A growing number of franchised automotive dealerships are actively using the Internet to increase sales, both in number and geographical range, and to improve customer service. According to a survey of more than 600 dealers conducted by the National Automobile Dealers Association in McLean, Va., only 47% had a Web site in 1997. That figure had jumped to 74% by last August, and most of the sites had some interactive capability. That number has continued to grow, rising to 81% by February.

The bulk of efforts by dealers focus on building Web sites and taking referrals from online buying services. E-commerce savvy dealers are focusing on improving how they handle E-mail from customers, typically by dedicating full-time staff to answer E-mails and Web-generated sales opportunities. In fact, the auto dealers association survey says, 95% of dealers with Web sites have staff dedicated to handling customer contacts via E-mail.

And some dealers are doing much more to cope with the fundamental changes that the Internet is causing to some of the industry's most basic business practices in recent years. Dealerships such as Enumclaw Chrysler Jeep Dodge in Enumclaw, Wash., now boast of being wired and providing desktop computers and E-mail access to all of their salespeople, who in the past sat at bare desks that mainly served as props for negotiations with customers.

But many dealers still have a long way to go. The association's survey indicates that only 38% of dealers with Web sites provide the MSRP, or manufacturer's suggested retail price, for their autos, 27% let customers order cars online, 27% let customer fill out financing applications online, and only 4.1% provided a method for customers to submit payments online.

As a result, technology vendors, especially Web-site development companies and hosting service providers, are aggressively targeting auto dealerships, which are especially attractive as potential customers because they have fairly uniform business practices and they are segregated geographically, so they don't compete directly with each other. This push by vendors has help more dealerships get into E-commerce.

The auto dealers association, for example, has exclusively endorsed two Internet development packages from the Cobalt Group in Seattle. The "Web Essentials" package includes site development and hosting by Cobalt, as well as E-mail forms, automated inventory listings, traffic reporting, and links to original equipment manufacturers and the association. A more advanced package offers additional elements such as an advertisement creation tool, a lead manager, an auto-service appointment manager, and a tool for selling auto parts.

The association is also reacting to Internet competition by setting up its own portal, www.nadadealers.com, with the help of the Cobalt Group. The site will provide consumers with access to the Web sites of all its members, new and used car inventories from dealers, as well as various shopping information. The association plans to launch the site in the next month.

And in the biggest sign that the Internet is making the auto industry change its ways, the dealers association says it will reveal invoice pricing on cars listed at its site, information that prior to the Internet was kept confidential from customers.

Much of that information is already available on auto-oriented Internet portals, which usually partner with dealers and play some role in the car buying process. These portals are the main sources of Internet-based pressure on traditional auto dealerships as they attempt to get a slice of the more than $500 billion in new and used-car sales that flow through franchised dealerships on an annual basis.

Auto portals vary in the extensiveness of their information and interactive capabilities, but the leading sites usually include a rich assortment of information for addressing most questions from any auto shopper, such as car features, reviews, safety reports, and prices of both new and used cars.

The car portals usually team with several hundred to a few thousand of the 22,600 dealers in the United States, according to Forrester Research. Some sites, such as Autobytel .com and CarPoint, charge dealers a sign-up fee of a few thousand dollars. Others are free to dealers and make much of their revenue by charging fees for passing on names of interested car shoppers to dealers located close to the potential customer. Some also charge monthly fees of several hundred to a few thousand dollars.

Dealers' attitudes towards the Web portals are mixed. Some, like Enumclaw Chrysler Jeep Dodge, don't partner with portals because of the fees, and they don't want to lose control of the customer. "The Internet car buying sites look to have control of the customer," says Ed Mulnick, general manager at the dealership. "We prefer to avoid their fees while retaining contact with customers." For Enumclaw, that means developing its own site and promoting it on the Web.

Others dealerships such as Rodman Ford Lincoln Mercury in Foxboro, Mass., doesn't have problems with third-party Internet portals, as long as they produce.

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