SANTA MONICA, Calif. — For generations, the auto dealer has been the primary avenue for carmakers to sell vehicles to consumers.
But technology is rapidly changing that equation. Consumers no longer depend on dealers to learn about cars, and automakers are trying to sell more directly to consumers, despite the varying restrictions in most states on manufacturers owning or operating dealerships.
The pace of change is only accelerating. Last month, a dozen teams, including several car dealers, presented their ideas for better ways to sell cars at a three-day competition called Hackomotive, sponsored by Edmunds.com, a car-buying site that provides industry research.
“We’re seeing this massive shift in how people shop, looking for answers in real time,” said Nick Gorton, cofounder of Seattle-based Carcode.me, which won the contest’s $20,000 grand prize at the event, held in Santa Monica at the Edmunds headquarters. “The rise of the smartphone is particularly disruptive.”
The company won for a new service called Carcode SMS, which allows car shoppers to communicate by text message with dealers through an app that dealerships can use to respond to inquiries.
Gorton, who has worked at car dealerships, including his family’s two Chrysler dealerships in Michigan, was one of several car sellers-turned-entrepreneurs at the event.
There is an appetite for overhauling the traditional model, event organizers said, with 68 teams applying to compete. More than half the competitors traveled to Santa Monica from cities including New York, Atlanta, and Houston. Changing the buying model “is so overdue,” said Holly Dudley, head of enterprise portfolio and project management at Prosum Technology Services, who was a judge at the competition.
Several projects stretched the boundaries of the online sales process, allowing buyers and sellers to connect more easily and even scheduling test drives without the seller needing to be present. That business, called Carvoyant, lets shoppers subscribe to a monthly service and, after a background check, receive a lockbox code to obtain keys to any car they would like to drive. A device connected to the car’s data port lets its owner remotely monitor the location and speed.
“There are elements of the process that are ripe for disruption,” said Avi Steinlauf, chief executive at Edmunds. These include the availability of information on a vehicle’s price and history, the way test drives are scheduled, and the automation of financing and registration, he said.
Edmunds plans to help or join with some of the teams to develop their ideas after the competition, Steinlauf said.
Tim Kelly, a dealer from Chattanooga, Tenn., and his partner presented a website called Carclips.com that is intended to alleviate some of the challenges he faces selling cars at his own dealership. Carclips adds urgency to the shopping process, Kelly said, by combining eBay’s auction style with PayPal’s reliability in verifying the vehicle title and funds.
“It addresses the lack of urgency in the business, where someone on the lot goes, ‘I’ll think about it,’ and the dealer either has to push or let it go,” he said.
But instead of creating a listing online, sellers would put a sticker in the car window. Potential buyers could scan the sticker using their smartphone for more information.
It remains to be seen whether any of the projects would encounter legal obstacles in disrupting the traditional dealer network.