The Online Car Industry

- Kanyi Masembwa- Mohd-Ridzwan Nordin- Preethi Parameswaran- Andrew O’Shaughnessy

Major Players in Online Cars

Lead GeneratorsMicrosoft’s CarPointAutoweb.comCars.comCarclub.com

Direct SellersAutoNationDirect.comCarsDirect.comCarOrder.comDriveOff.comGreenlight.com

HybridAutobytel.comSource: Wall Street Journal, January 24, 2000, B1

Lead GeneratorLead Generator Pass on customer inquiries to dealers and offer Internet training to sales Pass on customer inquiries to dealers and offer Internet training to sales

staffstaff Select car, pick options, dealer price comparisons, dealer Select car, pick options, dealer price comparisons, dealer

recommendationsrecommendations

Direct SellerDirect Seller Consumers can buy and sell directly from their computerConsumers can buy and sell directly from their computer Login, select car, financing options, arrange delivery or pickupLogin, select car, financing options, arrange delivery or pickup

Hybrid Hybrid Lead Generator and “Click & Buy” optionLead Generator and “Click & Buy” option Allows Research and Dealer Recommendations, Research and Direct Allows Research and Dealer Recommendations, Research and Direct

Purchase, or Click & BuyPurchase, or Click & Buy

Basics

A Sample Front Page – carOrder.com

Lead Generator - Sample Front Page

Hybrid - Sample Front Page

Customers

Buyers/SellersBuyers/Sellers Leisure/Sporty customersLeisure/Sporty customers First time buyersFirst time buyers Repeat customersRepeat customers Business peopleBusiness people Price sensitive peoplePrice sensitive people The .com race for a fraction of the 1999 $350 billion auto The .com race for a fraction of the 1999 $350 billion auto

market could have profitable awardsmarket could have profitable awards 2.7% of new vehicles sold via internet in 1999 , increasing 2.7% of new vehicles sold via internet in 1999 , increasing

to 5% in 2000 to 5% in 2000 -J.D. Power-J.D. Power

Customer Quotes"I am very impressed with your page. It is "I am very impressed with your page. It is

very informative and useful. I know now very informative and useful. I know now where I will look first when looking for that where I will look first when looking for that right car! Keep up the great work."right car! Keep up the great work." – Al Cars.com customer – Al Cars.com customer

““Better Price, not having to deal with a Better Price, not having to deal with a salesperson, and we got just what we salesperson, and we got just what we wanted.” wanted.” Anthony & Heidi Wong – CarOrder customersAnthony & Heidi Wong – CarOrder customers

““For the First time in my life, I hugged a car For the First time in my life, I hugged a car sales person.” sales person.” Wanda – Autobytel customerWanda – Autobytel customer

Attracting Customers

• Discounts• Additional features/maintenance• Referral (word of mouth)• Offer incentives for free cars• Online research library (Autobytel)• Weekly automarket reports (Autobytel, Autoweb)• Financing online (Autoweb – through

peoplefirst.com)• Blue book value of used cars

Value Added

• Reminder emails for oil change/maintenance• Special discounts on services/parts• Service car anywhere• Home delivery• Free and convenient delivery service• Place advertisements to sell cars• Saves time• Free mailing lists• Test drive reviews• Search process easier

Value added cont’d

Lemon check doneLemon check done

Subsidized leases (edmund.com)Subsidized leases (edmund.com)

Safety auto information (edmund.com)Safety auto information (edmund.com)

Consumer reportsConsumer reports

Competitive pricesCompetitive prices

Community building with CarTalk’s Click & Community building with CarTalk’s Click & Clack (Cars.com) Clack (Cars.com)

Price Comparison BMW 323i

bmwusa.combmwusa.com $29,485$29,485 CarOrder.comCarOrder.com $25,425$25,425 CarDirectCarDirect $26,976$26,976

Legal Impediments & Pricing Strategies

In TX, lobbyists have caused the tightening of In TX, lobbyists have caused the tightening of franchise laws to further restrict efforts to sell cars franchise laws to further restrict efforts to sell cars without dealers. CarsDirect, Corder, and without dealers. CarsDirect, Corder, and Autobytel cannot sell in TX.Autobytel cannot sell in TX.

Lead Generators originally placed their businesses Lead Generators originally placed their businesses

on dealers’ ignorance of the internet. on dealers’ ignorance of the internet. 11 Possible shift from MSRP to cost-plus pricing. Possible shift from MSRP to cost-plus pricing.

Consumers are well informed of wholesale price. Consumers are well informed of wholesale price. 22

1 Wall Street Journal, January 24, 2000, B11 Wall Street Journal, January 24, 2000, B1

2 Ibid A4.2 Ibid A4.

Trying the product

PromotionsPromotions Free maintenanceFree maintenance Build your own car (Free customization)Build your own car (Free customization) Free DeliveryFree Delivery Free ResearchFree Research Convenience of Virtual CustomizationConvenience of Virtual Customization

Retaining customers

First time customers into repeat customersFirst time customers into repeat customers ReferralsReferrals Strong customer relationships throughout Strong customer relationships throughout

process (research, buying and servicing)process (research, buying and servicing) On maintenance plan, customers are On maintenance plan, customers are

committed to an ongoing relationshipcommitted to an ongoing relationship Near instantaneous price quotesNear instantaneous price quotes Bypassing dealer sales personnelBypassing dealer sales personnel