Battle for Online Car Sales Grows Fierce

The traditionally tight battle for U.S. auto sales is moving to the Web in full force, as top automakers are now clamoring for position in a crowded e-commerce landscape.

Earlier this month, U.S. automakers General Motors and Ford Motor Company announced alliances with AOL and Yahoo!, respectively, leaving little doubt that other deals are soon to follow. The Web has become a formidable tool for consumers who are seeking to bypass traditional methods of buying or leasing a vehicle.

In general, consumers use the Web to do comparative shopping on features and price, and to negotiate prices for new vehicles in advance of visiting a local dealership to close the sale.

Powerful Tool

According to J.D.Power & Associates, more than five million new car shoppers in the U.S. used the Internet in 1999 to research their purchase. “Use of the Internet as a sales tool is essential, particularly in the U.S.,” said Shinji Kitayama, an analyst with New Japan Securities Co.

Still, Kitayama and other analysts agree that it is too soon to tell how much impact the use of the Internet really has on car purchases, since most consumers still do not close the sale until they visit a showroom.

Mitsubishi Joins Fray

Mitsubishi Motors Corp. is the latest prominent auto manufacturer to disclose e-commerce plans.

The company has announced an as yet unnamed Web site, to be introduced by Mitsubishi Motor Sales of America, that will connect U.S. customers directly to dealerships. Information on financing, sales and vehicle maintenance will be included.

Last year, largely due to massive advertising expenditures, 261,000 Mitsubishi vehicles were sold in the United States. According to Pierre Gagnon, COO of Mitsubishi’s U.S. sales unit, the company expects to sell 275,000 cars and trucks this year, and hopes to surpass 300,000 in 2001.

Raising Mitsubishi’s U.S. Profile

Mitsubishi, Japan’s number four auto manufacturer, is making the move to the Internet to remain competitive with other imports and U.S. automakers. Toyota Motor Corporation and Honda Motor Company reportedly plan to begin selling cars online in the U.S. by the end of this year.

Toyota began testing a Web-based sales system in Washington state and Florida at the end of last year. Most Toyota and Lexus dealerships in the U.S. are expected to join the system by the end of this year. Honda reportedly will launch a similar venture this spring.

Whither Daimler-Chrysler?

Some U.S. auto analysts are surprised that Daimler-Chrysler has remained quiet regarding its own Internet plans, but company chairman Robert Eaton claims the that the carmaker is ahead of the game and will ultimately have a strong online presence.

“I’m totally convinced that we will do every transaction, inside and outside the company, on the Internet within this two-to-three-year time frame, with our suppliers, with our dealers, with our customers, with our employees,” Eaton said.

In-Car Internet Access

In other automotive Internet news, Bell Atlantic Corp.’s mobile unit and GTE Corp.’s wireless unit have signed a deal to provide a wireless network for GM’s OnStar in-vehicle system.

The network will allow users to make personal calls and access the Internet by later this year, and will ultimately facilitate voice-based access to e-mail, news, sports scores, stock quotes and weather.