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Wired for the future Featured

9:45am EDT July 22, 2002

There are people who buy automobiles from John Honiotes without ever straying far from the warm glow of their personal computers. Instead, they visit Autonation USA’s Web site, browse through digital pictures of Hondas, Volkswagens and Chevrolets, and, if they wish, have one delivered to their home for a test drive.

Then, if they like what they see, they apply for a car loan online, receive an answer within 30 seconds and ring an Autonation USA sales person, who cruises out to help close the deal in the comfort of their own living rooms.

Honiotes, former national sales director for www.autobytel.com — far and away the most successful Internet company when it comes to matching potential car buyers with local dealerships — does not try to argue this is the future of automobile sales. Instead, he describes it as a top-notch example of how the Web can revolutionize traditional businesses.

“Today, that type of customer is a very small percentage of our business,” explains Honiotes, sitting at a monstrous conference table inside Autonation USA’s Rockside Road dealership, the newest addition to the sea of chrome, steel and glass better known as the Bedford Auto Mile. “We think that will grow to be a full 20 percent of our business. But the way we look at it, for that one customer or two or 10 who want it that way, it’s a very important part.”

Last year, Cleveland businessman Lee Seidman convinced Honiotes to trade sunny California for wintry Northeast Ohio and help build the first Autonation USA franchise with a focus on using the Internet to make the business more efficient. Before Seidman’s operation, every Autonation USA dealership was corporate owned, including the six Northeast Ohio dealerships under the Mullinax and John Lance names.

But even with his extensive background in online car sales, Honiotes does not see the traditional, physical car dealership fading away anytime soon. Instead, he says, the Web can do the most good when it’s used to streamline and improve existing business models. The value Honiotes places on an outstanding physical location is evident in the spacious 35,000-square-foot Autonation USA dealership he helped design, which is equipped with its own coffee bar, dozens of Internet kiosks and a service department that encourages customers to take a look around.

Honiotes, who describes Cleveland as “not even high up on the pole” when it comes to overall Internet literacy, says only about one out of every three people who walk through the doors of Autonation’s Bedford dealership has Internet access in their homes. Nevertheless, he believes once the Internet learning curve is conquered, the Bedford “virtual dealership” will emerge as an industry leader when it comes to integrating the Web with the traditional car-shopping experience.

“In some ways, we have a little more work to do here than expected,” Honiotes says with a confident tone. “But we’re really comfortable that when it’s all said and done, we will be recognized as the first place to go when looking to do business using the Internet.”

It is common for car dealers who want to be players in a certain market to put 1,000 cars on a 20-acre lot and try to rule through sheer size of inventory. At first, Autonation USA was no different, and the huge investment very often filtered down to the customer.

“In the early days, they would throw 1,000 cars on the lot and the problem was the buyers had no incentive to go out and buy them,” Honiotes explains. “The customers would say, ‘Well I see all these great cars, but if I have to spend more, not less, there’s something wrong with this picture.’”

The Internet, however, allowed Honiotes to avoid this cash trap when he built Siedman’s Autonation USA dealership and freed money that would have previously been sunk into stocking the lot. Instead of 1,000 cars, Honiotes stocks about 300 vehicles on Autonation USA’s nine acre site.

He can get away with this because of the way customers are directed to shop for cars. Even those who visit the dealership without touching a computer end up browsing for vehicles at one of the many Internet kiosks throughout the building. If they’re not familiar with how to use them, there are plenty of sales guides to walk them through the process.

If customers cannot find an automobile they like on site, they can browse Autonation USA affiliated dealerships or send Honiotes and his staff out to find the car they want. Since the staff does a lot of its shopping for vehicles online, it can, many times, easily find the automobile the customer wants.

“The customer can instruct us to go out and buy a Honda Prelude, for example, based on a range of years, miles and colors,” explains Honiotes. “Right now, 10 percent of the vehicles we sell today are a result of customers asking us to go out and buy a different kind of car for them.”

Because of Autonation USA’s no-haggle pricing policy, it usually takes customers a few rounds of browsing before they are ready to buy a car. But once they are introduced to shopping via the Internet during that first visit, Honiotes says, customers often do not return to the dealership until they spot something they are interested in while browsing the Web.

“About one-third of our customers have Internet access,” says Honiotes. “Does that mean that they complete the transaction on the Internet? No. What it means is, in trying to shrink down their thought process, they went on the Internet just to see what’s out there. “

This do-it-yourself process frees Autonation USA’s sales guides to focus their efforts on new shoppers who drop by the dealership to look around. Meanwhile, the low-pressure browsing from home and no-haggle pricing structure very often set the stage for an easier sale when those customers who have been browsing online return to the dealership.

“The earlier you get the customer involved, the greater success you will have with that customer,” says Honiotes. “If they go on the Internet and look for vehicles before they get here, they dramatically shrink the amount of time it takes them to do business with us.”

The lush interior of the Autonation USA’s Bedford dealership is proof that Honiotes wants to make the traditional car shopper feel at home. However, he says the majority of shoppers he encounters is mostly interested in taking care of the process quickly.

“We’re happy to have someone spend the day with us if that’s what they want to do,” he says. “But very few people think it’s a vacation to spend an entire day at a dealership.”

One of the most frustrating aspects of the car-shopping experience for the customer is the deal that gets away. When a shopper is quoted a price on a vehicle, then walks out the door without buying, Honiotes says, there is a good chance he or she may not get that same price on their next visit.

“You may walk back in ready to go in your mind and you say, ‘Hi, is Joe working today?’’” explains Honiotes. “Well, maybe Joe quit, or he’s off today . . . There is no way in hell they’re going to find your deal. You have to start all over again if you want to buy that car, and that, to me, seems pretty silly.”

Honiotes will soon introduce a Smart Card application at his Bedford dealership, in which customers are issued small plastic cards with embedded computer chips that store information about a certain deal if they need a few days to think about the purchase.

Storing customer information is also used on the administrative side to speed up the mountains of paperwork that accompany each sale. Once a customer’s name and personal information are entered into the system, they can be accessed for use on any paperwork that is part of the current purchase or, for that matter, any future buys.

“Single entry is the secret to the future of the business,” says Honiotes. “The way we see it, if I capture information in the front end of the store as part of the sale, when a customer comes back in, we’re not fishing to find out who they are.”

Honiotes is talking to a few major Cleveland banks about setting up a beta test site at the Bedford dealership for the first paperless car transaction. He expects that will happen later this year. Although customers will receive paperwork, the entire transaction between dealership and bank will take place electronically.

“Our goal,” he says, “is to take as much paper out of this business as possible.”

Also on the drawing board is software that will allow customers to schedule service appointments through the Web and automatically order any parts needed for that job that are not in stock.

Where many businesses get hung up when it comes to using the Internet in business, explains Honiotes, is what they expect from the new technology. Too often, business owners view the Internet as a portal through which, if they are doing everything right, new revenue should flow. Where Autonation USA is ahead of the game, Honiotes believes, is its use of the Internet as an intricate tool for research and communication on both sides of the deal.

“Where we think we’re remarkably different than any place in the country is that most dealerships are still trying to figure out one side of the equation,” he says. “They’re just looking for something being pushed to them in terms of the Internet and we recognize the real value of the Internet is pushing and pulling.”

How to reach: Autonation USA, (440) 232-9900 or www.autonationusa.com

Jim Vickers (jvickers@sbnnet.com) is an associate editor at SBN.