2 Online Auto Dealers Join Forces
As online new-car buying is taking off, two of the biggest players in the business are teaming up to compete directly against Autobytel.com Inc. by offering consumers a choice between buying on the Internet and visiting a dealer to close the sale.
CarsDirect.com in Culver City, one of the largest direct-sales operations on the Net, said Monday it has formed an alliance with Autoweb.com Inc., a large provider of dealer referrals, to link their Web sites and refer customers to each other.
Officials at both companies said the deal is aimed at broadening consumer appeal for both sites and combining the services they offer to compete with industry leader Autobytel.com in Irvine.
CarsDirect gains access to Autoweb’s site traffic, which is three times larger than its own. Autoweb, which currently refers customers to car dealers to conclude sales transactions, will be able to offer them all but delivery online, including no-haggle price quotes.
Autoweb had tested its own direct-selling service, but concluded it was faster and cheaper to pair up with CarsDirect, Autoweb Chief Executive Dean DeBiase said.
“It gives us an instant world-class direct service, with no learning curve,” he said.
Executives at Autobytel, which added direct service in January, said they doubted the alliance would eat into their 50% market share.
“They had to respond, but I don’t see it having any effect on us,” Autobytel Chief Executive Mark Lorimar said. “If they’re not selling cars independently, I don’t see why they’d sell more combined.”
Online car-shopping sites have proliferated in the last year, offering a rash of experimental programs under similar-sounding names. The Autoweb-CarsDirect alliance may signal a coming wave of consolidation, DeBiase said.
“There’s a lot of confusion in the space,” he said. “What you’re going to see is a simplification of that.”
As part of the deal, Autoweb will get $10 million of stock from CarsDirect, which is privately held. CarsDirect also will buy about 750,000 shares of Autoweb stock at a premium, paying about $8 million. Autoweb’s stock rose $1.63 Monday, closing at $8.19 a share.
