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HEARD ON THE BEAT / TECHNOLOGY

Ex-Auto Dealer's Company Provides Online Car Deals

September 09, 1996|GREG MILLER | TIMES STAFF WRITER

For those who think the perfect car-buying experience would mean never having to visit a dealership, an online service started by a Corona del Mar company comes pretty close.

Auto-by-Tel, a company started last year by former Southern California car dealer Pete Ellis, allows shoppers to place car orders over the Internet with more than 1,200 dealers nationwide. The company has already built a huge lead over rival services on the Internet, and is poised to pull further ahead after raising $15 million in a private stock sale last week.

Auto-by-Tel sold more than 20,000 vehicles last month, Ellis said, up from 15,000 in July. The service works as follows:

Customers fill out an online order form for a specific make, model and feature package. Auto-by-Tel routes the order to a local dealership that calls the shopper within 48 hours with a nonnegotiable price. Customers are free to look for a better deal, but they usually can't find one, according to Ellis, who said that more than 50% of the people who place orders end up buying their cars through the service. Dealers pay from $250 to $1,500 per month to be a part of the service, and Ellis said only a few car makes, including Ferrari and Rolls-Royce, are not yet available.

Dealers "were scared to death" of the service at first, Ellis said. "They were scared of the margins and frightened of the technology." But many have since flocked to the service because it delivers customers who are ready to buy. The Auto-by-Tel Web site has links to car information resources on the Internet, including Kelly Blue Book's price catalog of new cars, and insists that those who place orders have done their homework.

"What we have is the highest quality, most sophisticated buyer," Ellis said. "All the dealer has to do is call them up, treat them professionally, and quote them a quality price."

Last week Auto-by-Tel sold a 15% stake in the company to a group of investors including GE Capital Services and insurance giant American International Group Inc. Ellis said the company plans to use the money to help pay for the roll-out of a bevy of new online services including financing, insurance and used car sales. Auto-by-Tel can be found on the Web at http://www.autobytel.com

Greg Miller covers high technology for The Times. He can be reached at (714) 966-7830 and at greg.miller@latimes.com

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