ONLINE CAR SALES
Dealerships still drive the auto business, and any Web site that wants to sell cars has to work with them. Yet dissatisfaction with dealers is precisely what steers car buyers to the Web, according to GartnerGroup analyst Thilo Koslowski. The key, then, is to come up with a way to give both dealers and buyers what they need while generating enough revenue to stay in business - a trick that DriveOff.com, which was acquired by Microsoft in July, seems to have mastered.
Between September 1999 and March 2000, Koslowski reports, half of all US car buyers turned to the Web, most just for research. About 13 percent used a referral site like CarExpress or CarPoint (Microsoft's original auto play), which snag customers and hand them off to dealers for a fee. But few referrals result in sales, so dealers lose interest and buyers go unserved. Less than 3 percent bought directly from a broker site like carOrder, which purchases from dealers and delivers the goods to your driveway. This route, too, seems to be a dead end: Not only is car brokering illegal in many states, in May GM, Ford, and others advised their dealers not to do business with broker sites. (Now carOrder is trying to become a franchised dealer.)
Straddling the white line between the referral and broker models, DriveOff.com avoids the potholes on either side by closing sales on behalf of 2,300 partner dealerships. Once you've chosen a make, model, and options, DriveOff specifies dealers within 500 miles, quotes their prices, and spells out terms. Pick a deal and you receive a sales contract and a check for the cost of the car. Then you walk onto the lot, sign the papers, and burn rubber. The dealers let DriveOff arrange financing - a substantial moneymaker.
For consumers, DriveOff's approach takes a lot of the pain out of car shopping. For dealers, it delivers real customers at an acceptable cost. And for Microsoft, it cements customer relationships that could lead to sales of MSN's next-generation wireless travel services, such as interactive navigation and predictive links to the car's onboard diagnostic computer. It's no longer enough to simply close a sale, says CarPoint CEO Jeff Dossett: "The daily relationship with consumers is the new battleground."
- Rick Overton (riverton@aol.com)
CarExpress.com: www.carexpress.com.
carOrder: www.carorder.com.
CarPoint: www.carpoint.com.
DriveOff.com: www.driveoff.com.
NEW MONEY
Merging Traffic Ahead
Sky Finance
Dive and Thrive
Power Hubs
