 years ago,” Sepic added. “Chances are they have researched this vehicle online, and have a good, solid knowledge of what they are purchasing before they walk into the dealership.”

At Zimbrick’s Far East Side dealership group in the High Crossing area, including Buick-Pontiac-GMC, Hyundai and Nissan stores, plus an economy car lot, general sales manager Jay Sass was promoting a sales campaign tied to the company’s 44th birthday.

In keeping with that theme, new cars were being offered for 44 cents over invoice, which represents the dealership’s costs, Sass said, and for many used cars, the deal was 4.4 percent financing.

“New car sales are down, but used car sales are through the roof,” he said. “There’s definitely financing out there and it’s aggressive.”

Used vehicles attract interest

Don Goben, who owns a used-car lot at Pflaum and Stoughton roads, said sales were way up in the past year at his business, the strongest they’ve been in five years.

“Due to the economy, people aren’t spending money for a new car if they can get a value on a used car,” Goben said. “They are being way more practical with their money and spending in general.”

Goben sells both foreign and domestic brands at his lot, which typically stocks about 80 vehicles at a time and sells about 70 per month. He said American cars sell better than foreign ones, because the foreign brands tend to hold their value better — sometimes costing $4,000 or $5,000 more than a comparable domestic car that may get just as good gas mileage.

And whether foreign or domestic, Goben said cheaper financing is easier for customers to get for used cars than for new ones.

Lenders tighten standards

Sean Baxter, vice president of Kayser Automotive Group, agreed good financing was available through the banks that work with dealerships, but he said it’s not being offered as freely as before the start of the recession.

“Definitely we have seen a contraction of the financial institutions’ lending standards,” Baxter said. “Their evaluation of each consumer has tightened up quite a bit, and their willingness to exceed their benchmark criteria or guidelines has virtually disappeared.”

Baxter said customers might find their best values in taking advantage of the rebates being offered at many manufacturers’ expense now. Virtually across the board, automakers are providing deep discounts.

On the expense side, some dealerships also reported cutting inventory to help make their bottom line. Baxter said his Kayser Group for a time had been carrying two to three times the amount of cars and trucks needed for the current level of sales.

Baxter also pointed out that his firm has been weathering the storm with no cutbacks in employees, including 175 in Madison and about 400 groupwide.

“We really have been able to avoid that, which has been really, really great for our organization,” Baxter said.

Bucking national trends

At Smart Motors, a Madison Toyota dealer, general manager Allen Foster said business was strong, despite what the public perception might be.

“I keep hearing on the news and reading that it’s doom and gloom everywhere and the auto industry is in the tank,” he said. “But every day we’re selling lots of cars, and I don’t believe we’re an isolated case.”

Foster credits his continuing good sales — 2008 was a record year, he said, with this year shaping up to come close — to a long company history in Madison and to offering what he said was a strong product in Toyota that appeals to cost-conscious customers especially now, when times are tight.

The local economy, with relatively low unemployment, also has been a bit more insulated from economic pressures than some other parts of the state, Foster said.

A traditional seasonal boost due to nicer weather also seems to be boosting business.

“People are definitely out shopping more now,” agreed Don Miller, who is moving his Chrysler-Jeep new car sales in with his Dodge dealership on the East Side of Madison after Chrysler declined to renew his franchise as part of the automaker’s just-resolved bankruptcy proceedings.

“My gut feeling is that traffic is a little better.”

---

LINGERING CONCERNS
FOR DEALERS
At least three factors continue to cloud the outlook for improved car and truck sales:
• Continued low consumer confidence about the economy.
• Lingering customer resentment or concern about the bailouts and bankruptcies of Chrysler and General Motors, even though Chrysler is already out of bankruptcy and the government has pledged to back warranties and ensure servicing options.
• Some hesitation to buy, pending a congressional decision on the proposed “Cash for Clunkers” incentive program.

Source: Bill Sepic, president of the Wisconsin Automobile and Truck Dealers Association

---

LOOKING FOR A FEW GOOD SALESPEOPLE

Despite overall poor sales numbers for new cars and trucks in Dane County and throughout the state, one local dealership is reporting so much success that it’s having trouble hiring enough salespeople.
At Smart Motors in Madison, general manager Allen Foster decided a couple of months ago that he needed 10 new salespeople, but he has been able to fill only three of the jobs.
“We’ve got our managers waiting on customers during our overflow times,” Foster said. “And we’ve got salespeople in some cases working with multiple customers, which is not ideal. Our goal would be for salespeople to (each) be able to focus on one customer.”
A college degree isn’t required and previous sales experience is helpful but not required, Foster said. An attitude that values customer service is key, he added.