SAN FRANCISCO - A new breed of auto shopper is loose on the Internet. Savvy and independent, Internet customers have jumped the traditional fences of information flow and advertising. They are checking prices, choosing options and financing, and finding dealers - all on their own.
And they've got the auto industry scrambling for their loyalties.
Mike Jackson, president of Mercedes-Benz of North America Inc., was adamant in his keynote address at the National Automobile Dealers Association convention here: As buyers flock to the Internet, Mercedes-Benz must keep them happy - and loyal.
'We don't want to give up control of our of retail environment to someone else,' he said.
To the traditional auto marketers - manufacturers, dealers and newspapers - few things are more unsettling than a large and growing number of affluent customers operating independently.
Make no mistake: It is all about control. The traditional channels want control and are spending lavishly to keep it:
Manufacturers, such as Mercedes-Benz, do not want auto shopping to turn into simple price comparisons, the specialty of online buying services. They want to capture Internet shoppers directly on the Web and buff their brand images.
At the convention, DaimlerChrysler, for instance, showed its new national Web program, designed to channel shoppers directly to its top, or Five Star, dealers.
Newspapers, afraid their lucrative classified advertising will erode, are fighting back with their own Web-based classifieds.
Cars.com, owned by eight newspaper chains, said at the convention that it had added USA Today to its network. Cars.com posts online classified ads from its member newspapers.
Experts exhorted dealers in San Francisco to jump in and create attractive Web sites.
Web use is growing rapidly, said Robert Herbold, COO of Microsoft Corp. About 20 percent of all Internet searches are auto-related, he said. The online services that refer consumers to dealers, including Microsoft's CarPoint, generate about 400,000 leads a month, Herbold said.
Jay Houghton, automotive marketing manager at A.T. Kearney Inc., a consulting firm based in Chicago, put it to dealers this way:
'If you don't commit (to the Web), you will be left behind.'
SETTING THE BAIT
The problem is Web users are a new breed. Whether they are baby boomers or younger, they are not as overtly image conscious as their parents. They value convenience. And they are empowered by information - the Web's forte.
But how do you target these customers? In a way, you don't.
'They find you,' Houghton said. 'You must have attractive bait for them.'
As dealers and manufacturers fight back, the online buying services - which helped start the online avalanche - are broadening their appeals eagerly.
For instance, Autoweb.com, an online buying service based in Santa Clara, Calif., said at the convention that it will provide in-depth repair information and a repair forum on its Web site starting this spring.
COMPETITION IS KEEN
Competitive pressures are mounting fast, noted Chip Perry, president of AutoConnect. The Atlanta-based online buying service, funded by industry heavyweights Manheim Auctions Inc. and Automatic Data Processing Inc., offers free used-vehicle leads and online classified ads to dealers.
Manufacturers are moving aggressively into online retailing, he said. DaimlerChrysler, for instance, now has its national Web service, Get A Quote, which funnels sales leads directly from customers to its Five Star dealers.
GM last year launched GM BuyPower nationally, its national online Web service to capture leads for its dealers.
When the manufacturers are strong on the Web, Perry wonders what will happen to Autobytel.com and others that are charging fees for leads.
Manheim has spent heavily on the Internet and is expanding. At the convention, it said it would launch a new vehicle pilot program in Phoenix. Visitors to the Auto-Connect Web site, autoconnect.com, can request price quotes from about 70 participating dealers.
The automotive Internet market is clearly beyond the experimental stage. But the competitive arena is still a free-for-all, with major players, from GM to Manheim to major dealers, pouring money into the chase.
There is no mystery why. At stake is the future.