Study: Online Car Prices Often Wrong

FRAMINGHAM (03/23/2000) - Automotive Web sites often overstate the price of a new vehicle -- sometimes by thousands of U.S. dollars -- and some sites allow consumers to configure cars and options that automakers were unable to deliver, according to an independent study released yesterday by CNW Marketing/Research in Bandon, Oregon.

A statement issued by CNW said the national study measured what eight Web sites claimed were the manufacturer's suggested retail prices and dealer invoice prices for 86 models against actual manufacturer's data.

The vehicle pricing sites measured by CNW included AutoWeb.com; CarPrices.com; CarsDirect.com; ChromeData, which supplies prices to Vehix.com; Priceline.com, and America Online Inc. (AOL).

According to the survey, ChromeData was the most accurate, followed by IntelliChoice and Kelley Blue Book. At the time the study was done, the site that offered the most inaccurate data was CarPrices.com.

The study said ChromeData missed the actual price mark by an average of only US$84 per vehicle, while CarPrices missed by an average of $888 per vehicle.

According to the study, IntelliChoice was off by an average of $140; Edmunds by $570; CarsDirect by $461; AutoWeb by $580; Kelley Blue Book by $324; and CarPoint by $505.

"Considering that nearly 40 percent of new car buyers use the Internet as part of their shopping process, such misinformation is horribly misleading," the study said.

Dave Thompson, a spokesman for ChromeData Corp. in Portland, Oregon, said, "We're very pleased that we came in No. 1, but we still want to do better. It's more than getting the data; it's what you do with it. It's the configuration software you use -- our software won't let you try to configure a vehicle that doesn't exist."

Ahmed Ghouri, co-founder of San Diego-based CarPrices.com, said his company is a consumer research firm that uses data vendors to get car pricing information.

In fact, Ghouri said, just weeks before the CNW study was done, CarPrices switched its data vendor from ChromeData to IntelliChoice because the firm thought IntelliChoice's pricing information was superior to ChromeData.

"Moving forward, we are going to be licensing multiple data vendors and cross-referencing their prices with the prices of dealers who come to our site and participate in a sort of reverse auction, where they compete against each other to drive the price of a car down for the consumer," Ghouri said. "We believe that moving forward we'll have the most accurate data because we have daily feedback from dealers."

CNW also found that some Web sites allow buyers to put together vehicles and add options that automakers couldn't deliver.

For example, the study said ChromeData incorrectly included an eight-way driver's seat adjustment in a Quick Order Package on a Dodge Ram pickup while most of the other sites did not. Others allowed the option to be added for $360.

According to the study, Kelley Blue Book improperly allowed a handling charge to be added to the Ford Crown Victoria outfitted with a natural gas engine option for $935. Ford doesn't provide for that configuration.

And CarPoint's automatic calculation allowed CNW to add polished aluminum wheels -- an option costing $500 -- even though Chevrolet curtailed availability of those wheels in October. The study by CNW was carried out last month.

Jonathan Gaw, an analyst at International Data Corp. (IDC) in Mountain View, California, said, "It's clear it is a challenge for the online services to build systems that integrate the price and car configuration (information) for all manufacturers, and not all of them have done it as effectively as they should have. Stories about online firms selling cars that don't exist have not been common, but they do exist."

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