U.S. Car Dealers Speed Into Online Sales Market

But many eclipsed by dealer/maker megasites

The number of U.S. car dealers with Web sites has grown from 74% to 83% in the past year, according to a survey of 2,500 dealers released Aug. 25 by the National Automobile Dealers Association (NADA).

But even as these dealers report increased sales from their online storefronts, analysts said more technically sophisticated dot-com initiatives jointly spearheaded in the past few weeks by automakers and dealers may eclipse dealers' solo efforts.

Until recently, automakers and dealers ran disparate Internet initiatives in a battle to control access to customers. But as online vehicle brokers have gained credibility with consumers, unprecedented joint efforts have sprung up between car manufacturers and their retail dealer channels, analysts said.

Last week, Ford Motor Co. unveiled FordDirect.com, an online company owned 80% by dealers and 20% by the Dearborn, Mich.-based automaker. Detroit-based General Motors Corp. announced a similar dot-com joint venture, splitting the equity stake down the middle with participating dealers.

Both dot-com ventures plan to build megasites where consumers can configure, price and purchase vehicles through participating dealers. Ford and GM expect thousands of dealers to participate in and help fund the dot-com initiative.

A comprehensive megasite with sophisticated functionality that's backed by the deep pockets of automakers may eclipse individually created dealer Web sites, said Adam Weiner, an analyst at Gomez Advisors Inc. in Lincoln, Mass. "Most dealer sites are more marketing- and promotions-oriented than transactional, and they'll stay that way," he said. "By the time they spend the time and money to improve their sites, the manufacturers will have already built the type of sites consumers really want."

Still, the survey conducted by NADA, a nonprofit dealer lobbying, mediation and marketing service organization in McLean, Va., found that 98% of dealers' Web sites include sophisticated interactive content, such as that allowing car shoppers to send e-mail, order vehicles or obtain financing online. For example, 82% give car shoppers access to vehicle inventories, 56% provide the manufacturer's suggested retail price on vehicles and 52% give car owners the ability to schedule maintenance appointments online.

Rob Robas, the parts manager at Raleigh, N.C.-based Thompson Cadillac-Oldsmobile Inc., said his company gets some vehicle and repair services sales through its Web site but that he isn't convinced it's worth the cost of maintaining the Web site.

"We have worked with a lot of providers to get [our Web site] working properly, and we're not sure whether we're getting a return on our investment," he said.

The NADA survey also showed early investments in Web sites paid off for dealers. Dealerships that have operated Web sites since 1995 generate an average of 13 new vehicle sales per month on their sites; dealers that launched Web sites last year generate an average of five sales per month. Dealers sell 750 cars per year on average at an average of $24,450 each, NADA officials said.

Copyright © 2000 IDG Communications, Inc.

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