Autobytel Sustains Huge Loss, Gets New CEO, Cuts More Employees
Internet auto innovator falls on hard times
By Brendan Moore
Along with getting a new CEO, internet auto pioneer Autobytel is reeling from a record loss so far in 2008, and has laid off 115 employees in its efforts to cut costs.
The new CEO is 51 year-old Jeffrey Coats, a board member at Autobytel the last 12 years. The CEO job has been somewhat of a revolving door at Autobytel as Coats replaces Jim Riesenbach, who became CEO in 2006. Riesenbach replaced Rick Post earlier, who had taken the job at the end of 2004. The reason for the short stays is the dismal financial performance of Autobytel.
After losing $6.3 million in 2005, Autobytel lost even more in 2006, notching a $31.5 million loss in 2006. The company then announced they were in the process of launching a new auto community website in third quarter 2007 named MyRide.com, which they stated would eventually become the focus of the company’s efforts to turn itself around.
In effect, Autobytel stated at that time that they would abandon their previous internet model, which relied on dealer business. The new site was expected to be more consumer-focused and generate higher margins.
Autobytel is one of the pioneers of consumer online auto shopping and used to make most of its money from the fees it charged dealers for leads and sales. As more and more dealers have acquired in-house expertise regarding internet marketing, Autobytel’s fee income from dealers decreased considerably, thus leading to financial difficulties at the company. The slowdown in the retail auto business has effectively killed what was left of that business.
At the same time, MyRide.com has not been the success the company hoped it would be. The site has not generated the volume of users or the ad revenue the company had forecasted.
After losing almost a million dollars ($973,000 USD) in 2007, Autobytel has lost a massive $64.8 million in the first three quarters of 2008. The company has made a profit in two years of its 12-year existence since 1996, those years being the consecutive years of 2003 and 2004.
Autobytel announced in September that it was looking at various options for the company, among which is a possible sale.
COPYRIGHT Autosavant – All Rights Reserved