Autobytel

Major issues facing Autobytel is the intense completion with other online car-buying service providers, the turning over of dealerships they are partnered with and operating cost that are extremely high in comparison to revenues. Autobytel approximately 3000 dealers in North America in major metropolitan areas. Majority of expenses they are incurring are in relation to the extensive training provided and marketing.

The auto retail industry generates approximately 1 trillion dollars a year, this includes both new and used car sales and parts and service.

Used cars make up about 40% of vehicles sold. Gross profit margins on used cars tend to be higher therefore salespeople are under more pressure to close the deal and for the consumer the vehicle has predetermined characteristics that often cannot be changed (mileage, accessories, history of use and maintenance records). Prime reason customer would be drawn to AutoBytel.com. Vehicles are certified pre-owned, no high pressure sales tactics, can search for price, make, model, mileage, year and location of vehicle so customers can choice from a larger selection of used cars and find what they want. Have access to Kelly Blue Book reports for trade in information and are giving 72 hours for 100% money back return.

AutoNation (400 new car franchise and more than 40 used car superstores in 20 states) vertically integrate the car industry by selling, renting, leasing and servicing cars at every level imaginable.

Spending 1.3 million advertisement was extravagant for a company with 1996 sales of 5 billion and no operating profit. (super bowl promotion) Repeated the promotion in 1998 paying 1.5 million in advertising. Making Advertising Age “Marketing 100 List” the only internet company so named.

Strategic Growth Options

Alternative 1 focuses on adding new dealers to their network to enhance cash-flow while reducing operating cost. Since Autobytel sees 89% of it revenue from dealer subscription fees, it is important for them to continue to add new dealers to their network. However it is also just as important that they continue to foster the relationships that they have with dealers that are already in the Autobytel network.

Alternative 2 focuses on Autobytel offering new products and expanding relationship with information service companies, reducing marketing and operating cost.

(Disagree) Alternative 3 calls for Autobytel to expand to global markets. Since the Autobytel is at this point losing money, expanding to other global markets at this time would not be in the best intrest of the company. The bulk of the auto sales

(Agree) Alternative 4 calls for the elimination of the for sale by owner section of the cyber store and focusing on increasing the number of certified, pre-owned car dealerships.

Do away with offering