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The Automotive Retail Revolution Is Well Under Way. Can Traditional Dealers Blaze A New Path?

The way cars have been bought and sold across the globe has not changed in decades. Sure, the internet arrived in the late 90s and provided consumers with improved levels of information and transparency, but the actual process of purchasing a car has not really changed significantly.  That is, until very recently. Two new industry entrants, Carvana and Tesla, and one traditional dealer group, Paragon, are pushing the industry to modernize like never before. 

In 2012, Ernie Garcia Jr. and two co-founders started Carvana as a subsidiary of DriveTime. Carvana set out with a simple mission: to change the way people buy cars by providing customers a car-buying solution that is fun, fast, fair and powered by technology. Carvana accomplishes this with a modern, transparent, online car buying experience and great customer support. Fast forward 7 years and Carvana is an independent public company with a market capitalization of $12BN (as of September 9, 2019) and is on target to sell 175,000 cars in one year, entirely online.  

Tesla started selling its Model S sedan, direct-to-consumer, primarily through its own website in 2011. Today, Tesla is outselling big brands like BMW, Mercedes-Benz, and Audi, with a 100% online selling model. Sure, Tesla has a great, innovative product to sell, but the relative ease of their purchase process is also a key ingredient of their success. 

Most traditional dealers have been dismissive of these new market entrants because they have done things the same way for so long with great financial success. In fact, when asked about Carvana and Tesla, most dealership executives focus on the “L” part of their P&Ls, but they shouldn’t overlook how revolutionary these companies have been or the impact they have had on consumer expectations. 

Luckily, there are many forward-looking dealerships who have taken inspiration from these initiatives and are embracing a modern retail experience. Take Paragon Honda and Paragon Acura in Queens, New York for example. Led by the vision and passion of hard charging Brian Benstock, the two Paragon stores have embraced the online revolution as much, if not more so, than any other dealership. Across both the sales and service sides of the business, Paragon has taken a customer focused approach to delivering a world-class experience. It makes a lot of sense when you consider the limited real estate they have, how scarce parking can be in Queens, and how challenging New York traffic always is. Instead of making customers come to Paragon, Paragon brings the cars to their customers. 

Brian and his team branded their new customer-driven platform “Paragon Direct.” Paragon Direct offers shoppers a frictionless online buying experience that puts the customer in total control of their shopping journey. Customers can square away the entire transaction without setting foot in Paragon’s dealerships, including home or workplace delivery. And, if the customer decides to come into the dealership to see and test drive the car, they can complete their transaction using the same expedited experience in the dealership on a large touch screen kiosk.

Similarly, Paragon Direct offers owners an at-home pickup and delivery option for service and repair customers. They will even pick up a customer’s car in the evening, service it overnight, and return it by the next morning. Talk about convenience!

Dealerships across the country can learn a lot from Brian and his team at Paragon.  Lucky for us all, Brian is not shy about sharing his beliefs with the industry at large. Constantly found on the speaking circuit, Brian shares his insatiable desire to stay ahead of the pack by testing new technologies and processes in an effort to wow his customers. As such, you will find Paragon partnering often with the likes of Google, Facebook, and other well-established technology companies, in order to not just meet, but stay ahead of customer expectations. At Roadster, we are proud to partner with Paragon, helping them on their journey to a frictionless future.

“We need to look outside of our business if we’re going to reinvent ourselves. We need to look at what customer service is like from the people that we’re doing business with. The clues are everywhere.” - Brian Benstock, Paragon

Paragon also recognized the need to dedicate resources toward this new way of doing business, tapping Julian Winfield as the Department Head of Paragon Direct. His primary mission is to spearhead Paragon’s retail transformation by leveraging technology to redefine processes. The push to go above and beyond in modern retail is paying big dividends as Paragon had a record-breaking August:

-Paragon Acura finished #1 in the world for new car sales, an increase of 52.9% over 2018, and serviced more cars in the month than they had ever serviced before.

-Paragon Honda set an all-time monthly sales record for Honda dealerships around the world with 813 new Hondas sold in August, a 19.7% increase over 2018. In addition, Paragon Honda sold 318 Certified Pre-Owned Hondas. Combining new and Certified Pre-Owned vehicles averages to 36 Hondas sold each day in August!

To achieve this level of success requires vision, execution, and a continued commitment, but it is something that every dealership is capable of if they can embrace the future in front of them.  Just 7 months ago, Brian said the following in an interview with CBT News:

“Dominance is what we’re after. I want our store to be the number one volume dealership of all brands in the world, frankly. I think that nothing less than that is going to stop us, stop me. I think that’s what we’re looking for. We have the density of population, right? The math works out. We have an incredible marketing machine that generates an incredibly high number of leads, so if we have the population, and we have the lead count, then there’s no reason that we can’t double that to the 10,000 plus units, the 20,000. We think we can do it over the next 24 months.” -Brian Benstock, Paragon

Brian and his team are well on their way to another record year. The Paragon story is just one of many success stories out there, but as an industry overall, we still have a long way to go. It is time to help each other move forward.

If you are at an inflection point and are ready to drive change but are unsure how to start, drop us a line. We are happy to share our learnings and best practices. At Roadster, we have developed a playbook to help dealerships prepare for and execute modern retailing. Like Brian, we are out there speaking and teaching courses across the industry. We are more than happy to help dealerships that are interested. Feel free to email me directly: rudi@roadster.com.

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