Reporter Amy Wilson visits One Sonic-One Experience in Charlotte
CHARLOTTE, N.C. -- Some of my past car purchases were chock-full of the annoyances car buyers complain about: long back-and-forth dickering, loads of paperwork and even one condescending lesson in how to fill out the manufacturer's customer satisfaction survey -- top marks across the board, of course.
Those prior transactions are a striking contrast to my most recent "purchase," which involved one sales rep, an iPad, 31 minutes and just a couple of minor technical glitches.
Full disclosure: I didn't actually buy the vehicle, a gray 2015 Toyota RAV4. I was testing Sonic Automotive Inc.'s new customer experience initiative which is now live at Town and Country Toyota here. Dubbed One Sonic-One Experience, the approach is spreading this month to four other stores in the Charlotte market. Sonic leaders expect to roll it out at the rest of the company's 101 stores in 2015 and 2016.
The Toyota store launch, which began in July, has gone "surprisingly well," Sonic President Scott Smith says. "It's our petri dish, so we're learning a lot as far as how the technology functions practically, how people want to see the information."
When the $250 million-plus initiative is fully implemented, Sonic is aiming for completion of a vehicle purchase in 45 minutes or less with no dickering on price under the guidance of a single iPad-armed employee taking care of the customer from beginning to end. Sonic's bet: The approach will eliminate the pain points typically felt by car buyers and thereby make the company's stores a preferred place to shop.
Experience guide
I show up at the store on a late-September Thursday morning. I'm not a mystery shopper; the company knows I'm coming.
D'Andre Jackson is my guest experience guide, Sonic's name for sales reps. Jackson gives me a quick tour, showing me several kiosks focused on subjects such as pricing, vehicle customization and finance and insurance products. A prominent feature near the center of the showroom is Sonic's imagine bar, an area where customers can research purchases using iPads and a giant 72-inch square screen.
I tell Jackson I'm interested in a new RAV4 and have a trade-in (actually my Volkswagen Jetta rental car). On Jackson's iPad, we study the store's inventory. I zero in on a silver 2015 RAV4.
With my pick firm, we head outside to evaluate my trade. Jackson snaps pictures of the Jetta, collects its mileage and scans its VIN using in-house software. All the while, he asks me questions about my driving habits and whether I have children. The answers to such lifestyle questions will be used later to suggest add-on F&I products.
The Jetta info is going to Sonic's centralized trade center, which will use its own data and third-party information to generate a trade-in offer. After a three-minute evaluation drive, we head back into the dealership to start my deal.
Town and Country Toyota has experienced both sales growth and some glitches since the initiative launched. But by now, the store is performing beyond expectations, says Jeff Dyke, Sonic executive vice president of operations and chief overseer of the rollout.
No-haggle pricing was locked down on Aug. 1. New-car volume has doubled, and the store's share of the local market jumped from less than 14 percent before the launch to more than 20 percent in September. With lighter inventory going into October, share retreated slightly to 18 to 19 percent, Dyke says.
Because of the added traffic, the store has hired 16 new sales reps since the launch with more to come. But over time, Sonic executives think they'll be able to use attrition to reduce overall head count at the stores.
In July, gross profits per new vehicle dropped about $200, Dyke said, but that improved to a $50 decline in August and September as inventory mix improved.
500 Glitches
The glitches were expected, Dyke says. "We've worked out 500 glitches. There's little ones here and there, but we're really smoothing out," he says. "The bad weather is behind us."
Some early problems:
• Inventory and vehicle price did not show up correctly in the system.
• The system didn't calculate leases properly.
• The timer for how long it takes to finish a deal didn't start at the right moment.
• The system didn't properly pull electronic credit reports.
Programmers are on hand at the store to tackle the problems. And when a glitch creates a problem for a customer, Dyke has armed the store with a stack of vouchers worth $5,000 total. A store manager can give a customer a voucher valued at up to $500. Seven customers have received them since Aug. 1 for problems such as long waits when the store's Wi-Fi system went down or its vehicle detail area got backed up. The dealership is reconfiguring its delivery area, adding a car wash.
Dyke says he brought on document specialists to handle customer paperwork too late, during the last week of September. A couple of experienced F&I managers had quit, and remaining staffers were overwhelmed. F&I sales suffered but rebounded after the doc specialists were fully trained, Dyke says. He's hiring doc specialists early for future rollouts at other stores.
The doc specialists were still getting up to speed for my deal. But before we get to the paperwork -- yes, there are still some actual paper forms -- Jackson reviews Sonic's offer for the Jetta. It is slightly less than the estimates from third-party vendors that Sonic's appraisal software displays next to its own number.
Pick again
When that happens and a customer asks whether Sonic can do better, Jackson says he can go to a sales manager and ask to up the offer by as much as $500. But the central trade office must approve it. If not, even if the customer threatens to take the trade down the street and offer it to, say, CarMax Inc., "we take that chance," says Jackson, a 22-year-old finishing his bachelor's degree in kinesiology. He made $19,000 a year at Best Buy before joining Sonic in June. At the time, he was told he should be able to triple that amount selling cars. He sold 18 cars in August.
I accept the trade offer, and we move to the deal builder tool on Jackson's iPad. After starting to work on loan terms, we find out the silver RAV4 is now marked as sold.
Jackson says the system had been experiencing a few bugs that day and the day before, such as VIN numbers not matching properly. He says the store gets so many cars in and they turn so fast that sometimes they show up on the virtual lot and a customer can select it, but the car is not really available.
Time to pick another car and start the clock again. I quickly select a similar gray RAV4.
That glitch erased 28 minutes of work, but no biggie. We go back to the deal builder and work on loan terms.
A few F&I products are suggested to me, including an extended-service contract and a vehicle etch product. I say no but tell Jackson I do want tire and wheel coverage -- I've had bad luck with potholes and nails. We add it to the deal. Dyke later tells me that answers to lifestyle questions and demographic information determine the software's initial F&I product suggestions.
When it's time to finish the deal, the paperwork comes out. Though the process is mostly electronic, the typical buyer still has to sign six or seven pieces of paper, and I'm no different.
By early October, the number of paper documents had dropped to three for a typical deal, Sonic told me later. In November, another one, the paper contract, will go away when all lenders finish approvals of electronic contracts, store General Manager Sanjay Prakash says.
While my deal took 31 minutes to complete, it was probably speeded up by the fact that I'd already gone over some of the options on terms and lenders during the first aborted attempt to buy the silver RAV4. Then again, it may have been slowed by my many questions. As a reporter, I grill Jackson and others about what's going on in ways a regular buyer wouldn't.
Sonic measures transaction time from the moment the iPad's deal builder app is opened until the vehicle has been readied by the detail team. The Saturday before my visit, the average deal took 43 minutes. By Saturday, Oct. 25, that had dropped to 38.5 minutes. Some go much faster, said Dyke, recalling one completed in 15 minutes on a busy Saturday.
If my RAV4 transaction had been real, I would have been the store's 12th buyer that day. One of the real buyers was a couple who'd come all the way from Texas.
As of last week, the store's plan is 95 percent rolled out, Prakash said. He's still waiting for a new photo booth, for the imagine bar screen to be connected to the store's new website and for his redesigned delivery rooms to be completed.
With replenished inventory of 330 cars going into the new month, he predicted, "November is going to be crazy."
Original article by Amy Wilson at Automotive News