![]() ![]() ![]() Kuizon-Teves filled out an online application on the Auto-by-Tel website. All they want to talk about is how much you can spend a month," she says. "They just give you the runaround and try to get you tired. Cristina Kuizon-Teves, of Los Angeles, turned to the referral service Auto- after getting fed up with trekking to four different dealers in search of a Chevrolet Tahoe. Walk into most dealerships, and it's still hard to get a straight answer from anybody.)īut many customers are satisfied. (Surveys consistently show consumers are dissatisfied with the process. Many consumer advocates are skeptical about dealer-referral services, since buyers still end up buying from local dealerships who may provide the traditional dealer experience. With manufacturers and online brokers held in check, all that's left on the Web for online car buyers are dealer-referral services, and dealership websites. "It's four little words," says Art Spinella, president of CNW: "Can you beat this?" A CNW marketing research study concluded last month that new-car buyers pay an average of $1,400 less per car from a dealer than they do online - at least for buyers who negotiate-because online brokers represent yet another layer of middlemen. "They severely limit the ability of the auto industry to realize Internet-driven efficiency gains in the future," says CFA research director Mark Cooper in a report.īut other studies insist that local dealers serve consumers better than online brokers. The Consumer Federation of America estimates that such limits cost car buyers $20 billion a year, or an average of $1,500 per car. But most state franchise laws already prohibit manufacturers from bypassing local dealerships, to protect the dealers' investment. They had hoped to lop off the 31 percent of a new car's price that covers distribution and marketing, passing some of that savings on to the consumer. "It's in the public interest to have stable sales-and-service networks," says David Hyatt, executive director of the National Automobile Dealers Association.Įven manufacturer websites have failed to sidestep the middleman. (State lawmakers listen to dealers, because cars are a main source of sales-tax revenues.)ĭealers say online car-sales sites hurt consumers because they don't offer service down the road. In addition, 47 states now have laws that prohibit anyone but franchised dealers from selling cars to consumers. And CarsDirect, with $350 million in venture capital from technology incubator Idealab in 1998 is now worth barely $100 million. One such broker, CarOrder, closed shop Feb. Direct online sales brokers, who buy cars from dealers and then resell them to consumers, haven't been able to recoup their expenses. Most Internet-only auto websites are either out of business or struggling. Yet across the retail landscape, the middleman is winning, especially when it comes to the second-biggest purchase most people ever make - automobiles. Today, shoppers can often gain an edge by going online. The Web would cut out the middleman, level the playing field between buyers and sellers, lower prices, increase choice, and add convenience. The Internet's rise in the late 1990s was filled with promise for consumers.
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