Auto Dealers Hit the Road

Published: 7 November 1999 y., Sunday
In recent months, CarsDirect started selling straight to consumers, and Priceline.com added cars to its reverse-auction lineup. And on Monday, the latest site jockeying for position will enter the race, OpenAuto.com, promising to let buyers name their own price. But despite the growing traffic, a recent study raises questions about whether buyers are actually saving any money by avoiding the notoriously heavy-handed car sales force. Buyers who go through Web sites that lead them to dealers or that broker a deal for them end up paying more than would have had they gone straight to the dealer, according to a recent study by CNW Marketing/Research. Surveying 1.1 million car buyers, the firm found that buyers typically paid 6.5 percent more for a vehicle bought from an online broker than if they had gone to a dealer. An Autobytel executive questioned CNW_s study and said the site saves dealers about $1,300 per car in marketing and personnel costs and is able to pass those savings on to customers. Prices at CarsDirect are lower than most dealer retail prices, said CEO Scott Painter. The company sets its prices in the lowest 10 percentile of where dealers have priced theirs in the past month, according to Painter. "If we can_t find a car at the right price, we lose money," he said, adding that the company_s goal is 1 percent profit on each sale. Bid sites such as OpenAuto and Priceline hope to sidestep the question over whether buyers get the lowest price, by letting buyers specify the price they want to pay. If a sale goes through, dealers pay OpenAuto.com $150 per vehicle, while buyers pay no service fee. At Priceline.com, buyers pay the site a $50 fee. With OpenAuto.com, buyers can choose whether they want to finance through the site_s partner, LendingTree.com, through the dealership or through a third party. Priceline doesn_t handle financing, but CarsDirect and Autobytel do. OpenAuto.com also offers insurance through QuickenInsurance, car reviews from New Car Test Drive and information from Kelley Blue Book and MapQuest.com. Meanwhile, manufacturers are jumping in. Ford has invested in Microsoft_s CarPoint, which connects buyers to local dealers and launched in September. The company_s DealerPoint interface is even being distributed by Ford and Honda to their dealers. Ford has another investment in Carclub.com. Dealers are also getting into the online act; more and more of them are selling through their own online sites.
Copying, publishing, announcing any information from the News.lt portal without written permission of News.lt editorial office is prohibited.

Facebook Comments

New comment


Captcha

Associated articles

The most popular articles

Many countries, one market

New rules for the EU's single market will make it easier to live and do business anywhere in Europe. more »

EU budget review – MEPs welcome new ideas but miss real revision

MEPs were disappointed that the Commission's EU budget review document had not sought the radical revision that the EU needs, they told Budgets Commissioner Janusz Lewandowski in a Policy Challenges Committee debate on Thursday. more »

The European Commission grants € 9.5 million to support the electoral process in the Central African Republic

On 25 October, the Commission adopted the decision to financially support the 2011 electoral process in the Central African Republic. more »

Crisis management in the banking sector

New EU framework for crisis management in the financial sector for managing problems before they spiral out of control. more »

Out of the crisis and towards European economic governance

The financial crisis laid bare the limits of self-regulation, demonstrating the need for strong EU economic governance, surveillance and policy co-ordination, say two non-legislative resolutions voted by Parliament on Wednesday. more »

1 181 former workers of Heidelberger Druckmaschinen AG to get help worth €8.3 million from EU Globalisation Fund

The European Commission has approved an application from Germany for assistance from the European Globalisation adjustment Fund (EGF). more »

Taxing the financial sector

Global and EU- level taxes on financial sector would help to fund international challenges such as development or climate change and fix the fallout from the global economic crisis. more »

EIB and African Development Bank finance first large-scale wind farm in Africa

The European Investment Bank and African Development Bank today agreed to provide EUR 45m to design, build and operate onshore wind farms on four islands in the Cape Verde archipelago. more »

2011 budget - MEPs make room for new policy priorities

MEPs want future EU budgets to accommodate new policy priorities as well as negotiations on new sources of financing. more »

Globalisation Fund: Budgets Committee backs aid to Portugal, the Netherlands, Spain and Denmark

The European Parliament's Budgets Committee on Monday backed EU funding for 3,731 workers in Portugal, the Netherlands, Spain and Denmark who were made redundant due to the closure of their companies. more »