BUSINESS & TECHNOLOGY - UVA Darden School of Business



|BUSINESS & TECHNOLOGY |

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|Firm Brings Car-Buying Process to the Net |

|Abhi Raghunathan. STAFF WRITER |

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|07/13/2000 |

|Newsday |

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|ALL EDITIONS |

|A61 |

|(Copyright Newsday Inc., 2000) |

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|, a company that sells used cars in a new way on a new medium, has just expanded to a new region. |

|iMotors doesn't have dealerships or an inventory. Customers interested in buying a used car log on to the |

|10-month-old company's Web site at or call a toll-free number to specify the year, make, |

|model, style, color and options. The site sells used cars from 1995 onward. |

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|The company immediately gives the customer a price based on a patent-pending algorithm that monitors wholesale|

|automobile transaction costs across the United States, asks for financing information, which it can help |

|provide if the customer needs it, and for a $250 credit card deposit, which it says is refundable up to seven |

|days or 700 miles after the customer receives the car. |

|Thousands of sites on the Internet sell used cars, but most are online for-sale advertisements or listings of |

|dealership inventories. |

|"They truly have something unique," Chris Denove, a partner with market research firm J.D. Power and |

|Associates said of iMotors. "They will probably be successful among the limited number of used-car buyers who |

|are specific about what they want. Whether they are a long- term success will depend on what they do to reach |

|out to broaden the base of used-car buyers that are less particular about matters such as color and options." |

|To locate a car for customers, iMotors scours its network of leasing companies and wholesale auctions, |

|purchases the car with its own money, gives it a 269 point inspection, and refurbishes it at one of its |

|"Vehicle Service Centers"-large used-car repair facilities in Atlanta, Sacramento, and Cincinnati. The company|

|ships the car to a delivery center, two of which are located in Huntington Station and 53rd Street in |

|Manhattan. The process, from the click of the mouse to the turn of the key, takes an average of 3 1/2 weeks. |

|The company says it sells cars several hundred to a thousand dollars below the Kelly Blue Book price and also |

|offers a limited warrantee for three months or 3,000 miles. |

|Rob Erlichman, vice president of marketing for iMotors, calls the company the Dell Computer of used cars. He |

|said it can make a profit on each sale because it doesn't face problems like bloated inventory and upkeep that|

|often plague traditional used car dealers. "We've shortened the supply chain," Erlichman said. |

|Mark Scheinberg, president of the Greater New York Auto Dealers Association, said: "There are still a lot of |

|questions out there," about whether people will be able to trust buying used cars via a Web site. "Used cars |

|are not new cars." |

|Still, over the past 10 months, iMotors has had thousands of customers on the West Coast, and it plans to |

|expand nationwide in the next six months. "If you want a car in a week or want to drive different ones around,|

|then we're probably not the best ones," Erlichman said. "But the used car market is a $370 billion market. If |

|we get a 4 percent market share, we're a 6 or 7 billion dollar business." |

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|MONEY |

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|GM, Autobytel to test car sales on Net Shoppers will be able to scan local GM stock |

|Earle Eldridge |

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|02/22/2001 |

|USA Today |

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|FINAL |

|03B |

|(Copyright 2001) |

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|Independent Internet-based car-buying services, competing with dealers and manufacturers with their own Web |

|sites, are struggling to survive. |

|Some have gone out of business while others have merged with competitors. And some are trying to hook up with |

|automakers. |

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|Latest: , the largest car-buying Web site, announced Wednesday that it will run a 90-day regional|

|pilot program for General Motors. |

|Under the deal, consumers using to search for a GM brand will be given a list of inventory at |

|local dealerships and a special "e-price" for the vehicle. Working on its own, Autobytel wouldn't be able to |

|provide an inventory list. |

|GM hasn't identified the specific brand or local market that will be part of the project. And to avoid charges|

|that GM is unfairly setting prices, dealers involved will determine the "e-price" for each vehicle. |

|"One reason we want to test this is because consumers, by a 3-1 margin, say they trust an independent Web |

|site," says Mike Devereux, director of business development for e-GM. |

|Some who haven't benefited from that: |

|* went out of business on Feb. 15. |

|* was bought by , which is backed in part by Michael Dell, founder of Dell |

|Computer. Most, if not all, of the 75 employees at Greenlight are expected to lose their jobs once the deal is|

|completed next month. |

|* CarOrder recently dropped the dot-com from its name and bought two dealerships with the goal of becoming a |

|bricks-and-mortar chain. |

|Analysts expect a major shakeout of independents this year and next. |

|"We will definitely see more consolidation this year, and there will be few left," says Dawn McGreevey, auto |

|analyst for Gomez, an Internet consulting and research firm. |

|McGreevey says there is a place for third-party sites because consumers trust an unbiased source. But she says|

|only three of the 10 to 15 major players will survive the shakeout. |

|McGreevey applauds GM's pilot project with Autobytel because it lets GM benefit from the independence of a |

|third-party Web site. |

|Some dealers are skeptical about the independents' chances to survive. |

|Mike Jackson, CEO of AutoNation, the USA's largest dealership chain, says dealers working in partnership with |

|manufacturers can offer better prices and fewer hassles in buying a car over the Internet. |

|"We run our site with a 100,000-vehicle inventory," Jackson says. |

|But Mark Lorimer, CEO of Autobytel, says it's way too early to write off the independents -- at least his. |

|Automakers are hiring Autobytel to train dealerships on using the Internet to generate sales, even if they |

|don't use Autobytel's service, he says. |

|"They will continue to work with us, and I see more and more transactions like the GM deal," Lorimer says. |

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|MONEY |

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|Car dealers get aggressive on Net Sales on Web likely to grow |

|Earle Eldridge |

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|04/11/2001 |

|USA Today |

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|FINAL |

|B.03 |

|(Copyright 2001) |

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|Every month, five to 10 people fly 2,500 miles from the East Coast to rural Kellogg, Idaho, to buy a new car |

|or truck from Dave Smith Motors. |

|They come after visiting Smith's Web site at . They get competitive prices and perks such |

|as skiing, mountain biking, mine tours and free barbecue every Saturday -- rain, snow or sunshine. |

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|It's an example of how aggressively dealers have begun using the Internet to reach customers. So many people |

|flock to Smith Motors that, in a report out today, Ward's Dealer Business magazine ranks it as the nation's |

|No. 2 e-dealer, ahead of dozens of dealerships in major metropolitan areas. |

|Ward's picked the top 100 e-dealers based on how many vehicles were sold through their Web sites. Ward's |

|considers a Web sale one in which the customer's first contact with the dealership was via the Internet and |

|the dealership's online staff handled the sale. |

|Industry analysts say that despite the economic struggles of independent car-buying sites such as |

| and , dealers are increasingly selling more cars online. And some dealers predict the|

|Internet will generate up to 50% of their sales by the end of this year. |

|"Cars are going to be sold at a record pace online, with many dealers creating their own Web sites," says Rich|

|West, publisher of Ward's Dealer Business. |

|Ward's says its top 100 e-dealers sold more than 61,000 new and used vehicles via the Internet last year. |

|"Our Internet site gets over 4 million hits a year. That's more than the Chrysler Internet site," says Ken |

|Smith, owner of Dave Smith Motors, which sells every Chrysler and every General Motors brand. |

|His dealership is the largest employer in Kellogg, population 2,500. He has 40 of his 240 workers handling |

|Internet sales. Smith expects his Web sales -- currently about 25% of his total sales -- to reach 50% by the |

|end of the year. |

|Ward's No. 1 e-dealership is Anderson Honda in Palo Alto, Calif. |

|Owner John Anderson attributes the success of his dealership's Web site, at , to his |

|dealership being located in Silicon Valley and to quick e-mail responses from his 12 employees doing Internet |

|work. |

|"We don't have the lowest price, but our average response time is under 5 minutes," Anderson says. "And people|

|are surprised when they get an e-mail response from us at 11:30 at night." |

|AutoNation, the USA's biggest dealer chain, fared well in the ranking. Its dealerships took 51 of the top 100 |

|spots. |

|Analysts predict more sales will come through the Internet as more dealers build Web sites and a young |

|Web-savvy generation begins to buy cars. |

|Baba Shetty, an analyst at Forrester Research, says the next Internet wave will focus on giving consumers a |

|look at all the vehicles in a dealer's inventory. Both Ford Motor and GM have pilot projects to help dealers |

|list their inventories on Web sites. |

|"Not only will dealers use the Internet as a tool, but the Internet as a tool will get better," says Jonathan |

|Gaw, an analyst for technology research firm IDC. |

|But Gaw says dealers must be willing to give shoppers a firm price online. "The industry is still struggling |

|to wean itself from haggling over prices." |

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