Call-A-Car, the innovative online motor vehicle buying tool launched by McCarthy Motor Holdings, is set to change the face of motor vehicle retailing.
For, whereas in the past a buyer would get into his car and drive to a dealership, the modern car buyer is increasingly turning towards the Internet for all his new and used vehicle needs.
According to Lourens Botha, managing director of McCarthy On-Line, the increasing effect of the Internet is being seen at
Call-A-Car each month. "There is absolutely no doubt that Call-A-Car`s customer base is shifting towards the web. In July 2000 Call-A-Car closed 90 Internet deals - by November last year this number had increased to 250. Currently, between 40 and 50% of all Call-A-Car deals are done on the Internet. This was less than 5% three years ago when we launched Call-A-Car," he reveals.
And the Internet buyer is also very different to his telephonic counterpart. "The closing ratio for Internet customers is much higher than with telephone customers. In December, the closing rate for Internet customers was 22% (versus 15% for telephone). In January it was 20% (Internet) versus 8,5% (telephone). Internet customers are more serious - if we can grow that customer base we will grow the profitability of McCarthy Call-A-Car," notes Botha.
A major challenge with Call-A-Car however is accessing cheaper vehicles. Call-A-Car`s statistics reveals that 23% of searches are in the below R30 000 category, 50% of searches are in the below R50 000 category and 86% are in the below R100 000 category. "To satisfy customers who are searching for quality vehicles in the under R30 000 category is however almost impossible. We are faced with the unusual situation of demand exceeding supply and we are seeing that the South African motorist is financially under pressure," Botha reports.
A major opportunity, on the other hand, is that of new car sales. During September 2000 McCarthy Call-A-Car focused on new vehicle sales for the first time. Since then, its new vehicle market has grown to 15% of monthly sales. "Significant opportunity exists within this area - we need to grow this area of our business. Naturally, we aim to grow new vehicle sales in conjunction with the manufacturers` existing franchised networks," says Botha.
Yet another significant opportunity is that of expanding the Call-A-Car dealer network through franchising. "We plan to franchise the concept in order to obtain coverage in areas where there are no McCarthy dealers. Whereas we are reasonably well represented in the main metros, we don`t have many dealers in the rural areas - and there is significant demand for Call-A-Car`s services in the outlying areas.
"We also need to franchise in order to meet demand. We deal with at least 3 000 prospective clients per month and we hold on average less than 3 000 cars in stock. This means that our closing ratio is below 25%, which isn`t acceptable," Botha comments.
Therefore, Call-A-Car has embarked on a programme of franchising, which is already yielding results (franchising has already contributed 81 deals in 6 months). "We are appointing franchised dealers in selected locations outside the main metros. We want complete franchise coverage in South Africa for Call-A-Car. This will extend our vehicle stock database (we are hoping to double our stock) and we will offer improved service quality by increasingly matching demand," the McCarthy On-Line MD explains.
Talking of service, Botha says that customer satisfaction will never be compromised. "Naturally, in order to do this, we have to put into place a network of dealers that operate according to defined service standards. We have already conducted a trial with 10 non-McCarthy dealers and this has proved most successful," he reports.
Given the development of the dealer network, expectations for Call-A-Car are immense. "Our medium-term goals include having a significant share of the total used dealer market of South Africa. It is estimated that 30 000 used vehicles are sold by dealers per month in this country and we are aiming to achieve a market share of 15% over the longer term (it`s currently about 11,5%)," says Brand Pretorius, chairman of McCarthy Motor Holdings.
Another medium-term goal is to increase Call-A-Car`s share of the total new vehicle market by working within the franchise system and network. " We want to increase service quality. We also want to improve our closing ratios. I have no doubt that we will do just this - we have implemented a new system, which is able to track a lead accurately and effectively. We have experimented with this system in Pretoria and our closing ratio is over 50% in that city," Pretorius reveals.
Finally, Call-A-Car would like to maximise the available technology platforms to give customers better access to Call-A-Car and higher satisfaction. These platforms include cellular telephones, the Internet, land lines and television commerce.
Call-A-Car is one of the jewels in the McCarthy crown - last year sales increased by over 55% (versus 1999). November 2000 was the best month ever for Call-A-Car, with a record 656 units sold during that month alone.
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