Online auto brokering is a risky business.
The population of direct auto buying services - those that tap dealer inventories for vehicles, handle the car sale and set the retail price - has dwindled to one: 2-year-old CarsDirect.com of Culver City, Calif.
Just a month ago there were two additional direct services. But Microsoft CarPoint shut down its DriveOff.com subsidiary Feb. 15 and Greenlight.com of Livermore, Calif., was acquired by CarsDirect.com on Jan. 31. DriveOff.com was less than 2 years old; Greenlight.com was 1.
CarOrder.com of Austin, Texas, shut down its direct-sales operation last year. Its auto brokering operation was a year old.
Why am I not surprised at what's been happening?
There is not enough consumer demand for the direct-sales model to work. Studies have shown that while many consumers value the Internet to research their car purchase, a minority of consumers wants to do the transaction online.
And the business of selling directly through a third party offers slim profits at best.
Third-party sites need deep pockets to promote their brand names on high-traffic portals.
Even multibillion-dollar behemoth Microsoft didn't want to foot those kind of bills.
In other dot-com news:
Cobalt Group, a Seattle Internet technology company, and the Houston Chronicle have launched ChronicleCars.com, the newspaper's redesigned automotive Web site. The site will be maintained and hosted by Cobalt in partnership with the Houston Chronicle, allowing consumers to search local dealers' new- and used-vehicle inventories and research car purchases.
Toyota Motor Sales U.S.A. Inc. has renewed its relationship with Santa Clara, Calif., buying service Autoweb.com through the year 2002 to use Autoweb's Automotive Information Center products. Toyota uses Automotive Information Center's comparison shopping software on its Lexus.com site.
Staff Reporter Donna Harris can be reached at [email protected] or (540) 668-7295
