Whole town’s talking about how Tesla may doom dealerships as ‘Webb boys’ make $20 million showroom bet
Brad Vanderploeg, left, sales and leasing consultant at the Packey Webb Ford dealership in Downers Grove, explains features of a new Ford truck to Wayne Maples, 53, center, and Blake Young, 55, after they purchased it on March 8, 2019. (Zbigniew Bzdak/Chicago Tribune)Robert ChannickContact ReporterChicago Tribune
Packey Webb Ford, a 57-year-old Downers Grove car dealer with the oldest of old-school jingles — the impossible-to-shake “The Whole Town’s Talking About the Webb Boys” — has bet more than $20 million on what it hopes will be the dealership of the future.
With car shopping migrating online and dealerships looking like the next bricks-and-mortar retailer poised to fall, Packey Webb built a gleaming 54,000-square-foot facility on the 10-acre site of a former junkyard along Ogden Avenue in the west suburb.
Opened in late 2017, the dealership features the usual floor-to-ceiling windows with panoramic views — and a surprisingly small showroom.
The service area, however, is a different story.
“You could land an airplane in here,” said Webb Ford sales manager Kevin Schmieder, gesturing to the 32 bays lined up to accommodate what has become the dealership’s undisputed profit center.
“If there are no dealers, you’re still going to have to have these cars serviced somewhere,” said John Webb, 52, a partner in the dealership started by his father, Patrick “Packey” Webb. “That’s where the future is going to be.”
Webb Ford has already outlasted many of Chicago’s plaid-jacketed pitchmen from a bygone era, legends such as Harry Schmerler, “Your Singing Ford Dealer,” and Celozzi-Ettleson, “Where You Always Save More Money.”
But surviving in the digital age will take more than a good slogan.
When Tesla recently announced it was shifting all sales online and winding down its stores, the electric vehicle manufacturer sent shock waves through the auto industry, signaling perhaps the beginning of the end for your friendly local car dealer.
No more low-budget TV commercials, no more kicking the tires, no more giant inflatable tube men beckoning from lots with unbeatable deals.
Touting cost savings and consumer preference, Tesla closed 10 percent of its 100-plus stores, including two of five in the Chicago area, before putting the brakes on additional downsizing.
Last year, 4 out of 5 buyers who ordered the Model 3 — Tesla’s lowest priced car — bought it online, without taking a test drive, the company said. And it’s betting that consumers will take the digital plunge on a new crossover SUV, the Model Y, which was unveiled Thursday and will start to be shipped next year.
“Customers are becoming increasingly comfortable making purchases online, and that is especially true for Tesla,” CEO Elon Musk said in a Feb. 28 email to employees.
A Tesla dealership in Westmont on March 8, 2019. (Zbigniew Bzdak/Chicago Tribune)
While Tesla may be ahead of the curve, the bold move online has fueled broader industry speculation that auto dealers could soon join the growing list of traditional retailers — from booksellers to mattress stores — vanquished by a mouse click.
“Don’t count on it,” said Michelle Krebs, a Detroit-based analyst for Autotrader. “I don’t see everybody going to online car sales tomorrow.”
The entrenched interests of the nearly 17,000 new car dealers across the U.S., whose $1 trillion in annual sales are protected by state laws and franchise agreements with manufacturers, will no doubt be hard to bypass.
In Illinois, 713 new car dealers generated $38.3 billion in sales in 2017, according to the National Automobile Dealers Association.
Dealerships, whose ranks have been declining in recent years, are defending their turf against Tesla’s move online, with the Illinois Automobile Dealers Association among several state trade groups considering legal action to challenge whether manufacturers can sell direct to consumers, according to its president, Pete Sander.
Even before Tesla’s recent announcement, car dealers have waged a pitched battle in statehouses across the nation — with some success — to prevent Tesla from bypassing franchise laws and selling directly to consumers.
But with much of the car buying process already merging onto the information superhighway, Sander acknowledged dealerships will need to adapt to survive.
“I don’t think we’ll ever be able to stop online sales,” Sander said.
Armed with smartphone apps, a growing number of buyers research, select, price and even locate their cars online before setting foot in a showroom, reducing both sales margins on new cars and time spent at the dealership.
In 2017, franchised dealers sold a near-record 17.1 million new vehicles, but the shrinking margins accounted for only about a fourth of gross profit, according to the National Automobile Dealers Association. Meanwhile, the smaller service and parts business brought in nearly half of dealership profits.
“The economics of the dealerships are becoming more and more difficult,” Krebs said. “One of the reasons dealers are beefing up service is because there’s not a lot of money in new car sales.”
Jesus Pinto works on the cars at service department at Packey Webb Ford dealership in Downers Grove on March 8, 2019. Packey Webb Ford, a 57-year-old family-owned dealership, just built a new $20 million showroom and service facility. (Zbigniew Bzdak/Chicago Tribune)
Started in 1962, Packey Webb Ford has moved from its inaugural Glen Ellyn home to Wheaton and then a previous Downers Grove location as Ford consolidated its franchise dealer network over the years. The dealership has survived wrenching changes in the auto industry, with its earworm jingle — a take on “The Jones Boy,” a jazzy 1954 hit by The Mills Brothers — still in heavy commercial rotation long after other high-profile Chicago dealers have been silenced.
Car buyers of a certain age probably can’t shed the memory of Celozzi-Ettleson Chevrolet in Elmhurst, whose odd couple owners ended every TV commercial staring stiffly into the camera, holding a fistful of dollars and chanting their slogan, “Where you always save more money.”
Then there was Harry Schmerler, “Your Singing Ford Dealer,” crooning “Rock-a-bye your baby” to entice customers to his showroom in Elk Grove Village; ubiquitous pitchman Linn Burton hawking cars during the late movie for Chicago dealer Bert Weinman, “Your TV Ford Man,” and faux newsboy Timmy endlessly screaming “Extra! Extra!” on behalf of Long Chevrolet in Elmhurst.
For a new generation of online car buyers, though, that hard sell often falls on deaf ears.
Brad Vanderploeg, left, sales and leasing consultant at Packey Webb Ford delivers a new Ford truck to Wayne Maples, 53, right, and Blake Young, 55, after they purchased it on March 8, 2019. (Zbigniew Bzdak/Chicago Tribune)
T. Wayne Maples, 53, a medical software consultant who lives on the North Side of Chicago with his longtime partner, Blake Young, 55, never heard of Webb Ford, or its iconic jingle, before buying a new 2019 Explorer SUV there earlier this month.
The couple, who moved to Chicago about a year ago from Fort Smith, Ark., located and priced the vehicle they wanted on the CarGurus app — an advertising vehicle used by Webb Ford — prearranged financing, took an Uber to Downers Grove and closed the deal without haggling.
“It took longer to get here than it has to do the paperwork,” Maples said.
Both said they would have happily completed the deal entirely online.
“The test drive was really a formality,” Young said. “We pretty much wanted to buy it from what we knew online.”
The shift to online is taking place in the used car market as well. Carvana, a publicly traded Phoenix-based company founded in 2012, allows customers to browse, finance and buy used vehicles using a mobile app, with next-day delivery in more than 100 markets, including Chicago.
In lieu of a test drive, buyers have seven days to return the cars, a policy adopted by Tesla when it announced its online sales transformation last month.
Appearing on CNBC recently, Carvana CEO Ernie Garcia said returns happen less than 10 percent of the time, costing the company a couple of hundred dollars — far less than the fixed costs of a running a dealership to give customers a test drive.
“We think it’s a pretty good trade,” Garcia said.
Other automakers have toyed with online sales of new cars, including Ford, which launched a program last year allowing consumers to do everything but close the deal before picking up their car at a dealership.
A Ford spokesman did not respond to a request for comment on the progress of the program, but Webb said his dealership has not received a single order to date.
No matter how much of the car shopping experience eventually moves online, Webb remains skeptical customers could ever become comfortable with a web-only purchase.
“I still think they want to drive it, smell it, kick the tires at least once before they take delivery,” Webb said.
And in any case, with his eight-figure bet on the future, Webb is already adapting.
“I don’t see the dealerships going away,” he said. “You might not need as many showrooms, but you’re still going to need service centers.”