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Car dealers warned to get Net savvy

Net-based car buying services tell car sellers at the National Automobile Dealers Association convention that they'd better take part in the online revolution-or be buried by it.

SAN FRANCISCO--Car dealers must get online quickly if they are to avoid getting buried by more tech-savvy competitors, a bevy of auto-shopping Web sites warned this weekend.

Traditional dealerships risk losing sales as buyers continue to pile onto the Net for help with their car shopping, said representatives of such sites as, Microsoft's Carpoint,, and The sites made presentations this weekend at the 82nd annual National Automobile Dealers Association convention.

Despite the grim warnings, the message to dealers was "We're on your side." The sites told dealers that the Net can provide hundreds of new leads per month.

A quarter of new-car buyers already use the Internet to aid in their search, according to a September, 1998 study by J.D. Power and Associates.

For consumers, auto shopping sites provide easy access to information that previously had to be cajoled out of dealers and a smattering of consumer protection groups, including Kelley Blue Book price data and safety ratings. The sites enable consumers to visit dealerships already armed with the information they need to comparison shop.

"There's a great deal of confusion about what the Internet is going to do to this business," said Mark Lorimer, CEO of's network of more than 2,700 dealers, which receive referrals from whenever a consumer indicates an interest in buying a car, makes it one of the leaders in the category. Yesterday, launched a paging system that notifies the local dealer as soon as a purchase request is sent to the site.

"The faster you contact an Internet consumer, the more likely you are to get them to buy that car," said Lorimer.

The company also announced an interactive training program to help dealers use its system and dealer-to-dealer used car auctions on its site. Car auctions open to the public will be added within a year, Lorimer said.

At a packed news conference yesterday, members of the dealer network extolled the virtues of Internet leads. Tom Vann, general manager of Hillsdale Chrysler Plymouth in Hillsdale, Michigan, with a population of 7,400, said 65 percent of the dealership's new business comes from Autobytel. In Canton, Ohio, Waikem Auto Group is getting as many as 75 purchase requests per day at just one of its stores, according to Doug Waikem, the company's president. claims an even bigger dealer network--3,900 strong--but turnover is high. In its recent IPO filing the company admitted that last year it lost more than 60 percent of its member dealers despite a new pricing model that charged dealers per referral rather than a fixed fee. Dealer turnover is also fairly high at, which lost or got rid of 556 dealers and added 1,323 in 1998.

To give dealers a constant supply of new leads, Internet auto shopping sites are spending furiously on advertising. was one of the first Internet companies to advertise in the Super Bowl, way back in 1997. According to its IPO prospectus, the company spent $22.2 million on sales and marketing in the first nine months of 1998, on revenues of $16.5 million., which reported a loss of $11.5 million on $13 million in revenue for 1998, spent $13.6 million on marketing that same year., a division of Classified Ventures, a Net classifieds company whose investors include the largest newspaper groups in the country, spent $26 million on advertising in 1998., which is backed by Gannett, Knight-Ridder and The New York Times Co., among others, is "the last mover in the automotive Net space," President Mitch Golub admitted. But the newspapers' existing relationships with local car dealers, and their commitment to the car sales category, gives credibility with dealers. "This is their core business and represents their core dollars," Golub said.

Like newspapers, cable companies are also trying to protect the huge advertising base that dealers represent. TCI Media Services, which receives 25 percent of its ad revenues from car dealers, recently launched with Garff Enterprises, a Salt Lake City-based dealer group. With a $35 million annual ad budget, uses Internet sales as a perk for dealers who buy ads on cable, building Web sites for dealers and sending them sales leads. Ads for are already appearing on CNN, ESPN, The Discovery Channel and USA Network.

Also at the show, DaimlerChrysler announced that it is testing a computer-based service to give consumers information on options, pricing, and availability of its vehicles.

This year, car shopping sites will increase their advertising budgets and add new services, such as insurance and financing options, to lure in yet more consumers and more dealers. The promise? A more predictable revenue stream. "If we send [dealers] better ad leads, they'll be more consistent in their ad spending," said Justin Lapoint, a region manager with's Lorimer makes a more grandiose promise: " will help dealers survive Wall Street consolidation," he said.