DETROIT (Reuters) - A new company hopes to make the car-buying process easier for consumers and more efficient for dealers by bringing cars to buyers for test drives, avoiding the need to spend hours at a dealership.
With car sales people ranked below members of Congress in trustworthiness in a Gallup poll last December and many buyers shopping online before heading to dealer lots for a test drive -- and the accompanying sales pitch -- the firm’s founder thinks he’s targeted a sweet spot.
So do his financial backers, which include a General Motors (GM.N) former chief executive and an auto dealer who previously owned the NFL’s Minnesota Vikings.
Tred, which officially launches in the Seattle area on Wednesday, will deliver almost any vehicle to a potential buyer for $19 a car. Dealers will pay the start-up an undisclosed amount for each test drive.
The plan is eventually to roll the service out in other densely populated cities such as New York, Los Angeles and San Francisco, Tred Chief Executive and founder Grant Feek said.
“I always felt there should be a better experience, a better way to buy,” he said in a telephone interview.
Tred, launched in January 2012, will initially work with about 30 dealers in the Seattle area representing nearly all brands.
Tred raised $100,000 in a first round of financing from a group that included former GM CEO Rick Wagoner, whom Feek, 32, met while Wagoner was speaking to Feek and his classmates at Harvard Business School.
Last fall, the Seattle-based company raised another $1.7 million from several private equity firms, including Fraser McCombs Capital. The firm’s equity pool includes money from the family of Red McCombs, who owns eight dealerships in San Antonio and used to own the Vikings as well as the NBA’s San Antonio Spurs.
Tony Rimas, a principal with Fraser McCombs, Tred’s largest shareholder, said the new service is meant to improve the sales rate at dealers. “A customer asking for a car to be brought to their house is in my opinion converted from a shopper to a buyer,” he said.
The online service will allow consumers to set up test drives of competing vehicles, which will be delivered by Tred employees not associated with the dealers providing the cars, Feek said.
The employee rides along on the test drive and provides a packet of information that includes a checklist to help reduce the time spent in a dealer’s showroom to one to two hours from the national average of more than four, he said.
Tred also supplies a report with the vehicle’s suggested retail price, prices on websites such as those of Kelley Blue Book and TrueCar, as well as the no-haggle price from the dealer supplying the vehicle.
Editing by Dan Grebler