The sizzle was gone.
In just a year, the dot-coms have come full cycle. Good press is hard to come by, and the river of red ink flows on.
Some dealers said they were reconsidering doing business with third-party buying services.
"If you take the incremental cost of the lead, multiply it by the number of leads you get, but then divide that by the closing rate, it gets very expensive per car you actually sell through the Internet," said Dave Mungenast, a multifranchise dealer from St. Louis.
Some of the dot-coms were squirming under pressure from the news media and investors. Companies that failed to pass legal muster with tough state regulators or remained in the red attracted little interest.
Only a few small dot-coms are seeing black ink, and their volume was not enough to garner much media attention. InvoiceDealers.com of Palo Alto, Calif., for example, says it has been profitable since last June. But with annual revenues of $4 million, its volume is just a fraction of larger counterparts such as Microsoft Inc.-owned CarPoint, of Redmond, Wash., and Autobytel.com, of Irvine, Calif.
Buying services such as Autobytel.com are under fire because they are still in the red. Autobytel.com CEO Mark Lorimer spent most of his press conference challenging a report by NADA predicting the death of third-party buying services.
"NADA is a fantastic trade organization with a long and very glorious history of protecting its members, but it is saying that dealers should run their own Web sites without any third-party assistance," Lorimer said. "This amounts to a bizarre disservice to dealers."
Lorimer also took issue with a report by Automotive News labeling the company as "shaky."
"I would hope the media will treat predictions of the death of third-party buying services with skepticism," he said.
Autobytel.com's net loss swelled to $29 million in 2000, up from a $23.3 million loss in 1999. Lorimer says the company expects to be in the black by the third quarter of 2001.
Autobytel.com's press conference — which used to draw standing-room only crowds — was sparsely attended this year, though a company spokeswoman said the 15 to 20 people attending "wasn't bad for 8 o'clock on a Saturday morning."
The following morning, a panel discussion led by consulting firm Gomez Inc. of Lincoln, Mass., about the dot-com shakeout attracted a room full of reporters.
The discussion included representatives from online broker CarsDirect.com and Greenlight.com, which CarsDirect.com acquired less than two weeks ago; FordDirect.com, a joint venture between Ford and its dealers; CarPoint.com; and AutoNation Inc., the nation's largest dealership group.
All five panelists defended third-party buying services, saying consumers want vehicle information from independent sources, not just dealers and manufacturers. But CarsDirect.com would not answer questions on when it might be profitable, and FordDirect.com refused to comment on legal issues that could sink its Web site.
CarsDirect.com has burned at least two-thirds of its $300 million in venture capital. FordDirect.com is under pressure in California because it intends to promote a special e-price online. The state could decide dealers must offer the e-price to everyone, not just Web customers. Dealers worry the e-price will lower new-vehicle profits.
Some dot-coms reported a decline in traffic at their exhibition booths.
Stoneage.com, a Troy, Mich., buying service that says it has been profitable for three years and generates more than 100,000 dealer referrals per month, said negative publicity about dot-coms kept Stoneage.com from attracting new business at the convention. While dealers lined up to sign contracts with Stoneage at last year's convention in Orlando, Fla., this year's was just an opportunity to reassure customers the company was still around.
"Maryann Keller spent a lot of time talking about why the referral method won't work," said Stoneage.com COO Bud LaCombe, referring to remarks last fall by the former priceline.com executive about the third-party model. "If she's making assertions about the whole industry, I took exception to that. We know different."