The Internet knows no borders, so why does Autobytel.com respect them?
The Irvine-based online car seller has gone online in Britain and Scandinavia in a move to bring American-style price transparency to a market long fragmented by national currencies and customs. While European Union law prohibits most new-car dealers from selling multiple brands in the same showroom, Autobytel lets people compare cars side by side in a virtual environment that exposes differences in equipment and price.
The company's British franchise, Autobytel.com.uk, had 10.4 million hits in the first month after its launch April 30 and has generated more than 1,000 purchase requests for the company's dealer partners.
So far, however, it isn't helping consumers buy cars beyond Britain, where the savings are biggest. While the Irvine-based Autobytel is actively courting partners in several countries with an eye toward the eventual creation of a pan-European distribution system, Autobytel.com's British and Scandinavian franchises currently refer British customers to British dealers and steer Swedes to Swedish showrooms.
"Marketing on a pan-European basis has its complexities, starting with language differences," said Kevin Turnbull, chief executive of Autobytel UK Ltd., which is 100% owned by Inchcape PLC, the world's largest independent automotive distributor.
A more subtle reason, however, is that Internet auto brokers are constrained by the same legal straitjacket that hinders European car dealers from advertising cross-border. EU law allows auto makers to restrict their dealers' advertising to specific market areas, generally a small region within one country. Dealers can sell to customers from other areas but can't actively solicit their business.
In May, Volkswagen AG's British subsidiary, Volkswagen UK Ltd., sent a letter to its dealers to try to reassert control over those who had signed up with Autobytel UK in an attempt to expand their business horizons. The letter instructs dealers that collaborating with independent brokers such as Autobytel UK represents a "serious breach of your dealer agreement" and even jeopardizes their franchise contracts.
Turnbull is hoping VW UK will change its mind. The German parent company has issued no such instructions to its dealers in other countries, and no other auto maker has followed suit in Britain.
VW UK declined to make any officials available to comment on the matter but issued a statement saying that middlemen such as Autobytel UK would lead to higher prices and lower levels of customer service.
Dealers and other auto makers say such thinking defies logic and flies in the face of progress. "We've got to stop thinking about our own little patches," said Christopher Evans, marketing manager at Masters South London, a Vauxhall dealer that hopes working with Autobytel UK will boost its business. "We are part of the greater scheme of things."
Evans said the Internet is going to "revolutionize car buying in the U.K." and warns that auto makers and dealers that stand in the way of new technology risk losing out on opportunities. "Flexibility is the word," he said.