Dealers Show Growing Interest in Selling Used Cars on the Internet

Sales Manager Paul Miller of Capital Ford in Raleigh, NC, increased used-vehicle Internet-related sales for his dealership from 600 units in 2001 to 1,035 in 2002. New-car on-line sales went from 744 to 972.

His dealership is one of three Ward's e-Dealer 100 stores that sold more used vehicles than new, at least via the Internet. Capital Ford was 29th on last year's Ward's Dealer 500, selling a total of 4,665 new vehicles and 3,594 used.

Miller credits the 72.5% jump in used-car Internet sales to a software package he started using last year. “I would have never guessed making such a minor change would have had such a big effect,” he claims.

The package, called I2 Box, allows dealerships to place multiple pictures of each vehicle on-line, place a link that pulls up a Carfax report for the shopper and display window stickers. There also is a link to the Edmunds.com vehicle review section. North Carolina-based ProMethods developed the software.

It allows all of the vehicle research to be completed from one Web site — Capital Ford's.

“It's quick and I don't have to wait a week to get my pictures up. It's also easy. The guy who's doing it for me doesn't even speak English,” Miller says.

New-vehicle Internet-related sales for franchised dealers on the Ward's e-Dealer 100 far surpass those for used vehicles (80,173 and 24,053 respectively).

But for many dealers, used vehicle sales are more important. Used vehicles' gross profits are higher, notes Miller.

Cars.com data show gross profits for used vehicles to be 3-5 times more than for new, says Mitch Golub, general manager of the dot.com firm specializing in used cars.

“The place to be is in used vehicles,” he says. “Used vehicles have changed the entire profit model on line.”

As a result, companies that provide used car leads for dealers, such as the auction site eBay Motors, are becoming more popular with dealers.

On last year's ranking, no dealers listed using eBay Motors as a third-party site. This year 10 did. It's popular with consumers also. Almost 7 million unique visitors are on the site each month and in 2002, more than $2.2 billion worth of vehicles and accessories were sold.

The average vehicle on eBay receives eight bidders and 75% of the vehicles are bought by people out of state.

AutoTrader.com, the used-car giant Web presence used by 53 Ward's 100 e-Dealers, created its own auction site after ending a partnership with eBay Motors last November. Only in existence for three months, more than 300 dealers are listing vehicles for auction on AutoTrader.com.

CarsDirect.com, a third-party site for new vehicles, in June launched a used-car section with classified-type listings on its site. “We're seeing rapid interest for used cars on-line so it makes sense for us to be there,” says Bob Briscoe, CarsDirect.com CEO.

It's also becoming easier for dealers to market used vehicles because of advancements in digital photography, Briscoe notes.

CarsDirect just started testing a vehicle trade-in tool for customers and dealers. “We're trying to bring customers who are further down the buying process to dealers,” Briscoe says.

AutoTrader, CarsDirect and Cars.com all provide detailed reports each month to their dealers, letting them know which used vehicles are selling and which aren't. Dealers can use that information to decide what pre-owned vehicles to stock.

“It's a window into shoppers' intentions that normal sales data can't provide,” says Mark Miller, vice president of dealer operations for CarsDirect.