Auto Trader Interactive managing director Peter McCullough said the recent merger of parent companies Guardian Media Group and Hurst had "lifted the lid" on its online development.
"In the past six months, our website traffic has grown by 150%," he said.
He expects a series of product launches, combined with a website redesign, to lead to "significant numbers of dealers" signing up over the next 12 months, adding to the 5,500 currently online.
"Dealers must streamline their businesses to take advantage of higher volumes," said Mr McCullough. "They don't need huge showrooms, they need good logistics to enable quicker turnaround. With the growth in online locators, dealers no longer need to have vehicles physically in stock in order to sell them."
Larger dealer groups are likely to be attracted by Autocall, Auto Trader's new online system that connects consumers to dealers via a call centre. Auto Trader initially pays for the phone call, which is later charged to the dealer depending on the volume of sales leads generated.
Dealer Edit, launched in June, enables dealers to key in car details and download photographs. Nearly 600 retailers have signed up, putting some 22,000 cars online.
"It speeds up turnaround for dealers - they control their stock on the site," said Mr McCullough.
Auto Trader's new data mining engine will enable dealers to see how many searches have been made per model. It records whether searches are turned into dealer contacts and analyses why further action may not have been taken, helping dealers to assess possible problems.
The company, which moves to new offices in Warrington, Cheshire, this month, also plans to launch live trade-to-consumer auctions towards the end of the year.
"We are not ready to launch yet because auctions need critical mass - around 1m consumers a month visiting our site is not enough," said Mr McCullough. "We need at least 2m because we expect only around 1% will use the live auction facility."