Automakers must provide more information about vehicles on the assembly line, finished units at the factory and vehicles in transit to dealerships to speed online retail sales and improve distribution efficiencies.
By making this pipeline transparent, the factories could give Internet consumers a broader view of inventory to find a match to the vehicle they want - or something close to it.
That is the thinking behind the locate-to-order model, which Internet research firm Forrester Research Inc. of Cambridge, Mass., predicts will be the next stage of online car buying.
In locate to order, consumers would configure a vehicle online and search for a match, or a close match, in inventory provided by all dealers in a market, as well as from vehicles in the distribution pipeline.
THE BIG CHALLENGE
The technology exists. But the big challenge will be getting key players - dealers, automakers and independent online buying services - to work together.
'I don't think there is a lack of willingness,' said John Holt, president of Cobalt Group in Seattle.
Automakers and dealers will be cautious and not rush to the model, he said.
'I think these are complex situations, and because they change the business practices of the past, these are the kinds of things that people are going to study carefully before they plunge in,' Holt said. 'Without their cooperation, nobody can get this done.'
In locate to order, automakers must provide build data - not just the vehicle identification number as is provided now - to online buying sites, Holt said. Build data from the factory contains more information about a vehicle than the vehicle identification number provides.
'We don't always know about trim and options because it's not included in the VIN,' Holt said. 'The only way we get that is if we get the build data.'
DaimlerChrysler and its dealers are studying locate to order. Ford Motor Co. and General Motors are working with their dealers to create online selling sites that use pieces of the locate-to-order model.
Forrester identifies the likely leading locate-to-order players as GM, Ford, AutoNation Inc. and MSN CarPoint.com.
GM and Ford are developing online selling sites with their dealers.
Although GM and its dealers have not completed details of their joint venture, dealers will be able to put their entire inventory on the site, including non-GM vehicles.
FordDirect.com, the online joint venture between Ford and its dealers, is expected to launch in California before year end. FordDirect.com will aggregate inventory from Ford dealers.
Aggregating inventory from all dealers, including non-Ford dealers, in a market would be a critical step and that has not been part of the FordDirect.com discussions, said Jack Valentic, Ford vice president of dealer operations on loan to FordDirect.com.
Locate-to-order is a customer-friendly model, said Tom Peyton, senior manager of e-commerce at DaimlerChrysler.
'This is what the customer wants,' Peyton said. 'But it is a departure from the way we have done business in the past.'
DaimlerChrysler has developed an infrastructure that would allow locate to order, he said.
'But certainly we're only going to make that move with our dealers, and after we fully understand its impact in the market,' Peyton said. If the automaker adopts a locate-to-order approach, it most likely would be designed for its Five Star dealers.
Forrester cites MSN Car Point.com as a potential locate-to-order leader. Forrester notes that the Web site, a standard referral site today, 'will pivot aggressively to offer an LTO model of car buying by early next year.'
But, the study says, other independent online buying services will be challenged by lack of scale, technology resources and entrenched pre-locate-to-order business models.