An online startup in San Francisco is running an auction-like Web site for people buying and selling used cars.
Pratap Mukherjee, CEO of bestoffer.com, said his company takes some of the uncertainty out of buying a used car.
Bestoffer.com inspects each car it lists for sale and traces the vehicle's title and lien history. Mukherjee said the cost of maintaining a staff of inspectors and inspecting every car will not limit growth.
'An inspection costs $75 to $100, but our revenue is on the order of $300 to $350 per car,' he said.
Mukherjee's view of potential earnings is supported by Warren Packard, a member of
bestoffer.com's board and a partner in the venture capital company bestoffer.com, which provided the start-up money.
'They can staff up on inspectors as demand increases,' Packard said. 'They might have some trouble as demand ramps up, but once it reaches a steady state, there should be no problem.'
Fees paid by buyers and sellers will generate most of bestoffer.com's revenue, Mukherjee said.
Bestoffer.com wants to offer as many cars in each of the markets it serves as a local newspaper does in its classified advertising pages. The service, which began in November 1999, serves only the San Francisco area. As of Jan. 31, nearly 800 vehicles were listed on the site. The company plans to enter other major markets this year, probably in Southern California. The service works like this: A seller contacts bestoffer.com and schedules a time for an inspector to look at the vehicle. Office staffers run a title check.
Buyers can select vehicles in which they are interested, and bestoffer.com will arrange a test drive. The online venture even will hold an open house, with several vehicles at one place for an afternoon.
Buyers enter the highest price they wish to pay for a car, and the sellers enter the lowest price they will accept. A computer-controlled auction program then whittles the numbers until they reach a middle ground.