Autobytel hunting for investors

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Autobytel.com is looking for help. Lehman Bros., an investment bank retained by the online car-buying service, is approaching potential investors quietly, according to an executive familiar with the situation.

Autobytel's uncertain future is another sign that its business model, collecting fees from dealers for sales leads, is being eclipsed. General Motors Corp., Ford Motor Co. and several major dealer networks are trying to link national dealer networks with a strong Internet presence.

A GM official said the automaker is talking with Autobytel and other independent buying services about using one of them to launch a proposed Internet joint venture with GM dealers.

Autobytel CEO Mark Lorimer would not confirm that all or part of the company is for sale. He would say only that the company's board always looks at ways to improve shareholder value.

RIPE FOR THE PICKING

Autobytel's strong brand name and feeble stock price clearly make it ripe for the picking. On Oct. 5, Autobytel stock traded just above $5 a share, off 75% from its 52-week high of $20.38. Autobytel has lost money every quarter since its 1995 creation, although Mr. Lorimer forecast that the company will turn a profit by the second quarter of next year.

Meanwhile, GM Chairman Jack Smith, speaking with GM dealers Oct. 5 in Las Vegas, gave the green light for GM's proposed Internet joint venture with GM dealers.

GM and its dealers will own the new online buying service. They will use the Web site to pass along sales leads to GM dealers and other dealers who sign up with the site. The site will market itself as independent and be open to all vehicle brands. GM said it hopes to reach consumers who distrust branded manufacturer sites such as its GMBuyPower site, handled by D'Arcy Masius Benton & Bowles, Los Angeles.

GM said it hopes to have the service running next year and admitted it might have to team with an existing Internet company to move quickly.

"We're looking at all options, including working with [third-party] partners that can help us offer consumers the best online automotive buying experience," said a spokesman for e-GM, the automaker's e-commerce division.

"There's definitely some expertise out there that GM and dealers need to make this work," said Sam Slaughter, VP of Bob Sellers Pontiac-GMC in Farmington Hills, Mich. Mr. Slaughter is a member of GM's e-dealer council that is working on the joint venture.

PERFECT FIT

Despite its financial problems, Autobytel could be a perfect fit for the GM-dealer venture. The company supplies sales leads to about 5,000 dealers nationwide. During the second quarter, it routed about 594,000 purchase requests to dealers.

"Autobytel.com is so large in the space of selling vehicles online, it now accounts for more sales than all the manufacturer Web sites combined," said Chris Denove, director of consulting operations for J.D. Power & Associates.

Another possibility for GM is Autoweb.com, another buying service that relies heavily on dealer fees. Its stock price has dropped below $2 a share, down from a 52-week high of $14.13.

Mr. Miller is a reporter with Automotive News.

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