Yes, dealers are selling cars on line. But there are significant challenges in the process that need to be addressed.

One challenge is how to handle the trade-ins. It's a big concern for consumers. The Forrester Internet Research Survey reports 26% of people who research vehicles online back out because of trade-in concerns.

Also, the two most visited automotive Web sites as reported by several Internet studies? Kelley Blue Book and Edmunds.com, sites that provide pricing on used vehicles.

The problem is, for both the consumer and dealer, handling the trade-in process online is a nebulous process.

Some dealers have placed links on their Web sites to the Edmunds and Kelly Blue Book sites as a partial solution.

Now, a remarketing company out of Florida, Fleet Lease Disposal, Inc. is developing a solution for the trade-in process. It's a Web site application called Veretech and it allows consumers to obtain guaranteed prices online for their trade-in.

Anderson Honda in Palo Alto, CA has been piloting the Veretech system since mid-December, says dealership owner John Anderson.

Between December 15 and February 10, of the 200 people who filled out the on-line appraisal form, 19 purchased a vehicle.

Mike McFall, the president of Fleet Lease Disposal, thinks the tool might pull in the customer who is on the site only to do research and desires to remain anonymous.

“It's an incentive for the customers to reveal their identities — tell us who you are and we'll give a guaranteed price on your trade-in.”

Consumers who take the time to fill out the form are serious customers, he says.

Manuel Souza, Anderson's Internet sales manager, believes the trade-in was the missing link to the true Internet sale.

“Before, customers with a trade-in had to come into the store and engage in some form of negotiation. “It's a matter of trust — we're guaranteeing a price without seeing the vehicle. For the customer, that's important.”

The process for the consumer is painless. A click on a button on the dealership's Web site brings up a comprehensive form the customer fills out online. Within seconds after submitting the form, the customer is given a guaranteed price that they can print out in the form of a certificate.

The price is only good for 10 days to account for vehicle depreciation and to get the consumer to make a decision.

The customer brings the vehicle and the certificate to the dealership. Provided the consumer is honest about the condition of the vehicle, the price stands. The consumer can negotiate. “But very few choose to,” says Mr. Anderson.

Of course, the question is: Can customers accurately determine the condition of their vehicles? Early returns say yes. Only once has a customer misrepresented that, says Mr. Anderson.

In the remarketing business for 22 years, Fleet Lease Disposal has been able to develop the Veretech software into a fairly accurate pricing guide, says Mr. McFall. The pricing is based on what happens at the local auction.

Veretech gathers all of the auction information and interprets it to a market price, after making adjustments for vehicle condition.

By surveying all of the auctions within a dealership's geographic location, Veretech is able to determine the actual market value of the customer's trade-in.

Mr. McFall explains, “Because we look at the prices the car just sold for at the auction, the dealer knows if he buys a similar car for a certain price, he can sell it for at least that much.”

“The trade-in is the missing link of the true Internet sale.”
— Manuel Souza
Internet sales manager
Anderson Honda

If the dealer doesn't like the price the Veretech software provides the customer, Fleet Lease Disposal promises to buy the vehicle for the quoted price. So far, the company hasn't had to buy any such vehicles.