Ford Builds an Onramp for Net Sales - Company Business and Marketing

Industry Standard, The, Sept 4, 2000 by Eric Young

The big automakers are going on the counterattack against Internet car sites.

On Friday, Ford said its auto dealers will set up a Web site, FordDirect.com, that will let customers configure, price, finance and purchase a new Ford car or truck. Just two weeks ago General Motors proposed to team up with its dealers on a site that would provide consumers with objective third-party auto information on all makes and models of cars.

Both Ford and GM are taking aim at a raft of Internet car-sale sites such as Carpoint and Autobytel that have cropped up in recent years. The startups provide consumers with information about vehicle pricing, availability and the promise that customers won't have to interact with car dealers -- a harrowing experience for some -- until the vehicle is delivered.

FordDirect will be jointly owned by Ford and its dealers and be run by an independent management team. Ford officials say the site will begin operating in California in September and throughout the country next year. "We are breaking through the channel conflict that is sometimes caused by the Internet and giving our customers a great new experience," says Jerry Reynolds, chairman of the national Ford Dealer Council. "Consumers have sent a clear message. The Internet has become a major force in buying new cars and trucks and in the ownership experience that follows. Now, we have responded."

Ford had no choice but to respond. More and more car buyers are turning to the Internet not only for information, but also to make purchases. CNW Market Research estimates that newcar sales on the Internet will increase from 0.5 percent of the $331 billion total new-car sales in 1999 to 9 percent by 2002.

Car-sale sites say they aren't worried about the automakers. Consumers, dot-coms argue, will trust neutral sites for information. Their challenge, though, is to turn browsers into buyers.

The automakers could bring a lot to the table. After all, who knows more about vehicle specifications, availability and customization than the automaker? And Ford and GM could offer special online promotions to lure buyers online.

"If you want a customized car with certain trims, you could imagine Ford saying, 'You come to our site and we'll get it to you a week before anyone else could,"' says Jonathan Gaw, an automotive industry analyst with IDC. "If they do this really Nell then, yes, some of the pure-plays can be in trouble."