Autobytel.com is an online automotive marketplace that connects customers with car dealerships. It offers services like building customized vehicles, value-added services, and sending final orders to dealers based on their geographic territories. The company is questioning how to best position itself in the market given its new products and services. It is also considering whether to increase advertising spending, potentially using both traditional and new media. Autobytel was founded in 1995 and operates various automotive websites while providing information to help consumers purchase new and used cars. It connects thousands of dealers nationwide but has been struggling with high spending on marketing, sales, and administration compared to its revenues.

1. AUTOBYTEL.COM
Presented By:-
Maneesh Garg
Rohit Singh
manigarg21@gmail.com

2. GENERIC SCHEMATIC OF “HOW AUTOBYTEL.COM WORKS?”
Autobytel.com
Customer
‘A Web Interface’
that connects
customers with the
cars offered by the
dealerships +
customized build-up +
value-added services
Final Order is sent
to a Dealer
depending on his
geographical
territory
Dealer 1
Dealer 3
Dealer 2

3. PROBLEM STATEMENTS


Given the new products and services Autobytel
was now offering, how should the company be
positioning itself in the market?
Should the company be spending more on
advertising? If so, was a combination of
traditional and new media the right way to go?

4. ABOUT AUTOBYTEL








Launched autobytel.com in 1995
Founder- Pete Ellis
Market Cap- 31.95 M
Positioning statement- Your Lifetime Automotive
Advisor™
Providing information to purchase new and used cars
Connected thousands of dealers nationwide with motivated
car buyers
In 1998 it launched CyberStore - a site where consumer
could shop for pre-owned vehicles online
Its network of automotive sites, including Car.com℠,
DealershipJobs.com and MyGarage.com

5. CASE FACTS

Autobytel- Dealer relations was the key to success.

Major issue- Dealer’s turnover, Internet Companies,
Shrinking profits and Taking advantage of poor dealer
reputation.

Company had approx. 3000 dealers in Northern America in
major metropolitan areas, with major expenses on marketing
and sales expenses and ongoing training and support
provided.

Autobytel provided exclusivity of geographic area to assure
dealers a large volume of quality purchase requests to lower
their operational costs.

6. AUTO RETAILING INDUSTRY

Includes sales (new and pre-owned), service, and parts
exceeded $1 trillion per year.

Over 56 million new and used vehicles changed hands
annually, resulting in over $670 billion in sales.

New cars and trucks were sold through approximately
22,000 dealerships in the United States, which represented
about 49,000 franchises.

7. AUTOMOTIVE DEALERSHIPS
Automotive dealerships derived revenue from three
primary sources:
Revenue
sale of new and
used vehicles
service and
parts (S&P)
finance and
insurance (F&I)

8. GENERAL FACTS ABOUT THE INDUSTRY

Car-buying tended to be both a thoughtful and
emotional process (because it was 2nd largest purchase after
Home).

Industry had a poor reputation among consumers; in
fact, fewer than 50% of customers who purchased a vehicle
ever returned to that dealership to either purchase another
vehicle or to get service.

In addition, while 59% of new car buyers reported feeling loyal
to the vehicle they purchased, only 13% reported feeling loyal
to the dealership where they purchased the car.

9. TRADITIONAL CAR BUYING PROCESS

Consumers enters a dealership to purchase a new car (having little
information regarding manufacturers’ costs, dealer costs, leasing costs, financing
costs, and other relevant information)

However, because they knew that the MSRP price listed on the vehicle was
negotiable, they were faced with the arduous task of bargaining with a
salesperson to get a favorable price.

This lengthy negotiation process usually began with a floor salesperson,
and goes on to senior salesperson or sales manager, or someone more
senior, such as the general sales manager.

After all this, over 20% of traditional car buyers still paid a vehicle’s
original sticker price.

Even after all this inspection for trade-in, financing and insurance (F&I) are
still left.

Traditional car buying process included three to six salespeople per transaction.

10. THE AUTOBYTEL.COM SYSTEM
Customer visiting the Autobytel.com website could shop for
vehicles in a number of ways:

Beginners- through vehicle photos for every make and model
with specification and pricing information.

After narrowing down their choices, they could access a
variety of automotive information about their preferred
vehicles

Assist consumers with specific vehicle related decisions,
including financing and insurance.

Building their car from the bottom up

No-obligation, purchase request for their vehicle of choice.
They could also submit an optional finance or lease
application.

11. MYGARAGE

Through MyGarage® vehicle ownership experience, Autobytel
offers-

Valuable shopping and research features to help consumers buy,
sell and maintain their vehicles, including new and used car
research

New and used car price quotes supplied by dealers and other
vehicle sellers,

Used car vehicle listings

Information and links to providers of insurance, auto finance, and
other products and services.

Help dealers to efficiently manage and convert online business.

12. CYBERSTORE

Launched in 1997, the Certified Pre-Owned CyberStore
gave consumers the ability to use Autobytel.com to
purchase pre-owned vehicles.

The site was generating over 2 million searches per month.
Approximately 10% of Autobytel.com’s purchase requests
were for used vehicles, and CyberStore subscription fees
were accounting for slightly more than 10% of total
program fees.

13. CURRENT SCENARIO (AS OF 1999…)

14. PRODUCT & SERVICES OFFERED
HOME
Customer
Service
New Car
About
Autobytel.com
PreOwned
Vehicle
Contact
Research
Press Room
Rewards
Warranties
Advertising
Canadian
Guests
Insure
My Area
Finance

15. STOCK PERFORMANCE CHART (1999-2012)

16. WHAT NUMBERS SAY?
1995
1996
1997
1998
1999-Q1
1999-Q2
Revenues
274
5,025
15,338
23,826
8,032
9,203
Gross
Profit
274
5,025
15,338
23,826
8,032
9,203
Sales &
MKTng
930
7,790
21,454
30,033
9,957
11,027
Product &
Technical
Developm
ent
99
1,753
5,448
8,528
2,366
3,216
General &
Admin
275
1,641
5,851
5,908
1,817
2,052
Total
Operating
Expenses
1,304
11,184
32,753
44,469
14,140
16,295
Operating
Income
(1,030)
(6,159)
(17,415)
(20,643)
(6,108)
(7,092)
Net
Income
(1,030)
(6,035)
(16,810)
(19,398)
(6,141)
(5,984)

17. 
The company is spending way more (almost 1 ½ times) on Sales &
Marketing’ than what it is earning as Gross Profit

E.g. It spent $1.3 Million US on Superbowl Ads when its total revenue was only $5
Million US

With only 200 employees the company’s spending on General &
Administrative area is exorbitant in the last 4 years – increased 21
times from 1995 through 1998


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This amounts to $30,000 US per person as salary
This is ridiculous when average selling price of a new car is $22,650 US
Company claims to have cut fat from the system – “Automotive
Dealership” – but is itself way inefficient

There is a Dealership FInancial Problem – Net PreTax profit has increased
from $125,000 US to $306,000 US (1991-97) but Net Profit per car has reduced from
$231,000 US to $51,000 US (1987-97)

18. 
The Net Profit for Used Cars has almost gone up twice in the same
time: from $148,000 US to $274,000 US

Used Cars average selling price has increased twice in the same period
where New Cars’ has increased 1.7 times, only.

Benvenuto said they have COGS = 0 – coupled with no
procurement/carrying/shipping costs and no inventory risks.

This claim is not justified: If it were, then there shouldn’t have
been any reason to continue to bleed monetarily.

We believe the company is doing accounting error

It is not showing the money invested on servers – an imperative
and huge cost for running web portals – which is inevitably a
COGS

19. SALESPERSONS

Sales personnel of Autobytel are quite efficient.

Autobytel.com has a better Closing Ratio (1:5 to
3:10) than any of its competitors

Dealerships’ salespeople remain inefficient – 9 cars on
avg. a month

Dealer are applying the salesforce training obtained
from Autobytel.com to other areas – Loss of Revenue
to Autobytel.com

20. LEARNINGS

The company needs to milk the innovations it has been leading

It has to create copyright / patent right laws to save its procedures and
training from being copied.

It must not enter into the Wholesale Car market – Doesn’t have enough
cash at hand

It must focus on the Services & Parts Market – And quickly

It must reduce its tie-ups with the insuring companies – its cut is small
($50 ~ $125) and customer usage is very less

It must focus on its tie-ups with Manufacturers & Auto Dealerships to
create, develop & sell “Lateral Automotive Accessories” from the site itself.

It should focus on mobilizing more of its 200 trained workforce as DPs.

It can’t afford to spend blatantly on S&M

21. 
It has to bank heavily on its already existing
Brand Strength & Awareness

It has to outsource the maintenance &
functioning of Servers.

22. THANKYOU