CarsDirect.com Joins the Online Fray, Banking on Price and Service
Sherman Oaks-based CarsDirect.com, an online car dealer powered by financial backing from Dell Computer founder Michael Dell, on Monday officially debuted its Web site, entering a crowded field of online automotive sales sites.
The CarsDirect site is structured as an online car dealer, just as Amazon.com is an online bookstore. Other Internet auto sales sites, by contrast, generally refer customers to existing dealers.
The https://www.carsdirect.com site lets customers research, price, finance and order cars from every major auto maker. The paperwork is then mailed to the customer’s home and the vehicle is delivered to the buyer. In some states, the transaction must be completed at a dealership, however.
CarsDirect.com is the brainchild of Idealab founder and frustrated BMW buyer Bill Gross, who put together about $30 million in investments in CarsDirect from Goldman Sachs; MSD Capital, a private investment firm headed by Dell; Foundation Capital; and Primedia Ventures, a subsidiary of automotive publisher Primedia Inc.
“This allows us to hit our marks for the next couple of months. I don’t think capital is an issue for a year,” said Scott Painter, CarsDirect chief executive. “This is a building year.”
CarsDirect has allied with Bank One to offer financing, and is working on marketing alliances with other Web sites, Painter said.
In addition to prices and financing, the site also provides research on car models as well as insurance, links to government crash test reports and maintenance and service partnerships with dealers.
But it’s price and customer service that CarsDirect.com is counting on to snag buyers.
Painter, 30, claims that 90% of the time, vehicles at CarsDirect will cost less than those purchased at conventional dealerships.
“That means nine out of 10 of the buyers out there would have paid more than you would [buying through CarsDirect], and that’s a guarantee,” Painter said. “If we can’t find a car at that price, we’ll eat the difference.”
Online competitors include Microsoft Corp.’s Carpoint.com; Irvine-based Autobytel.com Inc.; Autoweb.com Inc.; and Cars.com, a subsidiary of Classified Ventures Inc., owned by a consortium of newspaper companies that includes the Los Angeles Times’ parent company, Times Mirror Co.
