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June 30, 1999
Web posted at: 2:28 p.m. EDT (1828 GMT)

by Bob Wallace and Julia King

(IDG) -- With a business-savvy CIO at the helm, top U.S. auto retailer AutoNation Inc. last week unveiled a first-of-its-kind master e-commerce site that lets consumers buy and take delivery of a new or used car without ever visiting a dealer.

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The initiative, which was launched with a pilot involving 17 dealers in Tampa, Fla., illustrates the pluses (including increased sales) and minuses (such as sales-channel conflict) that the auto industry faces as it strives to move from a 100-year-old sales model to online selling, which represents the long-term future.

"This initiative has the potential to radically restructure the consumer and dealer relationship, and it's something all the big automakers are working on," said Daron Gifford, a director at Deloitte Consulting in Detroit.

But each automaker will be restricted to offering inventory from its own dealers, whereas AutoNation's dealers sell a wider variety of makes, he added.

One such competitor is General Motors Corp., which last week said it plans to sell direct over the Internet starting with 15 major pilot programs.

Under the AutoNation deal, consumers can choose cars from AutoNation's complete inventory at 400 new-car dealerships and 36 used-car megastores.

The dealer that supplies the vehicle gets the commission because the company owns all the dealerships. However, there is competition among salespeople because different staffs handle the Web and walk-in sales.

Some 270 of AutoNation's dealers already sell via their own Web sites, which will eventually be linked to the master site.

Their influence on the company's business has already been palpable. The company launched its first e-commerce site only last year, and a customer poll late last year showed that 51% wouldn't have bought a car through the company had they not found it through the Internet. AutoNation reported $18 billion in revenue last year.

CarsDirect.Com, with backing from online computer direct-sales pioneer Michael Dell, also announced that it would start selling cars over the Net later this year.

No haggling

"What differentiates [AutoNation's] initiative is that AutoNation posts the price of the vehicle as configured for the consumer rather than referring the shopper to a dealer to haggle over price," said Chris DeNove, an analyst at J.D. Power & Associates' Calabasas, Calif., office.

At the AutoNation Web site (www.autonationdirect.com), consumers select a car, fill out a form and reserve the car with a credit card. The form is sent to a database linked to a paging system that alerts dedicated online salespeople when a lead comes in.

Art DeLaurier is vice president of e-commerce technologies at Fort Lauderdale, Fla.-based AutoNation. He said having the effort spearheaded by Scott Barrett, a former president at Blockbuster Entertainment Group, led to a marriage of business and technology skills to provide a new level of customer service.