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Internet drives capital car dealer
[September 03, 2011]

Internet drives capital car dealer

Sep 03, 2011 (The Sacramento Bee - McClatchy-Tribune Information Services via COMTEX) -- A slice of the Internet's effect on contemporary car selling can be found along Highway 50 in Gold River.

At first glance, at 11363 Pyrites Way appears to be an auto auction house, but in truth, the 22,000 square feet of brick-and-mortar structures are the tip of an Internet-driven car-selling iceberg.

"We say we're the future of car buying, and I can tell you from all my years in the business, I'm firmly committed to it," said Todd Lutes, company president.

As recently as 15 years ago, Internet-based operations were still being laughed at in many auto retailing circles.

Not anymore.

Lutes spent years in mainstream car dealerships, but he became sold on the advantages of the Web.

Along with longtime friend Scott Gregory, an investor and adviser for national technology businesses, and Steven Galvez, who brought extensive information technology experience to the table, Lutes launched in November last year.

The business specializes in selling used, recent-model imports that have been reconditioned on-site.

And while some buyers come directly to the covered facility in Gold River, many don't see their purchased car up close until it is delivered. The entire process has been handled via an Internet consultant.

Technically, a savvy buyer who knows what he/she wants could purchase a car via e-mail, without ever talking to a human being.

"To some people, it sounds crazy," said Galvez,'s vice president. "But once we began working with this model, we saw how well it really works." Both Lutes and Galvez noted how used-car buying has migrated to the Web over the past generation.

Most mainstream dealers, even new-car dealers, concede that the once-common practice of spending a day shopping at a dealership has vanished. Buyers want to be in and out within hours.

"What others do is fine," Lutes said. "But my overhead here is so low that we can price our cars lower than the competition." Lutes said leases its Gold River site, and employees buy, view and recondition all the cars going on sale. More than 100 cars are in stock at any time.

On the company website, prospective buyers can get exhaustive information on each vehicle and view 360-degree, inside-and-out visuals of the cars for sale.

Most vehicles come with a 90-day or 3,000 miles free warranty. Financing is available through numerous local credit unions and three banks. Free Carfax reports are available.

Also, the company can arrange delivery -- within a day or two on the West Coast. Long-distance delivery also is available; once delivered a sport-utility vehicle to Russia.

The local company touts a long list of customer testimonials and says it amassed sales revenue of about $7.6 million from Nov. 1, 2010, through July this year.

"We feel that is very strong for a new Sacramento-area dealership in these difficult times," Galvez said.

Internet car-buying has spawned many businesses, including, and eBay Motors. Likewise, the quick-in/quick-out used car buying trend fostered the growth of firms such as CarMax.

Lutes said has some DNA from all of those operations, but it's refined to emphasize a Sacramento-area presence.

Not surprisingly, a random sampling of mainstream local car dealers produced some skepticism.

"Most dealers offer full Internet services for their inventory," said one local domestic car dealer.

Another area dealer selling both foreign and domestic makes questioned: "How sure can you be sure that you're buying a quality car from these guys?" Galvez countered that "we have never had a customer not want their car when it arrived." The axiom of a generation ago was that you should never buy a car that you have not test driven. Industry experts say that's also changed with high-volume Internet car sales, but they warn consumers to remember some important safeguards.

"This way of buying is definitely a trend that has come about by way of the Internet," said Phil Reed, senior consumer advice editor of the Santa Monica-based auto research site, "It allows people to connect who are far apart from each other, and with so many photos and videos available, you can get a good look at what you're buying.

" ... But you still want to use all the tools at your disposal. That includes vehicle history reports and having the vehicle looked at by a professional mechanic ... And you want to make sure to look at any warranties that are available." Reed says there's great appeal in the idea "that you can press a button and have a car show up in your driveway ... but it still comes down to getting a good deal.

"Do your homework and don't overlook the options available. Does it have stability control and traction control? Get a highly specific appraisal." Jesse Toprak, an analyst with Santa Monica-based, agrees that online buying is "attractive in theory ... but due diligence is important." Toprak said he understands the allure of online car shopping: "In our surveys, some consumers say going to a dealership is one of the most painful experiences. They'd rather have a root canal than go through that experience." "It does allow people to have a variety of choices that they might not have in their local neighborhoods. You can shop from the comfort of your home, even at three in the morning." Lutes and Galvez believe they've benefitted from a wobbly economic climate in which some buyers remain reluctant to buy a new car, opting instead to purchase recent-model used cars. recently published research results showing that the average price for a typical 3-year-old used vehicle sold in the United States in July was $21,081, up $1,637 from $19,444 in July 2010.

Call The Bee's Mark Glover, (916) 321-1184. -- Mark Glover -- Read more articles by Mark Glover ___ (c)2011 The Sacramento Bee (Sacramento, Calif.) Visit The Sacramento Bee (Sacramento, Calif.) at Distributed by MCT Information Services

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