AutoNation Inc. is making offers to purchase used vehicles -- sight unseen -- listed for sale on popular third-party Web sites. It also guarantees to pay the amount offered for a vehicle if the condition description proves accurate when the vehicle is brought to an AutoNation store.
Mike Maroone, COO of the nation's largest dealership group, says the pilot program with eBay, Edmunds.com and Autobytel, will determine whether this is a viable way to purchase used-vehicle inventory other than at auctions.
"What we don't want to be is the retailer at the auction that is outbidding everybody else for cars. We'd rather earn them in our showrooms" as trade-ins, Maroone says, "and try and find creative ways to buy them."
Maroone says the pilot program started in the fourth quarter of 2011 and will continue "until we validate it. It's got to prove out that it is worth the time and the effort."
He would not say how many vehicles have been purchased under the program. The guaranteed offers to purchase vehicles are made to consumers who list vehicles for sale in areas where AutoNation has stores, a spokesman says.
Ed Cicale, AutoNation vice president of media and owner retention, says purchase offers are made within 24 hours of consumers' submitting descriptions of their vehicles. The offers are good for seven days or 700 additional miles on the odometer, whichever comes first. A consumer who wants to accept an offer must take the vehicle to an AutoNation store, where the vehicle is inspected.
If the vehicle's condition matches the description submitted to AutoNation, the company buys the vehicle for the price quoted to the owner.
Cicale says about 95 percent of the descriptions are dead-on.
"Customers don't want a disconnect either. They don't want to hide that they've been in an accident or hide that there is a giant scratch, so they typically overdescribe the flaws in the cars," Cicale says. "We do have some disconnect, but it's very small."
Here's how the program works: Consumers who list their vehicles for sale see a banner telling them they can get a "guaranteed offer" for a vehicle in "3 easy steps." The page on Autobytel's site carries the Autobytel moniker and says it is powered by AutoNation Direct, the dealership group's online business.
To help a consumer accurately describe a vehicle, AutoNation provides an online form that asks questions about the vehicle that can be answered mostly with multiple choice and "yes" and "no" answers. The owner is asked to explain problems.
For example, the form asks the owner to describe the vehicle's paint. The descriptive choices are "damage," "fading," "chips," "scratches" and "repainted." It also asks whether the vehicle has been in an accident. If the answer is "yes," the form asks for an explanation of the damage and cost of repairs.
The form asks the owner to describe the operation of the vehicle's motor and transmission as "good" or to explain the problem if a component "needs work." AutoNation provides a toll-free phone number for sellers who need assistance.
Maroone says AutoNation for years has made offers to purchase vehicles on its own AutoNation Direct. "Now we're saying 'Gee, would it work with third parties?'" he says. "I think eBay, Edmunds and Autobytel are great ways to try it."