Auto dealerships are accelerating plans to use mobile to cater to car buyers, moving into a new stage with mobile applications and Web sites that once mainly offered tips and reviews but now increasingly hook up potential buyers with dealers.
AutoNation, the largest United States retailer of new cars, trucks and SUVs, plans to spend $100 million over two years to create a mobile application that would allow customers to buy a car mostly online. The app, which will be released later this year, aims to make the car-buying experience much more like buying an item on Amazon.com.
A mobile-enabled site is critical for dealers as many vehicle searches happen on a mobile device, said Kerri Wise, senior director of dealer training for car-shopping site Edmunds.com. Likewise, consumers are increasingly spending time on mobile apps.
While a consumer may find value in downloading an app for a dealer group that sells multiple brands, like AutoNation, it is more of a challenge for an individual store to convince a consumer to use their dealer-branded app in the shopping process, she said.
AutoNation did not respond to media inquiries.
A dealer-branded app can build vehicle and dealer loyalty mainly through providing a way for a dealer to stay connected with owners post-sale. An app can provide vehicle owners with general information about vehicle operations, maintenance and warranty details and be used to schedule service appointments and evaluate trade-in value.
Consumers use of dealership apps is growing along with the overall surge in mobile commerce. Edmunds has seen the number of visits to its mobile Web site and applications this year skyrocket 50 percent from a year earlier. It expects the boom to continue as consumers turn to mobile to peruse reviews, connect with dealers and validate purchase decisions.
Mobiles reach with young consumers who favor video as a research resource, is particularly important.
J.D. Power and Associates, the Westlake Village, CA-based market-research firm which annually ranks the best Internet car-shopping sites, gives high marks to Edmunds.com, which lets buyers shop for new and used cars. Once buyers select a vehicle, they can see the average price paid for it in their region and receive an estimate. By entering their contact information, buyers can obtain a locked-in price from a network of dealers who pay Edmunds a monthly fee.
Car-shopping application design is still evolving.
J.D. Power also rates highly Cars.com, which links buyers to dealers who offer a quote; U.S. News Best Cars, which rates vehicles and tracks deals; and Kelley Blue Book, which figures out how much buyers should expect to pay based on various factors.
App design, however, is still evolving. Experts agree that the conception must show that the end transaction is only part of a process built on other features such as a dealership locator, reviews of cars, product and price information and details about financing and maintenance alerts.
An app that only offers basic contact information and a phone number to the service center is an utter waste, said Daniel Pifko, CEO and co-founder of San Francisco-based app developer SocialNav Inc. Smartphone users have to have something far more useful that what they can get from Google Maps.
Elements that would be interesting to a buyer include visibility into the inventory, access to sale pricing, access to timely discounts, or an ability to search across dealerships would be a pull item from customers, he said.
Apps are costly to build, especially from scratch, and to maintain as the diversity of phones increases and advanced features of other apps raise expectations. But costs can be reduced, according to Mr. Pifko.
If dealers start with a template app provided by the OEM/brand, or by a vendor with pre-built tech, the added cost can be minimal, he said. Of course, building an app for a dealer group will be more effective.
On the income side, an app that makes it easier for buyers to finalize a purchase without the headache and stress of dealing with the in-dealership process is going to attract a lot of customers and a ton of media attention. The marketing/PR benefit of that alone could be huge. Part of the reason Amazon is crushing retailers is just that they're easier to deal with and more communicative.
Also, if a dealer's app is built well, it will help steal customers from other dealerships.
Adam Thorwart, senior research associate, apps research at Newton, MA-based Strategy Analytics, said consumers tend to prefer a lock-price or price-update feature to a purchase feature.
Cars.com app screenshot.
When users are searching for a vehicle on an app it is less likely they would buy the car without seeing it in person, he said. But with a lock price feature the user can show interest in the vehicle without the risk of going to the dealership later that day or week and find out that the price of the vehicle might have increased.
Additionally, a price-update feature would help move product because a user can set parameters on color, style, make, model and engine size for a vehicle they are interested in and push notifications can go out to the user if a vehicle within the parameters experiences a price drop.
Since buying a car is one of the most expensive undertakings most people ever experience, a mobile app should try to address the emotional side of the process, experts say.
Ordering a car shouldnt be the primary goal of a mobile app, but should be there, according to Nitesh Patel, director, wireless media, at Strategy Analytics. The majority of consumers will want hand holding through the car buying process.
Apps are only as effective as the user traffic they draw.
It can only be leveraged if they intend to drive traffic to their app, said Roger Lanctot, Strategy Analytics associate director of global automotive practice. Customers look for a Ford Focus, not Rogers Ford most buyers do not know the names of local dealers.
Dealers know consumers shop for cars on mobile devices but few consumers will go to individual dealer apps, he said. They will go to aggregators.
In the long run, mobiles use as an education tool may be its greatest value to dealers but it is only one part of a larger process.
Mobile is becoming fully integrated into the shopping and buying process, said Jamey Power, an expert on customer satisfaction whose family founded JD Power and Associates. New generations of buyers expect it and know how to maximize its use.
But I would caution that it is not all or nothing. Ive seen reports that also convince me that having good phone process and email process is critical even with the younger generation of buyers.
Consumers are better off when they are prepared with good information, he said. The more they know and have at their hands the better off, and the more satisfied they can be in buying a vehicle. Mobile apps certainly can help that process.
Michael Barris is staff reporter with Mobile Marketer, New York.
Michael Barris is staff reporter on Mobile Marketer and Mobile Commerce Daily, New York.