Ford Dealers Form Auto Megasite

A coalition of 4,200 Ford dealers is forming FordDirect.com, which will enable Net users to select, purchase and finance new automobiles online. Customers can select the Ford dealers that will complete their transactions.

FordDirect will be jointly owned by Ford dealers and the Ford Motor Co. (NYSE: F), with an independent management team appointed by the venture's board of directors.

While Ford will be an investor, Ford Division dealers will retain control of the new site, which is to launch in California in September and throughout the United States next year. Specific terms of the deal were not disclosed.

The announcement of the new venture follows the release of a survey by the National Automobile Dealers Association (NADA) showing that well-established Web sites translate into much healthier sales for dealers. Dealerships that have been operating sites since 1995 generate 13 new vehicle sales per month from Internet leads, compared with just five for those with sites in 1999 or 2000, according to the survey.

Customers Have Spoken

"Consumers have sent a clear message: The Internet has become a major force in buying new cars and trucks and in the ownership experience that follows," said Jerry Reynolds, chairman of the national Ford Dealer Council. "Now, we have responded."

Jim O'Connor, a Ford Motor Co. vice president and president of the Ford Division, said dealers came to him with the idea earlier this year.

"This is a breakthrough," O'Connor said. "FordDirect is a cooperative effort between us and our dealers. But the real winners are our customers. They can now buy a new car or truck online with confidence and peace of mind, knowing that the entire experience is backed by Ford and our dealer partners."

FordDirect will enable consumers to select desired equipment, color and trim from inventories available at their preferred dealers.

Online Auto Shopping Takes Hold

Just a few years ago, online shopping for cars was considered a novelty. However, research firm Gartner found that from September 1999 to March 2000, 45 percent of 40,000 households surveyed used the Internet at some point in the car buying process, and 3 percent actually bought their cars online.

Two years ago, by contrast, the percentage of online shoppers that used the Internet for any part of the car buying process was less than 25 percent, the survey found.

Asked how likely they are to use the Net in their next new vehicle purchase, 48 percent of households surveyed said that they are "very likely" to shop for their next new car online, according to the Gartner survey.