I have a marketing background, but advice is worth what you pay for (and this is free, so keep that in mind, ha!).
It seems to me that you should be focusing on your potential client's customer base. Marketing pieces you put together should help you not only sell yourself, but show how they can sell themselves.
What I mean is this:
Develop a brochure that states some statistics such as, "95% of your target market uses the Internet to research their next auto purchase. How will your current website stack up?" Or some such thing. I'm guessing that you probably want to target the upper-end auto dealerships, as intuitively you can tell that the more wealthy, educated folk really are the ones using the Internet... and probably not the "Ford Pickup" crowd, if I may make a sweeping generalization. (my apologies to the ford pickup drivers on this site... dalecosp?)
You may want to call each dealership and ask who is in charge of advertising. You don't necessarily have to speak to that person right then, but you want to make sure you are sending material to the decision maker. After you send the material out, follow up with one or two phone calls, just to see if they got the brochure and if they had a chance to visit your demo website (which of course was conveniently listed in the brochure). Remember, you're not trying to "sell your product" but you are trying to "help them succeed". Also remember that it's all about timing, so just because they say "no" now doesn't mean that they will say "no" next month or next year. Make sure to follow up on the "no's" periodically.
They say it takes 8 "exposures" to a company name before it is remembered, so keep that in mind as well... you will have to bug the crap out of them before they remember you.
Also, you say that because it's a small niche, then mass advertising is out. I disagree- to a certain extent. Auto sales is an industry just like any other, and I'm sure there are specific trade magazines and associations which you may consider partnering with or advertising in. You don't need to only contact local dealerships.
Press is the best advertising around - it's free and it validates your position as "an authority". You may consider contacting editors of said auto sales industry magazines and offering to write a small article about how the Internet is changing the face of traditional auto sales... how shoppers can shop for cars 24/7 and compare prices among dealerships with a few clicks, blah blah blah... It will be good exposure for your company and a free plug for your service.
These are just some ideas- hth. Good luck to you!
-Elizabeth