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Survey Finds Car Dealer Web Sites Short on Service


Thousands of new-car dealers who have joined the electronic commerce revolution by launching Web sites might just as well have hung out "Open" signs and then locked their doors, according to a J.D. Power & Associates research report to be released today.

While 80% of the new-car dealers in California have Web pages, Power research chief Chris Denove said, many take days to respond to consumer inquiries and only about half give Internet buyers the same kind of pricing information consumers can get from independent buying services.

Other studies have praised the auto-retailing industry's increasing willingness to embrace e-commerce, but the report by the influential Power organization shows that many dealers still don't know what to do with the Internet once they get online. This problem is one shared by many traditional retailers, such as department stores.

But the issue may be more crucial in the auto industry, because many buyers are highly price-sensitive and the Internet is an ideal forum for consumers who want to price-shop. Ultimately, effective dealer Web sites that provide detailed price and availability information could be a key competitive advantage.

For the Record
Los Angeles Times Friday March 26, 1999 Home Edition Business Part C Page 3 Financial Desk 2 inches; 44 words Type of Material: Correction
Auto Web sites--A recent survey by J.D. Power & Associates asked car buyers who use the Internet to rate the usefulness of several types of Web sites. Seventy-three percent rated consumer guide Web sites "very useful"; 43% gave the same rating to car manufacturers' sites. A chart published Thursday was incorrect.

Auto dealers' inability to exploit the new technology is reflected in a separate Power survey of new-car buyers, which found that only 21% of those who used the Net logged on to dealers' Web sites. Of that relatively small group, only 20% rated the sites as "very useful."

Even dealers acknowledge that their efforts to reach out electronically are weak at best, although the National Automobile Dealers Assn. notes that most customers do not yet use the Internet and still seem to prefer going to a dealership to see the vehicle they are considering.

In the study by Power, an Agoura Hills-based automotive marketing firm, the 724 dealers surveyed ranked independent Internet-buying services such as Inc. and Microsoft Corp.'s as more effective tools for buyers than their own Web sites. Those services contract exclusively with dealers in a given geographic area to locate customers and help complete purchases.

Investors seem to share that belief. On Tuesday, Inc., a Santa Clara, Calif.-based online car-buying service, went public and saw its stock price nearly triple to $40 from $14 in frenzied first-day Nasdaq trading. The stock fell back 16% on Wednesday to close at $33.69. Irvine-based Autobytel is expected to launch its much-delayed initial public offering this week, perhaps as early as today, at $20 to $22 a share, also on Nasdaq.

"There's huge potential" for online car retailing, said Cheryl Bostater, an industry analyst with GSG Securities Inc. in Denver.

The message for car dealers, Power's Denove said, is that they must realize they are no longer the only game in town and that a substantial and growing portion of buyers look at the Internet as a valuable tool for gathering information.

Dealers who are loath to provide price quotes, dealer invoice costs and other information that buyers can obtain from other Internet sources are cutting their own throats, he said.

"That's absolutely right," said Art Podell, finance and new-car sales manager at W.I. Simonson Inc., a Mercedes-Benz dealership in Santa Monica. "I understand fully well everything being said, and this dealership mirrors the situation. Being on the Internet means that you have to have people assigned to monitor it."

Simonson has its own Web site, which does not yet have a dedicated staff and is not generating measurable business, he said. But the dealership does book several sales a month from online services, including the corporate Web site of DaimlerChrysler's Mercedes-Benz unit.

"What is going to have to happen, and is happening slowly," Podell said, "is that someone in each dealership is going to have to recognize the need to have dedicated personnel to handle electronic commerce, answer e-mail, provide information to people requesting it on the Web site."

Power has also found that dealers hoping to use their own Web sites to compete with rivals that have signed up with third-party buying services are not yet giving buyers any reason to seek them out.

"We haven't uncovered any evidence that consumers will get a better deal working directly with dealership Web sites," Denove said, especially as they often have to put up with slow and unresponsive service.

Car dealers see the third-party buying services as more effective than their own efforts at e-commerce, Denove said, "because they sell more cars and get more leads through the independents than through their own [Web] pages."

Part of the reason, he said, is that dealer Web sites are hard to find. There are more than 14,000 of them out there, but relatively few are linked to search engines such as Yahoo and Excite.

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