AutoNation overpowers its Web buying-service rivals

Magnificent 7
Top online buying services in dealer satisfaction

1. AutoNation

2. Volkswagen

3. Cars.com

4. Isuzu

5. Subaru

6. Toyota

7. Autobytel.com

Source: J.D. Power and Associates

In three years, the nation’s largest dealership group has grown into one of the biggest online referral businesses.

AutoNation Inc. has built an online dealer network of 2,928 — including 2,560 non-AutoNation franchises — that will debut as the “e-Tail Network, Powered by AutoNation” by year end.

“We expect to handle 2 million leads” this year, including leads for AutoNation and non-AutoNation dealerships, said Allan Stejskal, senior vice president of operations.

AutoNation handled 800,000 leads last year. By comparison, Autobytel Inc. says it generates more than 300,000 purchase requests each month, for a total of about 2.4 million annually.

Because of its size, strong balance sheet, and access to new-vehicle inventory, AutoNation has outlasted struggling dot-coms, and as a publicly held company with $20.6 billion in annual revenues, AutoNation has not needed venture capital.

AutoNation ranked first in Agoura Hills, Calif., consulting firm J.D. Power and Associates’ annual dealer satisfaction survey of online buying services, unseating Autobytel, which held the top spot three straight years. The rankings are based on 15 factors, including the responsiveness of the buying service, the quantity of leads and whether the fees are reasonable.

But Autobytel Inc. of Irvine, Calif., still has the most dealerships. Autobytel, which acquired Autoweb.com Inc. of Santa Clara, Calif., in August, and CarSmart.com at the beginning of 2000, has 6,300 franchises in its network covering all states except Alaska.

AutoNation added 1,400 franchises to its network by buying the AutoVantage buying service last year and added more by taking over a large portion of the referral program for CarPoint. AutoNation has an online sales territory spanning 48 states as well as an exclusive marketing agreement with America Online. AutoVantage had been the preferred buying service for AOL users. Between its own dealerships and the outsiders that have joined its network, AutoNation reaches about 75 percent of online auto shoppers, Stejskal said. The target for 2002 is to build the network to 4,000 franchises capable of reaching 90 percent of online auto shoppers. That would give AutoNation coverage as broad as Autobytel, which reaches about 90 percent of online auto shoppers.

AutoNation spends “well into eight digits” for all Internet marketing, says Stejskal, but expenditures are less than 5 percent of annual revenues. The company would not disclose its budget.

Despite the inroads AutoNation has made in the online referral business, Autobytel views AutoNation more as a customer than a competitor.

Said Mark Lorimer, Autobytel CEO: “For a large dealer group, AutoNation has done a good job in the e-commerce arena. But while they exist in the same arena as us, their e-commerce initiatives are much, much smaller and more confined than ours.”

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