Jumping into the hot market for auctions on the Internet, Irvine-based Autobytel.com Inc. said Thursday that it will become the first company to auction both new and used cars from its Web site.
The auctioning of cars from both dealers and individuals comes as online auto sellers struggle to find the right strategy for selling vehicles on the Internet. Autobytel's decision pits it squarely against online auction giant EBay Inc. and other Web players, such as Amazon.com, which host sales of used cars by individuals.
Still, investors were excited by the news, which leaked out Thursday morning. Autobytel stock soared 46%, or $6.19 a share, to $19.50, in Nasdaq trading. The company formally announced the move after the market closed. Autobytel was the 11th-biggest percentage gainer in U.S. markets.
Company executives expect that most of the cars auctioned on Autobytel's site will be used vehicles, but hope that it will be utilized to sell new cars late in the model year.
"EBay and Amazon are not doing a very good job of auctioning cars and we're counting on the reputation we have built with consumers," said Ann Delligatta, Autobytel's chief operating officer. "It's one thing to auction Beanie Babies and it's a very different thing to auction general transportation."
On Amazon's auction site Thursday, only a few dozen vehicles were for sale and the vast majority had not received any bids.
Industry observers doubted that car dealers would ever sell most of their new vehicles through online auctions because they want to control and maintain a base price. But manufacturers and dealers could sell some of their less popular models that way.
"It's a way to get rid of all those [slow sellers] that are sitting on the lot at the end of the model year and won't move," said David Cooperstein, an e-commerce analyst with Forrester Research.
Online auctions already are being used by retailers and manufacturers to sell surplus goods and last year's models of everything from clothes to consumer electronics to computers, and cars would be a natural extension of that trend.
The idea of online used-car auctions comes with even heavier burdens, combining consumers' qualms about both buying used cars and making large purchases sight unseen.
Autobytel has enlisted several companies to offer features designed to put people at ease.
