CAR DEALERS GO HIGH-TECH VS. SUPERSTORES

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[las vegas] A retailing revolution, embodied in the growth of used-car superstores, is driving auto dealers to adopt more sophisticated marketing approaches.

At this month's National Automobile Dealers Association convention, dealers crowded the displays of companies touting interactive media such as kiosks and World Wide Web-based auto malls. Database services allowing more precise targeted marketing also were popular.

"The nature of the retail business is changing dramatically," said Leon Edwards, a Birmingham, Ala., Chevrolet dealer and outgoing president of NADA.

Forcing the issue are two networks spawned by non-automotive retail organizations: CarMax, a unit of electronics retailer Circuit City Stores, already operating four used-car lots with plans to enter up to seven more markets this year; and AutoNation USA, backed by Blockbuster Entertainment Corp. founder H. Wayne Huizenga, which plans to open at least six stores this year in Dallas, Houston and south Florida.

Such organizations are bringing to the auto business the category-killer concept that dominates other retail areas like electronics, sporting goods, home improvement and books.

"It's clear they have well-thought-out plans, and an integrated approach to customer satisfaction. Anyone who thinks this is just some sort of gimmick is missing the point," Alex Trotman, chairman-CEO of Ford Motor Co., said in a keynote speech.

The superstores are relying on a large selection of late-model used cars and customer-friendly environments to attract shoppers. They also know how to use cutting-edge interactive media and database marketing to their advantage, said Mark Thimmig, managing associate at Coopers & Lybrand Consulting.

"AutoNation brings in a group of people who in four years [with Blockbuster] built a database of 60 million people. They have a comprehensive understanding of consumer behavior in their retail environment," Mr. Thimmig said.

Dealers unable to adapt to the new competitive pressures will likely get pushed out, with most analysts predicting the number of new-car dealerships could shrink from the current 22,500 to as low as 15,000 during the next several years.

"In the past, dealers ran their business by gut feel. Now, they have to get more scientific in their planning," said William Sawyer, VP-local area marketing for R.L. Polk & Co., just one of the marketing services companies that used the convention to introduce new products.

Polk was signing up dealers for an array of database marketing services based on information about demographics, lifestyles, historical purchasing patterns, loans, leases and brand loyalty.

Customized reports enable a dealer to get breakdowns by geography and vehicle type.

In other marketing services introductions:

Ryan Group unveiled Automotive Shopping Network-inter-active touch-screen computer kiosks with vehicle descriptions sponsored by local participating dealers. An attached phone allows a user to make an appointment for a test drive. Rollout will begin in the Minneapolis market in March or April.

Auto-by-Tel, an online referral service, announced an agreement that will pair it with the Microsoft Network's CarSource, a guide for new-vehicle shoppers. CarSource users could research selections, then dial into Auto-by-Tel to submit a purchase request to a subscribing dealer.

IBM Corp. and Chase Manhattan Bank introduced a system for processing car loans over the Internet. The system, expected to be in place at 200 dealerships by the end of the year, will allow electronic processing of registration and insurance applications.

Reynolds & Reynolds, a supplier of computer services to dealers, said it has added a side-by-side comparison feature to its Web-based DealerNet auto mall (http://www.dealernet.com), allowing consumers to compare 41 items on up to three models at a time. Kevin Distelhorst, director-general manager of online services, said the company has lined up two financial companies as partners for its own program that will soon begin processing auto loans on the Internet.

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