Online car sales site Autobytel (Nasdaq: ABTL) said Thursday that it turned its first operating profit in the fourth quarter. The company expressed optimism that it could remain profitable during the year ahead.
Autobytel president and CEO Jeffrey Schwartz said the company now is generating 4 percent of all U.S. auto sales. In 2002, he added, the company will focus even more on providing marketing services to auto dealers and makers.
Penny for Your Profit
Autobytel said it recorded a gross profit of US$210,000, or a penny per share. With all charges included, the firm lost about $900,000, or 3 cents per share — well below the $33 million it lost during the same quarter in 2000.
Revenue also increased, rising to $20.5 million for the fourth quarter compared with $16.8 million the year before.
Autobytel has grown, in part, through takeovers. The company now controls onetime competitors Autoweb.com and Carsmart.com.
And Autobytel already has posted an impressive comeback, at least on the stock-price front. In danger of losing its Nasdaq listing as recently as last fall, the Irvine, California-based company has seen its shares bounce back from below $1 to trade at $3.10 on Friday morning.
Much of the recovery came after Autobytel announced a partnership with Yahoo! (Nasdaq: YHOO), which will use the Autobytel family of sites to enable Yahoo! users to request quotes on new and used vehicles.
“By focusing on our core business, we are positioning ourselves to garner a greater share of the $21 billion spent annually by manufacturers and dealers on marketing and advertising services,” Schwartz said.
Reduced Speed Ahead
Schwartz admitted, however, that as car makers pull back from the aggressive promotions that marked last fall, Autobytel will likely see flat revenue growth in the first half of 2002.
In fact, automobile advertising on the Web spiked sharply in the last part of 2001 as carmakers sought to get their zero-financing offers in front of as many consumers as possible.
Fueled by that advertising run-up and by consumer reluctance to move the entire car-buying process onto the Internet, other online car sites that originally aimed to become online marketplaces also have set their sights on becoming marketing conduits.
For example, MSN’s Carpoint recently announced a multiyear marketing deal with Volvo, which will culminate with the debut of the automaker’s new SUV on the Carpoint site.
Other online auto sites are holding firm to the premise that more consumers not only will research car purchases on the Web, but also will seal the deal online. Privately held CarsDirect.com, which last year took over Amazon-backed Greenlight.com, is one company that is banking on more widespread adoption of virtual car shopping.
And there are reasons for optimism on that front. Jupiter Media Metrix (Nasdaq: JMXI) has said that up to 32 percent of all cars — $142 billion worth — could be purchased online by 2006.
I just purchased my new car through carsdirect.com and had the most wonderful experience. I was leery of making such a large purchase online at first, so I haggled with two separate local car dealers for three weeks, and wasted a lot of time and energy! Neither one could get me the exact car I wanted, and both tried very hard to talk me into buying vehicles from their inventory with many “options” that I didn’t want to pay for. Finally, I was fed up enough to pursue the online route, and boy AM I glad I did! I picked up my new car yesterday from a different local dealer – and it’s the exact car I wanted at a price that was quoted online at $200 below dealer invoice. And, my carsdirect.com salesman informed me of a manufacturer-to-dealer rebate of $500 that neither dealer told me about.
You know, five years ago, I hesitated before making my first airline ticket purchase online. Now, I only purchase airline tickets electronically. I’m certain this will be the same for car buying. There is absolutely no reason to go through the ugly, painful, time-consuming process we’ve been going through for years.
The media is still under a belief that many cars are actually sold “online” when reality is that although the transaction may originate online, consumers are still buying vehicles on-site at dealers.
I would be completely shocked if 32% of vehicles are sold online by 2006, as Jupiter suggests. We need to clear on what the definition of an online sale is. A sale through an Autobytel dealer is in most cases, not an online sale.
The clearer we can be on a definition, the closer we are to bringing consumers, dealers and sites such as cars.com and ABT to having realistic expectations and success in using the internet as an integral, but not sole, communication channel in automobile purchases.
There is data to prove that as many consumers will call car dealers after finding them at an online automotive site, as will send them a email. This is a group too large to ignore and this is how the internet is truly coming together with car buying.