Autobytel UK's first year in business has been difficult. First, Volkswagen threatened last summer to revoke the franchise of any VW or Audi dealer who paid for sales leads from Internet agents such as Autobytel. Then, the English car market went into a slump amid a government inquiry of alleged overpricing by automakers.
But the biggest obstacle is Europe's strict franchise law, known as the block exemption. The law, which is up for review, is the biggest barrier and the reason Autobytel has not become an online car-selling giant in Scandinavia, Belgium, the Netherlands and Luxembourg.
Because of the block exemption, Autobytel UK cannot buy new cars from dealers or list its inventory for direct sale on the Internet as it does in the United States. It only can provide information and refer potential new-car buyers to the 250 dealers who pay Autobytel a monthly fee of 500, or $760. The sign-up cost is $7,580.
The autobytel.co.uk Web site is owned by Inchcape, the United Kingdom's largest car distributor. Inchcape bought the license for 20 years from the United States parent. Similar arrangements have been made in the Nordic and Benelux countries with dealership groups or distributors, although only the Swedish site has been launched. Autobytel has been operating in the United States since 1995 and is considered the leading online car-buying service.
The United Kingdom site was launched a year ago. It measures success by counting customer visits. The Web site records 2 million visitors a day, said Kevin Turnbull, the Web site's chief executive.
Turnbull cannot say how many of those visitors bought new or used cars in Autobytel UK's first year of operation. He estimates the number at 4,000 to 5,000 vehicles. About two-thirds of those are used cars. That compares with about 50,000 new and used cars sold monthly by Autobytel.com Inc. in the United States.
Dealers are another Autobytel problem. Forty-five of its 250 subscribers are owned by Inchcape, which has 55 stores in the United Kingdom. Turnbull said every brand except VW and Audi is sold through Autobytel UK but said more subscribers are needed. 'The manufacturers here have a much stronger influence than they do in the U.S.,' Turnbull said. 'Over here, a lot of dealers will sit on the fence waiting for manufacturers to give a word of encouragement.'
Autobytel has approached the manufacturers, but the response has been weak. Chrysler Europe has promoted Autobytel and encouraged dealers to sign up. But Volkswagen issued a sharp warning to dealers not to work with Autobytel. Last June, Volkswagen sent a letter to its United Kingdom dealers warning that if they subscribed to Internet-buying services such as Autobytel, they risked losing their franchises. In response, Autobytel presented evidence that VW had lost sales. 'We told them we have now taken 6,000 purchase requests from your customers for your cars to be fulfilled through your dealers. And you said no to those customers because they came in through the wrong doors.'
A VW spokeswoman said the company is reconsidering its opposition.
Dealers who subscribe to Autobytel's new-car service are assigned territories. Potential customers who request information online are referred to the local franchised dealer to complete a purchase. Autobytel encourages dealers to follow the service's 'no-haggle' buying philosophy.
Given its difficulties selling new vehicles, Autobytel wants to increase business by launching direct sales of used cars. Used cars have become the service's biggest business. Autobytel is negotiating with car rental companies and corporations to handle sales of their used fleet cars. To increase inventory, it recently agreed to sell Avis Europe's used cars. The program is in the pilot stage on Autobytel's site. Negotiations also are under way with several automakers that Turnbull would not identify. Meanwhile, competition is growing in the United Kingdom with the recent start of such one-stop services as OneSwoop.com and Carbusters.com. Later this year, a site run by Virgin Group will be started.
'Our view is that it's good for us because they are making noise about car selling on the Internet. We are pretty confident some of them will grow up to be real competition, and some of them won't.'
You can e-mail Staff Reporter Diana T. Kurylko at [email protected]