Plymouth-Based firm convinces car dealers the Web is way to go

Published:
Sunday, March 10, 1996

Minneapolis StarTribune
Edition: METRO
Section: BUSINESS
Page#: 01D

By SOURCE:
JOHN J. OSLUND;
STAFF WRITER

Auto retailing:
It's not business
as usual

First of two parts

---

With the help of two local computer jockeys, Twin Cities auto dealers have driven their used-car operations onto the World Wide Web. The technology allows customers to shop the Net for used cars and could help local dealers defend their territory from national competition. First of two parts

It takes a certain kind of confidence to walk into a successful car dealership and sell the general manager on a new way of doing business.

But that's exactly what Steven Johnston did one night last November when he paid a cold call on Tom Cook, manager of Saturn of Bloomington. Although Johnston knows cars, it was computer technology that he was selling. And as it turned out, the laptop demo showing how used-car inventories could be tracked on the Internet's World Wide Web was just exactly what Cook was looking for.

Saturn of Bloomington is one of more than a dozen stores owned by the Lupient Automotive Group. Cook had been hunting for a software/hardware system that could quickly tell the manager, say, in Brooklyn Park what used cars were available at the Bloomington store, and vice versa. He had already explored - and disregarded - solutions costing upwards of $60,000. But Johnston, 32, and his partner David Kubisiak, 31, the midnight-entrepreneurs behind a Plymouth-based company called AutoBase, offered an inexpensive Internet-based program that gives dealers point-and-click access to their rolling stock by linking dealerships via Web pages.

Saturn of Bloomington and Bob Ryan Ford became the company's first customers.

Then a funny thing happened. People surfing the Web tripped across the dealership sites, saw the cars listed there and started making offers.

"Our first hit was from a guy in South Bend [Indiana]," Cook said. "That was the one that first opened our eyes to the fact that people are really looking at this technology."

Fundamental change
What started in December as a back-office inventory control solution has, by March, turned into a Digital Age marketing tool that's generating incremental sales and inspiring awe at dealers around the Twin Cities.
"It's going to change retailing," Cook said.

Bob Fitzharris, an analyst with the influential California-based auto industry consultant J.D. Power, agrees. "This is the way the industry is going," he said. "There's no doubt about it - computers have changed everything."

Fitzharris points out that information technology is driving some of the most potent new entrants in automotive retailing. CarMax, for example, a subsidiary of Richmond, Va.-based electronics discounter Circuit City, uses a sophisticated computer cataloging system that customers can view inside the showroom to narrow their selections from among the 500 to 1,000 cars on a typical CarMax lot.

Cook says the AutoBase concept does the same thing - except customers don't have to come into the store if they have a home computer. Although local dealers are concerned about megastores such as CarMax entering the Twin Cities market, some like Cook see the development of AutoBase as an effective way to fight fire with fire.

Dealer list expands
Johnston and Kubisiak, meanwhile, are busy enlisting some of Minnesota's biggest dealer groups, including Thane Hawkins Polar Chevrolet, Geo Mazda, Roseville Chrysler Plymouth, the Lupient Automotive Group and Tousley Ford. And more are coming every week.

As additional dealers come on board, the database of used cars that shoppers can browse via their home computers grows as well. Last week there were 600 cars and trucks, complete with pictures of the vehicles, detailed descriptions of the equipment and e-mail links to the dealership.

Consumer access to the database is free.

Barely into its third full month of operation, AutoBase still contains only a sliver of the used car market. There are about 20,000 used vehicles for sale in the local market at any one time, estimated James Schutjer, counsel for the Minnesota Automobile Dealers Association (MADA).

Of those, roughly 60 percent will be sold by dealers - both new car dealers and used-car-only dealers - and 40 percent will be sold by their owners in what's called the "casual market."

AutoBase hopes to build its vehicle database to 10,000 by year end, Johnston said. And it has attracted a powerful ally to make that happen. MADA, which represents Minnesota's 500 new car dealers, recognized the potential of the technology and quickly signed an exclusive agreement with Johnston and Kubisiak. Under the agreement, only cars for sale by MADA members can be listed on AutoBase.

Dealers pay $495 to get a home page. They also pay a fee per car to advertise on the database.

Dealers catch up
Fred Anderson, a used-car salesman at Bob Ryan Ford in Minnetonka, sold three cars in February through Ryan's site on the Internet. One of them was to Paul Wagner, a 29-year-old information systems manager for Micron Electronics.

Wagner suddenly found himself in the market for a new car when his old one was totaled in an accident.

"I needed quick, fast information," Wagner said. An experienced Web surfer, Wagner got on his home PC and conducted a generic search for "autos" that turned up dozens of auto sites around the country.

In the past year, most of the big automakers have established elaborate sites on the World Wide Web describing their product lines. Some, like Saturn, even list prices. But dealers sell the cars, not the factories. And dealers have been slower to adopt Web-based marketing. An Internet search will turn up Digital Age dealers in California and on the East Coast that list used cars.

But most lists are little more than electronic classified ads.

A big differentiater for AutoBase is the picture that accompanies nearly every car that's listed.

"What I liked about it was it had the picture," said Wagner. "And I could print out everything," he said. "What I wanted to do was get as much information on the new cars as possible and compare used cars to find a price range, based on miles and options. And then look locally to see what the best deal was."

He used the newspaper and visited several lots, too. But before he set foot in a showroom, Wagner has conducted his research, shopped the local inventory via the Web and made preliminary offers on the cars by telephone.

"It saved me a lot of driving around," he said. "It was easier just to stay on the Web and do stuff rather than be hassled by some used-car salesman."

Like Sunday shopping
Anderson takes no offense. The traditional method of selling cars involving lengthy negotiating "is just not in a lot of people' comfort zone," Anderson said. For that reason, some car buyers shop the lots on Sundays, when the dealership is closed.

Shopping via the Internet "is a little like Sunday shopping - without the driving," Anderson said. Wagner ended up paying $10,250 for a 1995 Plymouth Neon Sport Sedan with 10,000 miles on it.

"We are happy to be on the program," Anderson said.

Despite what looks like and overnight success, AutoBase has evolved from earlier failures.

Executives at Bob Ryan Ford had worked with Johnston and Kubisiak for a couple of years to develop a computerized kiosk where customers used touch-screen commands to browse the inventory.

Johnston, a car buff and computer technician, and Kubisiak, a computer engineer, wrote the software and bundled the hardware with the idea of placing kiosks in dealer showrooms and in local shopping malls such as Ridgedale and Rosedale. But rental fees in the malls were steep and the investment in time and hardware seemed too high to justify a few incremental sales, Johnston said. But a year ago when the Internet exploded with commercial applications, Johnston and Kubisiak saw the potential. They dusted off the software they'd written for the kiosk experiment and re-wrote it in hypertext mark-up language or HTML - the language of the World Wide Web.

The heart of the AutoBase system is the used-vehicle database, which is updated weekly. The key to the database is the search engine Kubisiak developed that customers use to locate cars by such criteria as make, model, price or mileage.

AutoBase is still a two-man operation. On the weekends, Johnston and Kubisiak can be seen on dealer lots taking pictures of cars with their digital camera.

By night, they retire to their respective basements to build home pages and update the database via the high-speed modems that link their computers.

By day, both men work at Honeywell's Technology Center in north Minneapolis, where Kubisiak is an engineer and Johnston works as a computer technician.

"We are still more or less a home-based business," Johnston said. "We have got the computer doing a lot of the work. Without that, we'd be swamped. We are working smart."

Johnston said the company will have to hire employees soon, but for now "we want to iron out as many bugs as possible first."

They also can help close a sale. Anderson called Johnston the other day with a request. A Web-browsing customer in Milwaukee had spotted a Lincoln Mark VIII on Bob Ryan Ford's home page. But the guy wanted a look at the car's interior.

Johnston came out with the digital camera, snapped some pictures of the car's interior and the engine compartment and sent them to the customer via e-mail.

"We are happy to be on the program," said Anderson. "These are the right two guys." Kicking the tires in cyberspace Web surfers can find AutoBase at http://www.autobase.com. From< there, you can link to listed dealers or go straight to the vehicle search option. Searches can be conducted by make, model, year, price or mileage. If you find a car you are interested in, such as the Porsche or the Saturn shown above, you can click on the e-mail address to send a message to the dealer. Source: AutoBase