1. Archive

DRIVING a deal online

AutoNation, the country's largest automotive retailer, enters the cyberworld of online car sales, and the first test of the new Web site is at its 16 new- and used-car stores in the bay area. The company expects the Internet division to generate 10 percent of a projected $30-billion in revenue in 2001.

To understand the future of car buying, look beyond the showroom at Carlisle Dodge to a cramped office, where four employees share two Compaq personal computers.

Landing a deal these days can hinge on sending the right e-mail reminder about a better rebate on the 1999 Dodge Intrepid. At times, this Internet sales team rarely sees customers.

"It's been a big adjustment," said Internet salesman Tom Jacobus, who used to sell cars on the showroom floor. "I had a nice cushy office."

Two out of five new-car buyers now visit auto-related Web sites before purchasing a vehicle. Carlisle Dodge's owner, AutoNation Inc., wants to attract those shoppers to its new virtual showroom.

The Fort Lauderdale company launched in June and entered into a cyberworld teeming with competitors. Carmakers such as Ford Motor Co. and General Motors Corp. sell used vehicles directly to buyers over the Internet. Several independent car sites, including and Microsoft Corp.'s CarPoint, are referral services, collecting consumer inquiries and selling them to dealerships.

AutoNation, by contrast, allows customers to do research, arrange financing, buy insurance and reserve a vehicle with a credit card without visiting a showroom. And as the nation's largest automotive retailer with 270 new-car stores and 42 AutoNation USA used-car superstores, the company can sell almost any make and model.

But unlike other forms of online retailing, most consumers are reluctant to make a purchase as costly as a car with just the click of a mouse. "People in our research say they still want to touch and feel a car," said Shelley Johnson, research supervisor at J.D. Power and Associates in Agoura Hills, Calif.

That's where AutoNation's Internet salespeople come into play. They are employed at each dealership to guide an online buyer to final sale. Some have never sold a car before. Others come from the showroom and are switching gears to provide a hassle-free, haggle-free experience. Sometimes that means responding to e-mails on their home computers before they go to bed or delivering a vehicle to a customer.

AutoNation has a lot riding on the strategy. The company expects to sell about $750-million worth of cars on the Internet this year, and is aiming for $3-billion in Internet sales by 2001.

The first test of the new Web site is at AutoNation's 16 new- and used-car stores in the Tampa Bay area. And if Carlisle Dodge is any indication, dealers are still getting used to the idea.

The Internet sales team is isolated from the new-car showroom. Members work in a small back room in the commercial sales and leasing office. The only sign of their presence is a small banner that hangs outside the commercial sales office and is hardly noticeable from U.S. 19.

Carlisle Dodge went online a year ago and put Jacobus and Teri Caton in charge of handling sales leads generated by its Web site and other Internet car-buying services.

With the introduction of AutoNation's Web site two months ago, Carlisle created a separate department for online sales. Since then, the dealership has added two Internet salespeople as more consumers turn to the Web.

The growth of online car shopping has been so explosive that analysts have not been keeping up. A year ago, J.D. Power forecasted that 31 percent of new-car buyers would use the Internet this year before buying a vehicle. Its latest study shows the number is 40 percent.

More of these consumers are doing research as well as a finding a local dealer who can quote them a price online. But closing a sale on the Internet is another matter. About 15,000 vehicles will be sold that way this year. That number is expected to grow to 500,000 by 2003, but that is only 3 percent of projected car sales, according to Forrester Research in Cambridge, Mass.

"As much advance as we've made in automating sales, the trick in selling cars is still the personal touch," said Steve Cole, research director at Forrester.

While Internet consumers want to talk to local dealers, they "don't want to go through all the games," Jacobus said. Indeed, Microsoft found that 65 percent of the people who use CarPoint do so because they are overwhelmed with the traditional car-buying experience.

Chip Caruana of Safety Harbor fits in that category. The 42-year-old senior account manager for a Tampa office-equipment company went to an online car-buying service three months ago looking for a new Dodge minivan. "I am a salesman and even I can't out-talk those guys," he said.

The Web site sent his inquiry to Carlisle. After exchanging a few e-mails with the dealership, he decided to pick up the phone and call Jacobus, who eventually found a Grand Caravan within his price range.

"The Internet took me two-thirds of the way," Caruana said. "You still have to know whether the dealer is sincere or not. That's a little bit tough over the Web."

That is why the Carlisle team will spend as much time on the telephone as they do on a PC. "We try to personalize this," Jacobus said. He recalls a couple living in Turkey who went online to buy a car because they were moving to Tampa soon. After talking to the wife, he found out they lived on the military base where he was once stationed. He later closed the deal.

Carlisle's Internet team sold about 31 vehicles in July, or 11 percent of the 290 leads they received. They would have liked to close 15 percent of the inquiries.

Internet salespeople have harder jobs than their counterparts in the showroom because they have to persuade the customer to come to the dealership. "The floor salesperson already has the customer in front of him," said Johnson of J.D. Power.

For that reason, AutoNation stresses quick response time. Microsoft's research shows that the odds of closing a sale get better the faster a dealer answers that first customer e-mail. At Carlisle, the salespeople wear pagers that buzz every time a sales lead shows up on the dealer's internal Web site. The goal is to respond to the inquiry within a half-hour.

Carlisle's sales team even answers e-mails after work and on Sundays. But it is impossible to respond to every e-mail on time because of the around-the-clock nature of the Internet. "I draw the line when I go to bed," Caton said.

Most of Carlisle's sales leads come from other Internet referral services. AutoNation expects that to change as it rolls out its Web site nationally this fall and puts some advertising dollars behind the effort.

The company has ambitious plans for online sales. It expects the Internet division to generate 10 percent of its projected $30-billion revenue in 2001.

AutoNation also is using the Internet to spread the philosophy of fixed prices, which has not been widely embraced by dealers. All its vehicles sold online have a set price, even though most of its dealerships still sell new cars through negotiations. (Carlisle Dodge has fixed prices in the showroom.) AutoNation has said it will gradually move its new-car dealerships toward the one-price policy.

But it will not be easy for AutoNation to distinguish itself in an already crowded online field. CarPoint, which was established in 1996, drew 1.4-million visitors to its site in June, according to Media Metrix.

"The manufacturers and dealers were laggards in getting into the Internet space," said H. Scott Barrett, AutoNation's senior vice president who oversees its online venture. "That made it easy for private Internet players to get into the game."

Online car buying has even attracted computer executive Michael Dell. He is one of the backers of, which in May began selling vehicles only through the Internet.

The proliferation of Web sites will only lead to better educated consumers. Jacobus also has seen a shift: "A lot of the time, I'm not sure who knows more, them or me."

Chip Caruana of Safety Harbor went to an online car-buying service three months ago looking for a new Dodge minivan. The Web site sent his inquiry to Carlisle Dodge. After exchanging a few e-mails with the dealership, he called salesman Tom Jacobus, who eventually found Caruana this Grand Caravan.