Land Rover’s SUV Is Banking On Net Results

Ford Motor Co.’s Land Rover unit is using its new Freelander small SUV to jump into Internet marketing in the U.S. in a big way.

The company will launch an Internet selling program Thursday in which computer-savvy customers can log on, configure the Freelander of their choice, submit the order directly to Land Rover, get a confirmation and be referred to their local dealer to complete the purchase--months before the official Dec. 1 on-sale date for the hot new mini-ute.

“We’re calling it the Freelander IPO, for initial public offering,” said Dean Evans, interactive e-commerce manager for Irvine-based Land Rover North America, a unit of Ford’s Premier Automotive Group.

The initiative marks the first time an auto maker has marketed an entire line of vehicles exclusively on the Net. Others, such as Volkswagen, have offered special Internet-only trim levels and colors.

The downsized Land Rover model has been a big seller in Europe and is expected to be the company’s top model in the U.S. too. It will come with a standard 175-horsepower V-6 engine, Land Rover off-road credentials, features such as traction and hill-descent control and a price tag that starts at less than $30,000.

The company expects Internet users to account for almost all of the first 3,000 Freelander sales in the U.S.--representing three months’ production--and would favor online buyers past the 3,000 mark if demand warrants, Evans said.

Analysts call the Land Rover initiative aggressive, but say the company is taking a risk.

“VW did this last year and got a lot of people to its Web site, but they had a problem training dealers and there was a lot of confusion,” said Jenna Pelaez, associate auto industry analyst with Jupiter Media Metrix in San Francisco.

“It is a great opportunity for Land Rover if they get it right and it is all smooth and easy for the consumer and the dealers are on board,” she said. “But if it is complicated for the buyer and doesn’t shorten the wait or make the purchase easier, it could really set things back.”

It’s not that the company doesn’t want customers going to its showrooms--each Internet sale must be completed at a Land Rover dealer--but rather that it hopes to capitalize on the Net savvy of its customer base.

Almost half of all car shoppers last year used the Internet for some degree of research before buying a new vehicle. The figure was much higher for Land Rover customers, about 67%, said George Peterson, president of AutoPacific Inc. marketing consultants in Tustin.

“Land Rover customers are affluent, relatively young and technology-oriented,” Peterson said. “You wouldn’t want to do a programs like this with Buick, but it certainly can work with Land Rover.”

Benefits to customers include the ability to order whatever combination of color, equipment and accessories they like. Those who order on the Internet also will be assigned a spot in the delivery queue and will receive a special key-chain tag that shows which of the first 3,000 Freelanders they bought.

*

There’s also a benefit or two for Land Rover.

It gets to hear from its customers exactly what they want in a transaction that isn’t filtered through a dealer--who might otherwise be trying to push unpopular colors or special equipment packages with higher profit margins.

And the company gets to control traffic to its dealers, ensuring that all get a fair share of Freelander buyers and that buyers, especially in remote areas, face better odds of finding the vehicle of their choice.

“This gives us a chance to combine the best of on- and offline car retailing,” Evans said. “The Internet portion gives customers a fair chance of getting in line for a Freelander and sets up a specific order number and delivery date for each vehicle. Then we refer the customer to the local retailer to confirm the order, and they are able to get acquainted with the dealers and experience how our dealers treat their customers.”

Customers still will have to haggle price. The Internet program will establish the manufacturer’s suggested retail price as the “ceiling price,” Evans said. But whatever Land Rover calls it, it is still a suggested price. He said the company has urged dealers not to gouge if demand exceeds supply. But they are free to charge whatever they can get, while customers are free to negotiate the best deal they can.

Sales will be limited by each retailer’s allocation. If the dealer gets an initial allotment of, say, five Freelanders and eight people from its geographic area place orders, the last three will receive a computer message indicating that the dealer is sold out. Then they will be prompted to go directly to that sold-out location for what Evans calls “further assistance.” That probably means for placement on an old-fashioned waiting list or toask the dealer buy an unsold Freelander from another retailer.

And yes, there will be some unsold Freelanders around.

Although Land Rover plans to sell that first three months (or more) of production via the Internet, there will be “a small non-Internet allocation” from the outset, Evans said. That’s so the occasional customer who isn’t computer-friendly or just doesn’t want to deal with an Internet transaction won’t be penalized.