Saturn Pilot Program to Push Online Shopping
March 24, 2008

By Dale Buss

General Motors’ Saturn division plans to launch a pilot program within three months that is intended to allow integrated online execution of just about every aspect of a vehicle purchase that can be legally and physically accomplished outside a dealership.

AutoObserver has learned that Saturn’s test — with as many as 10 dealers nationwide — will allow customers to perform several functions on a dealer’s Web site that currently either must be handled in the showroom or executed only piecemeal online, including checking dealer inventories, applying for credit and scheduling a test drive.

The pilot also is expected to test ways to use the Internet to facilitate the evaluation of customers’ trade-in vehicles and to negotiate price using online chat and e-mail between dealership personnel and customers.

“Really what we’re doing is packaging some (functions online) that we already have out there and adding some that we don’t,” said Chuck Thomson, Saturn’s director of sales. “Our ultimate goal is to make it easy for people to do business with us whenever and wherever they want.”

Saturn “has a different business model with retailers,” added Mike Devereux, GM’s executive director for digital marketing and customer-relationship management. “We’re trying to figure out which things we can streamline so dealers can be much more efficient in satisfying the customer.”

Jeremy Anwyl, CEO of Edmunds.com, said the pilot means Saturn “is pushing the envelope in terms of consumer shopping” online. “It’s pretty disjointed right now. There are a lot of logical things that dealers should have done that they haven’t done.”

At least one Saturn dealer welcomed news of the pilot. “Time is of the essence to consumers these days, so if you can give them things that save them more time, it certainly makes sense to go as far as the consumer wants to go,” said Tom Carpenter, owner of the Saturn franchise for metropolitan Columbus, Ohio. “But you’re not going to get the whole transaction online. We’ve already gone through that issue.”

Here to Stay
Saturn’s test could represent the furthest evolution of online auto shopping, an arena that first generated enthusiasm among OEMs more than a decade ago. Targeting the huge costs of traditional distribution through dealers, and tempted by the technological capability to interact with consumers directly, automakers began developing the Internet as a tool that might someday enable them to eliminate the middleman entirely. Around the same time, each of the Detroit Three launched initiatives to consolidate their dealer networks in various ways.

Both types of efforts to transform traditional distribution systems largely failed. GM, Ford and Chrysler have greatly rationalized their retail networks over the last several years, buying up, merging and otherwise squeezing out many hundreds of dealers. But their basic dependence on these independent businesspeople to move the sheet metal has remained unchanged.

Meanwhile, two big obstacles blocked OEMs from moving very far or very quickly into Internet retailing: the essential complexity of most transactions, which usually involve some sort of trade-in; and the significant political muscle that enabled dealers to protect state laws guaranteeing their roles as ultimate retailers of the industry’s wares.

As Carpenter noted, nowadays and for the foreseeable future, automakers have given up on efforts to end-run their dealers and instead have been focusing on helping them retail as effectively as possible. Online, that means creating connections that smoothly pass consumers from the research stage on manufacturers’ Web sites to dealer Web sites where they can begin the transaction phase.

“We want to deliver the best customer experience, and there are two front doors for that: the traditional way, literally through the front door (of a dealership), and the digital front door. Our ultimate goal is to make it easy for consumers to do business whenever and wherever they want.”

Internet Leader
Saturn and its dealers are a logical e-shopping vanguard for the industry and, indisputably, for GM. For one thing, part of Saturn’s founding DNA more than a quarter-century ago was GM’s determination to improve the traditional dealership experience as much as possible. So it pioneered “no-haggle” pricing, a principle Saturn still pursues, and established an emphasis on customer service that also persists to this day. And structurally, Saturn granted many fewer dealerships than GM’s older brands, each of which covered much wider territories.

Partly because Saturn has only 207 dealers with a total of 435 retail facilities across America, it already has gotten a jump on many other automotive brands in some important aspects of online retailing. All the dealers, for example, share the same Web site architect: Cobalt Group, a Seattle-based provider of Internet services to auto retailers.

“That means we have consistency in our sites from a functionality standpoint,” Thomson said. “Whatever we roll out, it’s a lot easier than dealing with 435 different types of sites. So the aptitude of our (dealers) from a digital perspective is pretty good.”

Having the same Internet platform “gives us a common look and feel, which definitely helps us maximize the online experience,” said Carpenter, the Columbus Saturn dealer.

Saturn also has been a leader in introducing new aspects online retailing. More than a year ago, for example, it became the first GM sales division to offer 24x7 live chat, around the same time BMW’s Mini and Toyota’s Scion brands did. And it has been a leader in experimenting with Internet marketing on cell phones and other mobile devices.

Taking the Next Step
Saturn’s pilot will be aimed at moving more functions of a vehicle transaction online and at integrating them into a sensible and convenient process. Essentially, explained Susan Walton, Saturn’s CRM and digital manager, “in today’s world the customer has the paperwork, and the deal jacket is maintained at the retailer. The functionality and process we’re building will allow for all of that documentation, and passing back and forth of the documentation, online in a secured space.”

A few Saturn dealers already are executing pieces of this vision on their own, Walton said. “But I don’t know that any OEM before us has figured out how to enable it. Because of the small network we have, we can become that enabler.”

For example, the way Thomson envisions the pilot, a customer will be able to research and secure financing completely online, whether the transaction involves an outright purchase or a vehicle lease, an incentive program or not. And an online consumer will be able to fill out a credit application online and submit it to dealership personnel.

One part of most transactions would be very difficult to move online — dealer assessment of the customer’s trade-in vehicle. Still, Saturn may experiment with some things in this trial “that will get us pretty close,” said Devereux. “If the person on the other end of the computer is honest about make, model, mileage and general condition” of the trade-in, the dealer can figure out most of “whether they’re going into equity or into a lease, and how you can get someone out of that vehicle.”

And Saturn may tinker with allowing customer and dealer to settle a final price online. “One major consumer complaint about the Internet is that you can’t get straight pricing,” Anwyl said. “But Saturn pricing is straightforward by definition. In theory at least, they’ll quote you a price on a new car without any aggravation at all, and that plays to the Internet. (Saturn’s) no-haggle philosophy is one reason they will find it easier than other car brands to do more online.”

But no matter how well the pilot might work, it can move Saturn dealers and consumers only so far toward consummation of a deal online. There will remain “practical things that have to happen at the retail facility,” Thomson said, including home-test drives.

And states’ franchise laws come into play as well. Alaska, for example, has laws governing auto retailing that are “among the most lenient,” Thomson said, because of the state’s dispersed population. In Louisiana, by contrast, “the state regulates the hardest, and says you have to sign the transaction papers within the actual physical plant of the dealership.”

In any event, Walton said, “We’re working hard to enable customers to do all of the necessary paperwork online, up to the point of picking up the keys. And that could be a game-changer.”

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