CEO Mike Jackson put the big Internet shopping sites on notice last week: AutoNation is building Web products that will slash the number of leads the group’s 229 stores get from AutoTrader, Cars.com, TrueCar and others.
And if the third-party sites keep raising prices, he’ll cut them out of the mix even quicker.
In making a case to spend $50 million on AutoNation’s digital storefront, Jackson laid bare the growing tension between dealers and third-party lead generators.
Each year many dealers drop third-party sites, dissatisfied with perceived high prices for leads and the limited sales they produce. But, says a source at a major Internet shopping site, the majority return within six months after their market share declines or they negotiate lower prices for less advertising.
AutoNation’s size and resolve make this conflict different. Jackson is investing in Web sites that eventually will offer shoppers finance options, trade-ins and other features that will have the AutoNation brand and be under AutoNation’s control.
Robust marketing, which will aim to make the Auto- Nation brand a household name in its market areas, will boost the cost to $100 million, the company says.
Todd Caputo, owner of Sun Chevrolet Inc. in Chittenango, N.Y., said he has seen no falloff in sales or leads since dropping AutoTrader in November and Cars.com a year ago and is using the savings to buy more Google ads and use more direct mail.