Jumping into the hot market for auctions on the Internet, Irvine-based Autobytel.com Inc. said Thursday it will become the first company to auction new and used cars on the Web.
The auctioning of cars from 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 hosts 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 most of the cars auctioned on Autobytel's Web site will be used vehicles, but also hope it will be used 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 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 Plymouth Neons 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 buying used cars and making large purchases sight unseen.
Autobytel has enlisted several companies to offer features designed to put people at ease.
