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Toyota mega dealer embraces online using startup's software
[NEW YORK] Longo Toyota in El Monte, California, bills itself as the biggest new-car dealership on the planet. Yet until last week, its digital technology was so archaic that salesmen couldn't produce a list of vehicles they'd lease for the same monthly payment without first toiling with hand-held calculators.
On Tuesday, Longo started letting customers use PCs or smartphones to form a list like this themselves. They can then proceed online through other processes largely kept within the confines of brick-and-mortar dealerships: selecting options, haggling over trade-ins and financing, and scheduling delivery. Buyers can avoid setting foot in the store, if they want.
The software behind Longo's system is from Roadster Online Inc, and Brendan Harrington, the dealership's president, is one of its biggest fans. In the decades-long battle between the e-commerce gurus who've seen dealers as sitting ducks and a Main Street American industry that's largely fended off disruption, Roadster is one of the startups that could bring about a new equilibrium. In providing these services, dealers are trying to catch up to the online experience shoppers have come to expect thanks to the likes of Amazon.com Inc.
"Roadster brought us from about 1990 up to 2017," Mr Harrington said. "What so many other Silicon Valley software providers have tried to do is take the human element out of the equation, as if nobody has a question when they're buying an item that costs $50,000." As Penske Motor Group's flagship, Longo's experience with Roadster will play a major factor in whether the nation's second-largest auto-dealership company and its affiliates deploy the software elsewhere, Mr Harrington said. The Penske family also operates Penske Automotive Group Inc, which has 294 dealerships.
Despite US auto deliveries declining after seven years of growth, he expects Roadster to deliver a 10 per cent boost over the next year to the 30,000 cars and trucks that Longo sells annually.
Brian Benstock, vice president of Paragon Honda and Acura in Woodside, New York, said he's already seeing the benefits of Roadster's software. The dealership, which Benstock said is Honda's third-largest in the US, boosted new-car sales by 20 per cent in June and 8 per cent in July, compared with roughly flat sales for the automaker nationally.
In the showroom, customers can use a do-it-yourself kiosk that Mr Benstock calls "a six-foot iPhone" to shop for cars, alter monthly payments and schedule deliveries with taps and swipes of a finger. The transaction can take 45 minutes, down from as much as three hours.
Car dealers have been laggards in online services in part because the programming necessary is complex, said Neill Occhiogrosso, partner at Costanoa Venture Capital Partners LLC. The Palo Alto, California-based firm led a US$7 million funding round that Roadster announced Monday.
"We have to own the fact that our business model is dead, and if we don't transition, we are going to be disrupted," Mr Benstock said. "The Teslas, the Apples, the Googles are going to come in and change the way retailing is done for automobiles, and it'll be too late for the dealers that haven't already adapted."