BATTLE LINES FORMING IN THE WILD WORLD OF THE AUTOMOTIVE WEBSITES

Battle lines are forming between dealer consolidators, the two largest automakers and direct sales websites over whether such sites are tantamount to "third party" brokers.

It's the latest in the wild world of the web.

After United Auto Group and its fellow company, Penske Automotive Group, bought a 10% stake in CarsDirect.com for $17 million, GM warned its 7,700 dealers to cease and desist from using sites like CarsDirect.

Earlier, Ford issued a similar warning to its dealers regarding CarOrder.com.

"No brokers or third parties acting as brokers are acceptable in the sales process," GM spokeswoman Rebecca Harris says.

Letters to that effect were sent to all GM dealers.

A DriveOff.com spokeswoman says, "DriveOff.com does not wish to replace the successful distribution channel dealers have provided for decades; instead, it provides the best of both worlds for dealers and consumers.

"Dealers receive closed sales and retain customer interaction while consumers receive the conveniences of arranging their entire transaction on the Internet."

The automakers say they have no problems with lead-generator websites like Autobytel.com and AutoWeb.com.

The GM action came right after UAG Chairman Roger S. Penske announced that CarsDirect had chosen the 177-dealer consolidator as its preferred provider and disclosed it is planning an initial public offering of common stock.

"CarsDirect is the best of the websites in car sales," Mr. Penske asserts.

CarsDirect CEO Robert Brisco, who joined Mr. Penske in a press conference announcing the relationship, denies his Culver City, CA-based company is a broker.

"Our 2,500 licensed franchised dealers obtain vehicle purchase agreements from our personnel, make the deliveries and handle the service," Mr. Brisco says. "We do not broker, have no intention to buy dealerships and are not violating franchise rules."

Under the UAG/Penske Auto-motive/CarsDirect agreement, all Penske-owned 117 dealerships will display their inventories on the CarsDirect Web site.

The deal will allow CarsDirect - which added Mr. Penske to its board of directors - to buy new cars at lower dealer wholesale prices and potentially reverse a red-ink pattern that brought it a $43.1 million loss in the first quarter of 2000 on revenue of $98.6 million.

Other dealership conso-lidators involved with sales websites include the largest, AutoNation, Inc., with America Online Inc., and the second largest, Asbury Automotive, with Greenlight.com.

"We think the combination of our automotive e-commerce expertise and the reputation of the popular AOL brand will create the Internet's top destination for buying automobiles," says AutoNation CEO Michael J. Jackson.

Greenlight.com says it does not plan to act as a broker, but build a dealer base receiving completed sales transactions from on-line customers.

Privately, dealers have voiced concerns that automaker opposition to independent car selling websites conflict with their desire to "control" the process on their own sites.

In this connection, GM is buying a 10% stake in dealer technology provider Reynolds & Reynolds Co.

GM says the purchase will enable consumers to choose and configure a vehicle on-line, using dealers to finalize the purchase, transmit the order to the factory and deliver the vehicle.

R&R will become the exclusive provider of GM technology for dealer e-business and the preferred supplier of office systems for its dealers.

Frank Ursomarso, Pontiac-Buick-GMC dealer in Wilmington, DE, is "cautiously optimistic" the GM-R&R deal "would get everything in one spot - and on the Internet, as well."