What was once a longstanding relationship between auto dealerships and the third-party sites that sent customers their way, such as TrueCar Inc. and AutoTrader.com, has now turned sour.
New car dealers are building up their Web sales efforts, with hopes to cut out the middlemen in online transactions, The Wall Street Journal reported over the weekend.
“These websites attract shoppers looking for car information, reviews and pricing guides, and then charge dealers to steer would-be buyers to their stores — a fee that in some cases costs up to $400 a referral,” WSJ said. “Today, they are sizable businesses in their own right, generating hundreds of millions of dollars in annual revenue. TrueCar went public last year and has a market value of more than $1 billion,” they added.
But after years of paying up for the referrals, car retailers like AutoNation and Penske Automotive Group are taking matters into their own hands by promoting their own online sales.
AutoNation, America’s largest dealer group, is in the early stages of launching an online buying tool that will allow customers to complete a majority of the car buying process online.
“We think there will be a great disruption in auto retailing,” AutoNation CEO Mike Jackson told the Los Angeles Times. Car shopping should be a seamless experience, allowing the buyer to start researching online, go to a dealer to test drive and return home to purchase online, he added.
Penske recently launched a pilot of its own online sales program, allowing customers to handle much of the transaction online while providing a platform to research vehicles and improve pricing transparency.
“Penske’s Preferred Purchase, which links a dealership to the sort of online options available from third-party shopping sites, is the latest in online sales programs being developed by large dealership groups,” Autonews.com reported.
But for many potential car buyers, deciding between interacting directly with dealerships online versus using referral sites may simply come down to trust.
By offering vehicle information and easy access to pricing details, without the threat of a hard sell, many of the referral sites have created a good reputation with customers, WSJ said — especially since they do not represent auto manufacturers or dealers.
Jared Rowe, president of AutoTrader.com, told WSJ that dealers are just trying to “force customers into buying the way they want to sell,” by attempting to shut out the online referral sites.
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