LAS VEGAS – Lunch speaker at the Conference of Automotive Remarketing (CAR) was Kenneth Elias of Priceline.com, giving a speech titled "Yes, I’m Selling GM and Other Cars on the Internet, and Dealers Aren’t Dinosaurs."
Elias said the Internet is all about information. There is plenty of information online, but how much of it is really valuable for both new and used car dealers? The problem with the Internet is that there is too much bad or irrelevant information. In the past, dealer websites did not have much useful information. For example, instead of giving pricing, they simply gave the dealer’s name and location."
Elias talked about how the airlines started using multiple rates for different scenarios – different fares for the same flight under various different circumstances, and how this affected sales. Priceline.com, launched in April 1998, describes its service as "demand collection" – the customer demands a rate, and Priceline determines the brand, the time, the dates, etc. On Priceline’s first day of operation, it had 37 sales. Today it sells over 80,000 airline tickets per week.
In Priceline’s new car sales service, the customer says what he/she wants (the brand, the model, the options), and they give three counties or locations where they will get the car, and Priceline matches that request with selected dealers. The customer receives "price discovery" – a bottom-line price for their offer. This is what customers want from online purchases, no matter which online vehicle sales service they use. "The majority of customers buy a car in thirty days," Elias said, "and Priceline keeps bid information so it knows what type of vehicle customers want and what price customers are willing to pay."
Used cars are a more difficult market to service over the Internet because there’s no commonality between the products. Priceline can determine demand, but customers may have trouble trusting the reliability of used cars sold online. Also, there is the question of consumers trading off for price. "For example," asked Elias, "if a customer wanted an Audi, but can’t find one at their price, would they buy a less expensive car like a Lumina? If they can figure out how to solve those problems with online used car sales, they’ll be able to tell or identify a used car buyer before one ever steps on the lot."