It appears Amazon might as well write off their investment in Greenlight.com now LOL. I can tell Bezos is a retailing genious;-)
"Auto dealers and manufacturers still hold the keys
By Paul Elias
Redherring.com, September 20, 2000
Despite Internet car sellers' best efforts, car manufacturers and their traditional auto dealers continue to tighten their grip on the Web by refusing to do business with the startups.
The latest example comes from a Charlotte, North Carolina dealership chain. Scott Smith, president of Sonic Automotive (NYSE: SAH) says he wants to supply cars to Greenlight.com. But last week, Mr. Smith barred managers of Sonic's 173 dealerships from continuing to supply DaimlerChrysler (NYSE: DCX) cars to Greenlight.com. He acted after receiving a letter from the manufacturer threatening him with economic sanctions if he continued to do business with Internet middlemen.
Mr. Smith says he continues to supply General Motors (NYSE: GM) cars to Greenlight.com but adds, "I haven't heard from General Motors, yet." Sonic, the second-largest dealership in the country, has a small equity stake in Greenlight.com.
ROADBLOCKS EVERYWHERE
DaimlerChrysler's demand follows similar bans involving automobiles produced by Ford (NYSE: F), Honda (NYSE: HMC), and General Motors. Those four car makers have threatened dealers with economic sanctions if they sell cars to online companies they deem third-party brokers such as Greenlight.com, Carsdirect.com and Autobytel.com.
Internet car sellers must rely exclusively on traditional dealers for cars because franchise laws in many states forbid car manufacturers from selling cars to anyone but licensed retailers. Those laws, along with a desire by car makers not to upset their decades-old dealer networks, have become big roadblocks to what was once thought would be a new way to sell cars over the Web.
"According to Ford's policy, Greenlight is a broker," Mr. Smith says. "Until Greenlight brings us something written from the manufacturer, we will not supply them with Fords." The same holds true for Chryslers and Hondas, he says.
"This is news to us," says a Greenlight.com spokeswoman. Greenlight.com CEO Joel Manby was unavailable for comment Tuesday. In an interview with Redherring.com last month, Mr. Manby insisted that only a "few dealers" in his network of 2,000 had been refusing to sell automobiles to Greenlight.com and that he was confident he'd get them back into the fold.
HEADED OFF AT THE PASS
Mr. Manby faces an uphill battle. Ford executives reportedly have been urging, among others, Asbury Automotive, a big Connecticut dealership and Greenlight.com car supplier, to stop doing business with the startup.
Over the summer, 400 dealer-strong Autonation (NYSE: AN), by far the largest auto seller in the country, instituted a similar ban against working with Internet car sellers. A spokesman for United Auto Group (NYSE: UAG) (UAG), which plunked down $17 million for a 10 percent stake in Carsdirect.com, refused to say whether or not the company continues to supply cars to the startup. UAG chairman and CEO Roger Penske, the famous race car driver, didn't return repeated telephone calls asking for comment.
"Selling a car over the Internet is a lot different than selling a book over the Internet," says a spokesman for the Alliance of Automobile Manufactures, a Washington, D.C., lobbying group representing car makers. Because online dealers hawk cars without servicing automobiles like traditional dealers, the spokesman says, manufacturers are afraid of diluting their brands and alienating consumers.
At Ford, a spokesman says: "Our problem with the online brokers is that they do not offer the same services and experiences as our licensed dealers."
Pressure by manufacturers has contributed to the demise of several Internet startups, such as CarOrder.com, which folded in August. CarOrder.com unabashedly ignored the dealers and planned to buy traditional dealerships for its inventory supply. But because manufacturers have the right of first refusal in dealership sales, they refused to allow CarOrder.com to purchase a single franchise. Executives at Web firms such as Greenlight.com and Carsdirect.com now stress how badly they need the dealers' blessings to be successful.
WHAT ABOUT THE DREAM
It wasn't supposed to be this way. Several Internet startups popped up last year promising to transform the traditional car-buying process of wheedling and haggling, which many consumers find repulsive. According to the vision, shoppers would go to the Internet, research car information, check inventory, compare prices, and buy cars without being harrassed by fast-taking salesmen. Instead it appears that traditional car dealers will remain an essential intermediary.
Two years ago Ford Motor began selling cars directly online in Texas, which had consumer advocates rejoicing and proclaiming the demise of traditional dealers. A year later, Ford turned off its direct-sales Web site, beaten badly by the dealers who used their considerable political muscle to enact state laws barring car manufacturers from selling direct.
Next month, General Motors and Ford plan to start selling cars online while working closely with their respective dealers. GM is launching a test program with seven Minneapolis-area car dealers, directly attacking the online startups. Presumably, consumers will be able to buy the car they want for a fixed price through one of the participating dealerships. "
There is more:
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