Dealerships , , , ,

WHO would have thought that paying rent in a massive UK shopping centre would become a viable alternative to buying media advertising to generate showroom traffic for a car dealership?

Yet, in the UK, a partnership between Hyundai UK and car-retailing disruptor, Rockar, is generating levels of traffic in one showroom that exceed all traffic in the rest of the Hyundai’s UK dealerships combined.

Rockar has merged an online backend with Apple Store-like car showrooms located in shopping centres. It displays six cars in-store which is significantly more than most car displays tried in the past at shopping centres in the UK, the United States and in Australia.

Rockar_Online

Many have experimented with car showrooms in shopping malls with mixed and mostly disappointing results. But the creator of Rockar seems to have found some tweaks to the shopping centre business model that are touching the right buttons with English car buyers.

The concept is also working for Hyundai with 94 per cent of Rockar Hyundai customers first-time Hyundai owners.

The essential difference is that Rockar does not actually sell a car to a customer. The customer buys the car online when and where they like. So it is the buyer who closes the sale.

There are no sales people as such.

There are people manning the showrooms (called Rockar Angels) but their role is to showcase the range to help buyers set their minds on a Hyundai and then help them choose the model and specifications that best suits their pockets and their driving needs.

The actual sale is made when the buyer goes online to the Rockar website. What is unique is that buyers can access the Rockar website to close their own deal from terminals located in smart displays in the showrooms. Or, alternatively, they can order in their own time from home or the office.

Hyundai_Rockar_4

The company says that 60 per cent of buyers who have left the store before ordering their car do so online later.

The price paid by the buyer is the price listed on the Rockar computer for that car at that time. The website lists all the actual cars in stock showing the selling price, the discount off RRP and the monthly payment at that price.

The Rockar website says the average saving per transaction is more than $5100.

Rockar founder Simon Dixon told GoAutoNews Premium in an exclusive interview: “We set the price at where we believe the market price is. This is not just the cash price but heavily focused on monthly finance pricing. We also focus on competitor brand pricing, (but) not on the same brands we represent as we are focused on brand conversion.”

So, at Rockar, there is no negotiation. There is no actual closing of a sale by staff. Nor do staff earn commissions. So there is no incentive to push buyers in the direction of cars Rockar wants moved. Presumably they achieve that by altering the discounts.

Mr Dixon said that Rockar takes stock from Hyundai in the conventional way but Rockar orders stock differently.

Hyundai_online

“Because we read our data on real demand, we can predict better what customers are buying rather than (on what has) been sold,” he said.

Rockar accepts trade-ins which are sent to auction.

“The customer (is given a value on) their trade-in as part of the buying process. We let them describe the condition. They then simply drop it off when they pick up their new car. We do around 45 per cent of sales with a trade-in,” Mr Dixon said.

Buyers can test drive cars which are parked at the shopping centres. The cars are fitted with GPS tracking and buyers are able to take the cars unescorted and try them out in their own time.

Finance is offered and the company says that 92 per cent of its customers choose Rockar’s finance plans.

Rockar also has a nearby service centre to one of its shopping centre outlets.

Mr Dixon says the customer is in control the whole time and Rockar does not release sales figures under an agreement with its first partner, Hyundai.

“We know that 94 per cent of our customers have never bought a Hyundai before.”

Nor do they focus on comparing the conversions they achieve from visitors to sales with conversion rates per visitor at conventional dealerships because the conventional dealership is a completely different business model.

With a car dealership, the customers are attracted to the showroom as a result of the marketing efforts by that dealer. So the dealership is the destination point that follows the marketing activity.

“Its customers have made a conscious decision to go there to buy a car,” Mr Dixon said. “There is probably a 75 per cent chance that people who visit a dealership will buy a vehicle.”

But where Rockar differs is that the huge amount of traffic that sees the shopping centre showrooms is, in fact, the marketing activity under this business model.

Hyundai_Rockar_3

“Rockar’s model is different because we take the destination point as the marketing point, not the other way around,” Mr Dixon said.

“People don’t necessarily go to a shopping mall to buy a car. The vast majority of would have never, ever walked into a Hyundai store before. The same goes for JLR.

“We know that 94 per cent of our customers have never bought a Hyundai before. It’s a massive conversion.”

Targeting its customers is done using “hotspot” maps marked with the density of sales. Rockar’s biggest density is within an 80 kilometre radius of the shopping centre, following the same pattern as the general shoppers.

Mr Dixon said Rockar leases shops within the malls, instead of appearing temporarily like a pop-up store.

“In all three of our stores, there isn’t one person who has previously worked in the car industry.”

“We operate quite differently. We take long leases. We don’t do pop-ups. Our models are permanent models just like other retailers in a shopping malls,” he said.

But he added: “It is more expensive than renting a space in a commercial area. The car dealers tend to be in the more commercial zones of the property areas which are less expensive than shopping centre malls, in terms of dollars per square metre.”

Mr Dixon said the whole process, compared with a traditional dealership, was different.

“The problem with the industry around the world is that it is very entrenched in a sales-controlled environment,” he said.

“That’s not where we see it going. Rockar gives power back to the customer.

“If you look at our staff you’ll see people who want to come into the industry and give it a shake. In all three of our stores, there isn’t one person who has previously worked in the car industry. They are all completely from outside the industry.”

He said Rockar markets to the customer, makes them feel at ease, shows them the way of purchasing the car, that there’s no pressure and that they can test drive from the shopping centre.

“None of our angels are on commissions or bonuses or have a target,” he said.

“So the first point is to market the brand and the second is to allow them to purchase as and when they want.

“They don’t even have to turn up at the store. About 60 per cent of sales are done online by the customer, mainly from their home.

“We have customers buying cars in the middle of the night, first thing in the morning – whenever. If you look at our lives now we do things whenever we want to. It’s all 24/7.”

Test drives of new models are available, though Rockar stipulates a minimum age of 25 years.

“You show us your driver’s license, book a time and you can take them out for your allocated slot, on your own,” Mr Dixon said.

Hyundai_Rockar_5
“All the cars are GPS tagged. That’s been really positive with younger people and females.

“It is also interesting that almost half of our customers buy a car without test driving, even when you make it as easy as we’ve done.

“I’d grown up believing everyone wants to drive the car before they buy it. Today’s brands and cars are so strong that there really isn’t a bad car.

“That mentality says that a new car will be better than the car they’re driving at the moment, which may be three or four years old.

“I think probably many have already read about the car and read the road tests by journalists and made their decisions based on that.”

The buying process is different and so is the age of the buyer. Mr Dixon said that the average age of a Hyundai buyer is 56 years, but “at Rockar, it’s 34 years”.

Mr Dixon says that 54 per cent of the company’s buyers are women.

“You can say it’s about the technology in the store but that’s not the reason,” he said. “Young people buying cars tell us it is the transparency of the car price which is appealing.

“It’s not that they are tech-savvy but because we can demonstrate the cost of the car and for once they don’t have to battle to find out what they can buy a car for.

“They don’t even like walking into a showroom in the first place because they feel intimidated, so there are a lot of people being converted.

“With Rockar, they’re not forced into closing the deal in the store – we don’t sit them down and serve them refreshments otherwise we would be a coffee shop for everyone.

“The traffic we see is incredible. We get 4000 people through the store on a Saturday. That’s huge traffic.”

“We don’t just see ourselves as a retailer, we see ourselves as an enabler in this industry.”

Rockar opens longer hours than any normal car dealership, keeping to the timetable of the rest of the shopping mall.

“It’s the same with our service centre,” Mr Dixon said.

“Customers can drop their cars at the mall and we take it away for servicing while they shop, or have something to eat or go to the movies.

“When they’re finished, the car is ready for them.

“It’s about turning the whole proposition on its head. It’s about putting everything where it’s most convenient for the customer.”

“Our next point is to try and look how we enable this change. We have kept this pretty quiet but we have spoken to one or two manufacturers about this so we don’t just see ourselves as a retailer but we see us as an enabler in this industry.

“The automobile retail industry is still successful but it’s not changing in line with the way our lives are changing.

“Perhaps that would concern me if I had a traditional business and saw something like Rockar coming and start shaking it up.

“There are less and less people visiting dealerships so why do we keep building them?”

“In the future, what do you do with all the real estate occupied by a traditional car dealership?

“There are less and less people visiting dealerships so why do we keep building them?

“There are almost signs telling dealers that people don’t want to go there. Around the world, business is turning around to bring it in line with customer’s’ expectations.”

Mr Dixon said he believed Rockar was an example of the great change that is coming to the industry. But it is only one change.

“There’s a big debate about (car) ownership,” he said.

“You use it, you don’t own it. It is quite a dramatic thing to change and has happened already.

“For example, you don’t have to own a vehicle you just have to use it. So we think the technology in financing is more about useage – bundle the car, fuel, servicing, insurance, registration and so on, all together and make it like a mobile phone contract. That’s the future.”

By John Mellor and Neil Dowling

Hyundai_Rockar_2


Jaguar Land Rover is Rockar convert

By Neil Dowling

THE success of Rockar, especially its ability of finding so many new buyers for the Hyundai brand, has convinced Jaguar Land Rover (JLR) to open a similar store at the Stratford Westfield shopping centre near Central London.

Rockar Jaguar Land Rover will be opened in September. A new service centre will also be opened a little more than a kilometre away.

Rockar founder Simon Dixon said JLR came to Rockar partially because he is an old friend of the managing director, Jeremy Hicks.

“I took this idea of Rockar to him before I launched the concept and he said that the idea was exactly what JLR’s research had shown was needed,” he said.

“I’m really, really excited about this. These are premium luxury brands and all our research says that there are a huge number of customers who are desperate for something new and different to be available online.”

JAGUAR-LAND-ROVER-AND-ROCKAR

Dealer Auction
AdTorque Edge