Many people once predicted that auto makers’ web sites would put third-party lead generators out of business.

The OEMs have a long way to go before that happens. The industry is realizing lead generators are here to stay.

And the much-predicted consolidation among the players has yet to take place.

“I’ve been predicting it for three years and it hasn’t happened yet,” says Andrew Donchak, executive vice president and chief marketing officer for Autobytel Inc.

Industry surveys indicate the majority of car shoppers visit third-party sites. Data from the Ward’s e-Dealer 100 indicate third-party sites still are creating the majority of the leads.

However, the number of leads fell this year, 48% compared with 57% last year. But the closing ratios for those leads increased 4%, from 12% to 17%.

Closing ratios for leads coming from all three channels – OEM, third-party and dealership websites all increased this year. More dealerships are learning how to properly handle web leads and the lead generators are doing a better job of funneling better quality leads to dealers.

Autobytel Inc. says 60% of consumers that send a lead through its site buy a car within 90-100 days. Whether they buy from the dealership that received the original lead is another story. Still, these are real customers who are sending leads through the Web.

“Dealer redistribution systems are more efficient and the ones that have to deal with dealers everyday – the Dealixes, Autobytels, autoUSAs – those kinds of systems are more efficient,” says Gary Marcotte, vice president -new vehicles and e-commerce for AutoNation Inc.

“They’re crisper about how they do it. If you want to get into this business, my recommendation is to partner with one of these companies.”

The industry did not hear talk like that from dealers a few years ago. Yet, in some cases, dealers still resent the third-party presence. A prominent dealer in California says his dealerships do not use third parties. He still remembers the days not long ago when zealous third parties bragged of how they would put dealers out of business.

However, dealers, are starting to see that partnering with third parties can be beneficial. It’s about being where the customer is, and lead aggregators typically have relationships with the larger portal-type sites, such as MSN and AOL.

“He who has the most customers wins in this business,” Mitch Golub says.

Mitch Golub, general manager for, says one of his goals this year is to be everywhere the customer is. “He who has the most customers wins in this business,” he says.

Part of his strategy is an aggressive national advertising strategy the company will be rolling out this year. did that a couple of years and it worked well.

Much of the traffic from lead providers consists of shoppers who may not have considered the dealership. In contrast, dealership websites are doing a better job retaining existing customers.

“Leads into the dealership website are most likely repeat customers,” says Christine Bucklin, chief operating officer for CarsDirect.

AutoUSA, a third party of sorts, created by AutoNation, generates a million leads annually for AutoNation dealerships and another 2 million for 3,000 dealerships not part of the AutoNation family.

“We want to be whereever the customer is,” says Marcotte. “We want to have the opportunity to get that relationship started and direct that customer to one of our dealerships.”

Dealers on the Ward’s e-Dealer 100 ranking reported using 447 third parties in 2001. That number increased to 528 in 2002. In 2003, the number exploded, with dealers using 860 third-party sites. Dealerships aren’t just relying on one or two companies to help them generate leads. Instead, they are reporting using seven or eight.

Still, playing in that lead-generation arena brings its lumps. For one thing, the nature of the data means there is transparent accountability. The numbers don’t lie. “We’ve created this environment with the tracking mechanisms we’ve developed,” says Golub. That’s a reason third parties have seen high dealer turnovers.

But that is changing. has increased its dealer base more than 37%, retaining 80% of its dealers in 2003. Dealix, likewise, tripled its dealership base.

The companies have to take it up notch, Golub says. “We need to get better products out there in the marketplace.”