Increasing digital demands are behind some dealers’ decisions to exit the business. And their stores often are eagerly snapped up by dealership groups that see advantages in being bigger.
One reason why being bigger helps? To maximize use of digital sales tools.
This has been playing out among the nation’s publicly traded new-vehicle retailers, namely Asbury Automotive Group and Lithia Motors, which led the pack last year in spending on dealership acquisitions. Both groups have outlined revenue goals for their companies and their in-house digital sales platforms — Clicklane at Asbury and Driveway at Lithia.
Lithia executives, for example, have said they intend to reach consumers across the country by making the group’s inventory available online, enabling a nationwide presence without also having to have a physical dealership in every market.
One of Lithia’s goals is to have a dealership within 100 miles of its customers, “allowing us to conveniently reach and serve large pools of customers for their full ownership life cycle and efficiently utilize our network for vehicle distribution, restoration, and warehousing,” CEO Bryan DeBoer said in July.
Last week, I talked to Daryl Kenningham, the new president — and CEO-in-waiting — at Group 1 Automotive, which ranked third behind Asbury and Lithia in spending on dealership purchases last year.
Growth is Group 1’s top priority, Kenningham told me. Investing in technology also is high on the list, given the increased productivity and efficiency it can bring. But Group 1 executives say they aren’t looking for a coast-to-coast approach.
As Kenningham put it, Group 1 doesn’t “have an overarching strategy that says we’re going to have a digital footprint that allows us to sell a car from a dealership in Atlanta, Ga., to a customer in Seattle, Wash.” That’s because, he says, shipping a vehicle to a customer outside of a dealership’s local market risks losing those customers longer term, from service to repeat business.
The unrelenting pace of dealership acquisitions and investment in online sales will allow us to watch these strategies unfold in real time.