Referral Service and Broker Models 'Not Sustainable'
DETROIT, June 7 /PRNewswire/ -- Speaking before the Automotive Press
Association here today, AutoNation's Chief Executive Officer, Michael J.
Jackson, said that automotive manufacturers and large "e-dealers" are
replacing online referral and broker services as the dominant players in
online automotive retailing.
Mr. Jackson said, "It's clear that the online automotive lead provider and
broker models are not sustainable. The question is not if there will be a
consolidation among these players, but when that will happen. National e-
dealers who fulfill customer orders from their own inventory, and
manufacturers whose web sites feature direct access to their best dealers and
special factory incentives, will be the dominant online automotive players."
Mr. Jackson said that while referral and broker services were generally
earlier to the Internet than dealers and manufacturers, these services have
failed to offer a seamless buying experience. "No matter how you cut it, the
referral and broker services are middlemen. They come between the customer
and the dealer, and that's not efficient. These services also disappear after
the sale, leaving the customer without a service relationship with a local
dealer."
The AutoNation CEO said "e-dealers" have several important advantages when
compared to referral and broker services. "Large e-dealers, like AutoNation,
offer Internet shoppers access to real vehicles at real prices because we own
the inventory at dealer cost. We can conduct the entire transaction online,
without a middleman, and we have the bricks-and mortar facilities necessary to
provide long-term service."
In related remarks, Mr. Jackson tackled a number of misconceptions related
to shopping for vehicles online.
"The first misconception is that the referral and broker sites give
consumers access to hidden cost savings that they wouldn't get if they went
directly to the dealer. The truth is, these services have to buy the vehicle
from a dealer," Mr. Jackson said.
The second misconception that the AutoNation CEO addressed was that of
"direct" versus "indirect" retailing. "Perhaps the greatest myth is that the
referral and broker services offer consumers direct access to vehicle
inventory. Nothing could be more misleading. It might be more appropriate to
call these services 'indirect.' And now, with some manufacturers warning
their dealers not to sell to Internet brokers, even the word 'indirect' might
be a stretch," Mr. Jackson said.
Mr. Jackson also said, "Research shows that customers spend an average of
19 days researching and buying a new automobile. On the other hand, they own
the vehicle for an average of 39 months. Good e-dealers, like AutoNation, are
positioned to meet the needs of customers during the entire ownership
experience. The referral and broker services seldom see beyond those first 19
days."
About AutoNation, Inc.
AutoNation, Inc. (NYSE: AN) is America's largest automotive retailer, on
and off the web, operating more than 400 new vehicle franchises in 19 states
and more than 200 web sites. The Company's revenue in 1999 totaled more than
$20 billion, making it a Fortune 100 company. AutoNation also owns the sales
referral business of AutoVantage.com, an automotive retail web site that
serves more than 1,200 dealerships in the U.S. This summer, AutoNation is
launching a new co-branded web site with America Online, Inc. (NYSE: AOL).
Called AOL AutosDirect, powered by AutoNation.com, the site will be the
"world's largest virtual auto dealership."
Certain statements and information included in this press release
constitute "forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or
achievements expressed or implied in such forward-looking statements.
Additional discussion of factors that could cause the actual results to differ
materially from management's projections, forecasts, estimates and
expectations is contained in the SEC filings.
SOURCE AutoNation, Inc.