LAS VEGAS -- Online shopping service Autobytel Inc. is expanding its pay-per-sale lead program with dealers in Florida and California as rival TrueCar Inc. shifts away from the business model in some states.
Autobytel says it has recruited about 200 Florida and California dealerships to pay per sale, in which dealers pay Autobytel $295 when a lead results in a new-vehicle sale.
Autobytel either signed the dealerships or converted participating stores from other lead payment plans.
Internet leads are created when consumers visiting shopping sites such as Autobytel.com, AutoTrader.com and shopautoweek.com ask to be contacted by dealers for more information or test drives. Publicly traded Autobytel was a pioneer in Internet leads in the mid-1990s.
Dealers typically buy monthly subscriptions or pay $20 per lead to the shopping services. The pay-per-sale model is popular in states where it doesn't run afoul of laws prohibiting third parties from serving as brokers to vehicle transactions or laws that prohibit so-called bird-dogging. That's when dealerships pay fees to third parties contingent upon sales.
Autobytel CEO Jeff Coats said his company's pay-per-sale plan has gained momentum since August, following a successful pilot in Florida and California.
"Dealers generally like pay for sale because they only pay if they get a sale," Coats said during an interview at the National Automobile Dealers Association convention here.
Coats said Florida has fairly liberal state franchise laws, while Autobytel has obtained a dealer license in California to provide the pay-per-sale leads there.
Lehman Toyota in Miami signed up with Autobytel six months ago, said David Castro, the dealership's fleet sales manager.
He said the 100 fleet vehicles sold from Autobytel leads so far have netted little profit for the dealership because they have sold near dealer cost.
But the vehicle sales have helped Lehman Toyota qualify for monthly sales incentives from the factory that have meant about $100 per car to the dealership.
Lehman Toyota sells about 300 new vehicles per month, Castro said.
"My job is to move metal," he said.
Castro added that pay per sale is a bargain in terms of marketing dollars because the price is $295 per car sold, which he said he adds to the sale price to at least break even on each deal.
TrueCar continues to provide pay-per-sale leads to Lehman Toyota, Castro said.
But to avoid potential legal problems, TrueCar said this month that it was dropping its pay-per-sale lead program in about 20 states and switching to subscriptions.
Also, TrueCar-affiliated dealers anywhere who want to switch to a subscription program may do so, TrueCar CEO Scott Painter has said.
Autobytel has about 2,500 new-car dealerships and 1,100 used-car dealerships nationally that buy its leads.