SANTA MONICA, Calif. — For generations, the auto dealer has been the primary avenue for carmakers to sell vehicles to consumers.
But technology is rapidly changing that equation.
Consumers no longer depend on dealers to learn about cars, and automakers are trying to sell more directly to consumers — despite the varying restrictions in most states on manufacturers’ owning or operating dealerships.
And the pace of that change is only accelerating.
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Last month, a dozen teams, including several car dealers, honed and presented their ideas for better ways to sell cars at a three-day competition called Hackomotive and sponsored by Edmunds.com, a car-buying site that provides industry research.
“We’re seeing this massive shift in how people shop, looking for answers in real time,” said Nick Gorton, co-founder of the Seattle-based Carcode.me, which won the contest’s $20,000 grand prize at the event, held at the Edmunds headquarters in Santa Monica. “The rise of the smartphone is particularly disruptive.”
The company won for a new service called Carcode SMS that allows car shoppers to communicate by text message with dealers through an app that dealerships can use to respond to inquiries.
Gorton, who has worked at car dealerships, including his family’s two Chrysler dealerships in Michigan, was one of several car sellers-turned-entrepreneurs at the event.
There’s an appetite for overhauling the traditional model, event organizers said, with 68 teams applying to compete.
More than half of the competitors traveled to Santa Monica from cities including New York, Atlanta and Houston.
Changing the buying model “is so overdue,” said Holly Dudley, head of enterprise portfolio and project management at Prosum Technology Services, who was a judge at the competition.
Several projects stretched the boundaries of the online sales process, allowing buyers and sellers to connect more easily and even scheduling test drives without the seller needing to be present.
That business, called Carvoyant, lets shoppers subscribe to a monthly service and, after a background check, receive a lockbox code to obtain keys to any car they would like to drive.
A device connected to the car’s data port lets its owner monitor the location and speed remotely.
“There are elements of the process that are ripe for disruption,” said Avi Steinlauf, chief executive at Edmunds.
These include the availability of information on a vehicle’s price and history, the way test drives are scheduled, and the automation of financing and registration, he said.
Edmunds plans to help or join some of the teams to develop ideas after the contest, Steinlauf said.