AutoRef allows car buyers to search and receive quotes online before stepping onto lots


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Buying a car can be a long, demoralizing and costly process.

It also can be simple. At least, that is the philosophy of AutoRef Inc., a startup in South Side's AlphaLab incubator that wants to reduce the time, money and general headache of buying a car.

AutoRef allows customers to search for new or used cars, and receive and compare guaranteed offers for free, entirely through its website. Dealerships, which pay a fee to be listed on AutoRef, can see what other shops are offering and respond by lowering the price or offering extra incentives.

There are other websites, including http://cars.post-gazette.com, that offer a similar service. What sets AutoRef apart is that it puts the entire negotiating process online and guarantees offers. AutoRef also creates a free alternative in a market of fee- and membership-based car buying websites, such as CarWoo!, TrueCar and Mojo Motors.

Negotiating from behind the tinted window of the Internet appeals to certain demographics, especially younger buyers, busy professionals and women, who tend to have less aggressive negotiating styles and on average pay more for cars than men do, said Michael Bailey, product marketing manager for AutoRef.

"It's sort of like Amazon, where there's a product, but there's different shops offering it," he said.

AutoRef customers report spending an average of 45 minutes at dealerships, as opposed to three hours without using the site, Mr. Bailey said. Additionally, the seven customers that have purchased vehicles through the startup company have saved an average of 11 percent off the sticker price, he said. The company's beta website launched in April 2011 and the full version debuted in July.

Here's how it works: Potential buyers sift through car options and Carfax reports. Then they can request offers for up to three cars at a time by providing AutoRef with their email address (which dealers won't have access to) and financial information.

Over the course of one business day, the dealers look at what other companies are offering and work to develop their own offers. They can even use the website to chat with customers to tailor the deal by tossing in, for instance, powertrain warranties or roof racks.

Then buyers receive a final offer that is guaranteed for 72 hours, with no obligation to buy. They can visit the dealerships that made the offers, test driving cars with dealers who already understand their preferences and financial circumstances.

The company started in 2010 in Southern California, where it still has its headquarters, when CEO Mike Pena was trying to help his brother buy a car, according to AutoRef's website. Despite having worked at a dealership, Mr. Pena found the car-buying experience to be time-consuming and frustrating.

He thought up the idea for AutoRef and brought it to a pitch competition at the Massachusetts Institute of Technology. Having reached the semifinals, he made contacts and eventually partnered with Todd Medema, a student at Carnegie Mellon University and now the company's COO.

Two years later, the six-person company has partnered with about 300 dealerships in California and Pennsylvania, including an estimated 60 to 70 in the Pittsburgh and Philadelphia areas, according to Mr. Bailey.

AutoRef has been based at AlphaLab since April, and since arriving at the incubator, it has begun to sign on additional dealerships through the Greater Pittsburgh Automobile Dealers Association, which represents 237 shops, according to its website.

The startup benefits from AlphaLab's $25,000 seed money. Though the company is currently charging only its L.A.-based dealerships and not its Pittsburgh dealerships, AutoRef makes money through those fees and has drawn on loans from friends and family. The company also expects investments from outside sources, details of which were not being disclosed at this time.

After finishing up at AlphaLab in October, the company aims to add more dealerships in Pittsburgh to its service and to enter new markets from Boston to Phoenix, though it hopes to keep offices in the South Side.

This fall, it also expects to hire three to five new employees for its Pittsburgh team and five to 15 new employees for its sales team between Pittsburgh and Philadelphia, said Mr. Bailey.

While those changes take place, AutoRef plans to make further improvements to the website, such as incorporating outside reviews that will enhance the customers' car-buying experience -- and the company's bottom line.

"That's really the best way to grow, I think, to have a product that speaks for itself," said Mr. Bailey.

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Elizabeth Bloom: ebloom@post-gazette.com or 412-263-1410.


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