Last fall, Wayne Hileman learned about a pilot program designed to help dealers create car-sharing departments aimed at ride-sharing drivers, and he knew it was perfect for his used-car operations.
The marketing pitch: Need a vehicle and a down-payment?
Take advantage of “Lyft Your Down Payment” by becoming a driver for Lyft , renting your ride-sharing vehicle from Hileman and then using the money you earn as a down-payment on a vehicle.
For the record, consumers who rent vehicles under the program are neither obligated to drive for Lyft nor use the money they earn to buy a car.
But as of mid-May, after having started the pilot program in earnest in March, the owner of Majestic Automotive in Cinnaminson, N.J., and Northeast Car Connection in Philadelphia, had about 35 rented vehicles on the road he would have sent to an auction and attributed a least one vehicle sale per week to the pilot program created by DriveItAway, in cooperation with Lyft .
Though technology is still being perfected and demand for ride-sharing, car-sharing, autonomous vehicles and other forms of mobility are in their infancy, transportation as we know it is evolving, and dealers who are early adopters will have a competitive advantage, Hileman predicts.
“Do I expect to see driverless vehicles in my market in the next five years? No, I don’t; I believe car-sharing and ride-sharing will come before that,” said Hileman, who also operates, Kia, Chevrolet and Volkswagen dealerships in New Jersey and Pennsylvania. “I don’t know the statistics, but a lot of my son’s friends who are 20 years old don’t own cars; they don’t even have a driver’s license. “Will they need a car every once in a while? Absolutely. That’s where we’re going to fit in.”
Change is coming
It’s pretty well established that technology and service-based mobility innovations are gradually transforming how people and goods are transported now and will take on more urgency in not-sodistant future.
But how these changes will impact the retail auto business is anybody’s guess. That uncertainty is driving auto manufacturers, tech companies, dealers and dealership groups and others to form alliances, partnerships and programs they believe will help shape how the industry buys, sells and services vehicles in the coming years.
The National Independent Automobile Dealers Association wants to make sure its 17,000 dealer members — independents and those who operate stand-alone used-car operations in addition to new-car franchises — keep abreast of industry changes. That’s why the trade group named Lyft and DriveItAway as National Member Benefit Partners, said Scott Lilja, NIADA senior vice president, member services.
That means “we have endorsed them as an industry partner that is offering unique solutions/services that NIADA has found to be of value to our member dealers along with offering a unique discount to NIADA members,” Lilja said. DriveItAway founder and chief executive John Possumato is scheduled to conduct a workshop at NIADA’s convention June 18-21 in Orlando, Fla., to educate dealers about car-sharing, ride-sharing and subscription services.
The National Alliance of Buy Here, Pay Here Dealers will hold its conference concurrently in conjunction with NIADA. He will outline his DriveItAway program, which includes software, dealer training and driver insurance and explain Lyft Your Down Payment.
Cash flow and incremental business
Lilja said the DriveItAway/Lyft program can help dealers generate incremental cash flow and vehicle sales they might otherwise miss. And just as importantly, it can be a pathway to the emerging mobility market.
“In terms of mobility and subscription as a service, it gets them thinking about that market,” Lilja said. “And it puts them in a mindset where they have to fine-tune their business model a little bit to meet these new requirements within that field and build relationships with Lyft and DriveItAway that they otherwise might not secure.”
Possumato said his company’s mission is to enable dealer-based shared mobility. But most profitable for dealers is to operate used-vehicle, car-sharing fleets for ride-sharing drivers and branch out into other forms of retail car-sharing later.
Dealers administer the program from their desktops, but for consumers it’s all app based, he said.
“They’ve already got vehicles on their lots that they can roll into this program,” Possumato said. “It requires little additional activity from personnel, and we charge a small revenue share.”
Yury Kaganov — who owns Empire Motor Sales, a used- car store in Philadelphia and RideSafely.com, an online operation that sells salvage vehicles — was scheduled to go live with DriveItAway in June.
He plans to support the program with his own online venture, MyDealerOnline.com, which allows dealers to post on their consumer-facing websites vehicles listed for sale on wholesale sites.
His goal is to maintain a virtual showroom along with his physical location and acquire vehicles only after he has a potential buyer. He believes consumers will want 2- to 3-year-old cars such as the Hyundai Elantra, Honda Accord, Toyota Camry and Kia Sorrento that typically have some of their new-vehicle warranty intact. He can have vehicles on his lot within three days in many cases, he said.
“Think about the money investment,” said Kaganov. “I don’t need to invest money in the car up-front; I don’t need to spend money on floor planning; I don’t need to have the real estate holding costs.”
He agrees that getting in on the ground floor of car-sharing gives independent dealers like himself an advantage.
“If you’re not going to try new things, then you’re going to miss out on the opportunities,” he said.