With the deluge of car-buying services now on the Internet, Autobytel.com's recent agreement to acquire CarSmart.com comes as no surprise.
Autobytel.com, an Irvine, Calif., Internet service that sends sales leads to dealerships for a fee, agreed on Oct. 15 to acquire AIN, owner of rival CarSmart.com, for $32 million in stock and cash.
The CarSmart.com acquisition is only the beginning of a shakeout that ultimately will decimate legions of small buying services and even challenge larger, better-established buying services that lack sufficient capital to expand and promote their brand names.
Even the two largest online used-vehicle buying services saw the need to merge. In July, AutoConnect.com announced it would merge with Auto Trader Online, the Internet subsidiary of Trader Publishing Co. of Norfolk, Va.
This was not a fire sale between shaky little startup companies. Rather, two strong competitors were compelled to join forces because they recognized that consumers are snarled in an online traffic jam.
There are simply too many automotive sites. The growing number of advertisers has bid up the price of exposure. In April, before AutoConnect.com and Auto Trader Online agreed to merge, AutoConnect.com spent $17 million to list used-car inventory on America Online Inc.'s site, www.aol.com.
And, as strong as they are, Auto Trader and Autoconnect.com face competition from larger rivals with stronger brand names, such as Microsoft Corp., Ford Motor Co. and General Motors.
The Internet may have started as an inexpensive medium available to small entrepreneurs with big ideas. But in the near future it will be dominated by large corporations with big bucks.