New Routes in the Internet Car Business

Independent auto analyst Maryann Keller has been tracking the auto industry for the past 30 years, first as a Wall Street securities analyst with Paine Webber, then for 13 years at ING Baring Furman Selz LLC. In mid-1999, she joined Priceline.com and spent 18 months as president of the company's automotive services unit. But when her staff was cut back, she resigned. It had quickly become apparent, she says, that most consumers weren't willing to buy a car online. "There was a lot of naïveté in Internet car business," she told CIO Insight Executive Editor Marcia Stepanek in a recent interview. "A fancy Web site wasn't enough to get people to buy a car. It made the Internet a dirty word in the car business."

Keller now owns a consulting firm and works with Sonic Automotive Inc. and Dollar Thrifty Automotive Group Inc., but she still has hope for the Internet. "The Internet has a tremendous amount of promise and can be a very powerful tool," she says. "It's great for communication between an auto company and a dealer or supplier, but nothing has changed for the Internet car buying industry."

Stepanek spoke with Keller about the lessons Detroit automakers learned about business during the Internet boom—and how they're smarter now about what the Net really can deliver. What follows are excerpts from that interview.

CIO Insight: Ford Motor Co.'s new "Back to Basics" strategy is aimed at cost cutting and boosting quality—-a direct reversal of its once ambitious and expensive Internet sales strategy. What did Ford learn about the Internet, in your view, and where are they headed with e-business strategy?

Keller: I think there was a fundamental mistake made by [former CEO] Jac Nasser and the people whom he brought in with respect to the role the Internet would play in the automotive industry and, in particular, in auto retailing. They looked at it as a way of circumventing the dealer; they looked at it as a way of marketing direct to the customer. And so most of their strategies were aimed at what they thought was going to be better customer service, better customer satisfaction—whether in the form of customers being able to get better information from the Internet, or Ford, somehow, managing to get every person who came to the Web site to buy a Ford car. That was the naïveté of 1998, 1999 and 2000—-that somehow, if you magically came and looked at a Web site that blinked at you, you were somehow going to be sufficiently convinced that it was representing a car you really wanted to buy. The trouble is, there's no competitive advantage in Web sites. Everybody has one. And so once everybody has one, it's like everybody's 10-second ad on the Super Bowl; they all blur together, nobody remembers them.