DETROIT (AdAge.com) -- Used-car buyers in Phoenix have a new place to shop: Walmart. And franchised dealers could benefit.
The world's largest retailer is leasing space in two suburban Phoenix stores to Live X Auto Exchange, an online used-vehicle buying company, Automotive News reports today. Walmart shoppers use Live X computers at the stores to check out more than 1,000 used cars and trucks for sale, Live X founder Patrick Dial said.
Mr. Dial declined to say how many vehicles it has helped sell since it was launched last month or what Walmart is charging his company. He said about 35 local dealerships, along with rental-car companies, banks and private sellers, are listing used vehicles.
Live X refers buyers to dealerships. But it also holds a broker's license that allows it to buy used vehicles from dealers and sell them directly to customers, Mr. Dial said.
"Here's the secret sauce," Mr. Dial said. "We're in a nontraditional location but one where there is a promise of value. And customers frequent it over and over."
Expansion in 2009
Next year, Mr. Dial said, Live X plans to expand to as many as 13 other Walmart stores in the Phoenix market. He said he would like to roll out the program nationally but has no timetable.
Other than being a landlord, Walmart does not have a business relationship with Live X. Spokeswoman Christi Davis Gallagher said the used-vehicle venture reflects Walmart's mission to provide one-stop convenience and value to save our customers money so they can live better." Live X does not display vehicles or offer test drives at the two Walmart stores, in Chandler and Mesa, Ariz.
Dealers pay Live X $995 a month to list an unlimited number of used cars and trucks. Mr. Dial, a former promoter for country music singer Garth Brooks, said his company's strategy enables dealers to retail aging inventory before they send the used cars and trucks to auction.
At the Walmart stores, Live X employees help customers open free accounts that give them access to the used-vehicle listings. Customers must go to the stores to establish accounts. Live X also works with buyers to help them get credit from lenders.
Customers can search the Live X database by vehicle type and price. When a customer buys a car or truck and is approved for financing, a service technician inspects the vehicle before it is sent to the Live X delivery center. The inspectors work at two local dealerships, Mr. Dial said.
At the delivery center, the customer can test-drive the vehicle. At that point, he or she can cancel the deal without penalty. Some participating dealerships also allow customers to return the vehicle within three days and exchange it for another used vehicle in the store's inventory.
Live X does not offer warranties on the vehicles it sells, but individual dealerships do, Mr. Dial said.
Larry Miller Mazda, in the Phoenix suburb of Avondale, lists about 28 used vehicles with Live X. As of mid-December, the dealership had not sold any through Live X. But General Manager Terry Ferrante likes the Live X business model. "You're always looking for new customers," he said. "There's an old saying that you fish where the fish are. Obviously, Walmart has proven to the rest of us that there are a lot of fish there."
Live X is not the first auto retailer to try to ride Walmart's coattails. Asbury Automotive Group experimented with selling used vehicles in Walmart parking lots in Houston in 2002 and 2003. Asbury abandoned the venture after it said it lost almost $6 million.
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Arlena Sawyers is a reporter at Automotive News