When Asbury Automotive Group announced in July that it was discontinuing the Q auto standalone used-car store business, leadership emphasized this did not mean Asbury was scaling back on used cars.
Not by a long shot.
“With our investments in digital technologies and lead management initiatives, we have reassessed our brick-and-mortar investment in Q auto and made the decision to exit the remaining two locations,” chief operating officer David Hult said in a late-July conference call on Asbury’s second-quarter results.
“With this decision, we are not decreasing our emphasis on used-vehicle sales,” Hult said. “Rather, we are focusing our investments and resources on alternative routes to market that we believe will provide a superior return.
“Our attention to the used-car business is evident by the more-than-500-basis-point increase in our used-to-new ratio this quarter,” he said, referring to Q2.
Three months later, Asbury has been able to take some of the focus that had been on Q auto and shift it elsewhere, including the used-car operations of its core stores and the retailer’s digital processes.
“Naturally when we have a project like that on the side, it is a distraction for some of our leadership team to focus on that business,”Hult said in Tuesday’s third-quarter earnings call. “And there’s also cooperation with our stores from a shared-inventory standpoint.
“Now that the focus is back on our core stores and our core business both from a leadership perspective and keeping the units within the stores, we see this as opportunity to, again, increase our throughput with our current stores,” he said.
Asbury president and chief executive officer Craig Monaghan, whom Hult will succeed on Jan. 1, said beyond the in-store talent, Asbury’s technology team — particularly its digital department — had been putting many hours into Q auto.
Now, “that energy has been refocused and redirected to how we can compete tomorrow in the digital world,” Monaghan said.
“We’ll share more with you in the future about that, but that’s really where that initiative has refocused, on our approach to digital transactions in the future,” Monaghan said during the call.
As it stands, between 4 percent and 5 percent of Asbury’s sales are done completely online, Hult said.
“We’re continuing to see progression in that area. It is opening up our channels in a lot of respects, but again it’s still to push the traffic back down to the store and (do) the transaction there, whether we’re delivering it at the store or delivering it at the people’s homes,” he said. “Progression has been solid the last few months and it continues to grow in that area.”
Earlier in the call, Hult was asked, given the Q auto shutdown, how Asbury was differentiating itself from its peers when it comes to its digital strategy.
Hult touched on the retailer’s previously discussed omni-channel approach, then noted: “We’re really focused on creating that transaction online, really getting consistent with our processes there and increasing sales that way. Our investment continues. We’re pleased with what we see so far, and see that as a core strength for us. Our goal, instead of creating more expense in brick and mortar, is to really create larger throughput through our stores, with centrally assisting the stores digitally and enhancing the transactions online.”