On-Line Car Buying Facts
6 May 1999
Autobytel.com Dispels Top-Five Myths of Online Car-Buying Sites; Mark Lorimer, President and CEO, Addresses Common Misconceptions Regarding Online Automotive Purchasing Programs
IRVINE, Calif.--May 6, 1999--Mark Lorimer, president and CEO of Autobytel.com inc. , the premier Internet car-buying service, Wednesday dispelled five common misconceptions or myths regarding online automotive purchasing programs.Excerpts of Wednesday's teleconference with key members of the automotive, Internet and financial media follow:
Myth No.1
All online car-buying programs are created equal OR Because it has a ".com," it's a new business model.
"This is the most frustrating myth of all -- that all car-buying processes on the Internet are the same. Understanding the underlying business models is key to understanding the benefits to the consumer. You can't simply put a `.com' in your name and claim you've started a new kind of company that sells cars in a different way.
"Autobytel.com understands the car business. We have over 450 years of manufacturer and dealer experience working for us, and we are very aware that to succeed in this business, you can't merely put up a Web site and pass customers back into the same old system at the dealership level.
"At Autobytel.com, we believe in the three `Ts': Training, Technology and Termination. Every Autobytel.com dealer must be trained, they must adopt our state-of-the-art, proprietary extranet and be able to differentiate between traditional customers and Internet customers.
"Take, for example, Amazon.com. What would this leading e-commerce company be worth if it simply took a lot of book orders but didn't deliver any books? We're not just order takers, we make sure the order is delivered. We concentrate on offering customers a state-of-the-art front-end that works hand-in-hand with a state-of the-art backend which includes 24/7 Customer Service WOW to ensure customers are receiving a positive experience and that our dealers are living up to the Autobytel.com promise.
"If dealers don't live up to the promise, we can -- and do -- terminate them."
Myth No. 2
Online car-buying programs add to the price of the car.
"Currently, over $300 billion worldwide is being spent distributing new vehicles -- that means getting the car from the factory to your driveway accounts for 30 percent of the price of a car. According to NADA numbers, the average new car sale costs a dealer about $1,270 in personnel and marketing expenses. We work with our dealers to bring that cost down by as much as $1,000 per car by eliminating unnecessary personnel and marketing costs.
"It's a model that is obviously working. We have some of the highest closing ratios in the industry -- not only on the Internet but also in traditional scenarios. Anyone familiar with the car business knows that there are two things that sell cars: Price and Process. Our dealers are hitting the sweet spot on both of these key elements for all makes and models."
Myth No. 3
Manufacturer sites will eliminate the consumer need for independent buying services.
"There are a few key reasons why this is false. First, consumers won't find invoice pricing information on manufacturer sites -- a key information tool for the purchase of a new car. Second, manufacturers aren't able to pick and choose among the best dealerships to represent them -- they must utilize their entire dealer body. And, third, their business model discourages dealerships from using dedicated Internet personnel because they refer consumers to multiple dealers. This means cars sold via manufacturer sites are being priced and sold by the old model.
"Additionally, consumers want aggregation and choice. At a manufacturer site, you will receive great information -- presented beautifully -- on the makes and models they sell, but you won't be able to comparison shop. This is why manufacturer sites are typically viewed as advertising, not transactional sites.
"Still, manufacturer sites are a great resource for online shoppers, and we encourage consumers to visit them before they come to us to transact for the car. In fact, we view manufacturer sites as complementary to our service. But when consumers come to Autobytel.com, they can be confident they will transact with dealers who have been trained to service information-empowered consumers."
Myth No. 4
Number of site visitors equals commercial success.
"First, let me say that in March 1999, we had a record number of unique visitors -- over 1 million -- and 19.2 million page views. However, we believe that number of transactions is a far more important value metric. In the first quarter of 1999 alone, we sent over 489,000 purchase requests to our dealers. The big questions to ask competitors who tout site hit numbers are: `What is your brand awareness?' and `Does your site sell anything?'
"Just to put it into perspective, a recent Opinion Research study found that among e-commerce companies, Autobytel.com is the sixth most recognized brand name, following Priceline, Amazon.com, eBay, E-TRADE and eToys. And, according to a recent J.D. Power and Associates study, Autobytel.com generates nearly as many vehicle sales as its two closest competitors combined."
Myth No. 5
Online buying services will put dealers out of business.
"This is an interesting one because in some ways it's true. Online buying services will put dealers out of business. But the dealers who go out of business will be the ones who don't understand online customers and who continue to do business the old way. Dealers that are able to deliver a new consumer experience will flourish. Essentially, Autobytel.com is creating our New Age car dealers. We believe dealers who are committed to the future will be the survivors."
About Autobytel.com
Internationally branded Autobytel.com is the acknowledged leader in online automotive commerce(1). The most comprehensive automotive Internet site, Autobytel.com offers consumers a positive purchasing and ownership experience, while providing its Accredited Dealer Network with the most efficient way to reach online car buyers. As it assists consumers through every aspect of the automotive lifecycle, Autobytel.com provides continuity into the next vehicle purchase.
Launched in March 1995, Autobytel.com's low-cost, no-haggle car-buying program is available in the United States, Canada (www.autobytel.ca), the United Kingdom (www.autobytel.co.uk) and Sweden (www.autobytel.se). In 1999, Autobytel.com was ranked No. 1 in Dealer Satisfaction with Online Buying Services for the second year in a row(2).
The statements contained in this news release that are not historical facts are forward-looking statements under the federal securities laws. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed in, or implied by, such forward-looking statements. Autobytel.com undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause Autobytel.com's actual results to differ materially from those expressed in, or implied by, the forward-looking statements are changes in general economic conditions and increased or unexpected competition.
(1) As reported by J.D. Power and Associates, Autobytel.com generates nearly as many new-vehicle sales as its two closest competitors combined.
(2) J.D. Power and Associates 1998-1999 Dealer Satisfaction With Online Buying Services Studies(SM). 1999 study conducted among dealership Internet specialists who completed 1,024 individual evaluations.
Note to Editors: A replay of the teleconference is available through May 12 by calling 888/266-2081, pass code: 1495838.
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