INTRODUCING THE USED-CAR SUPERSITE

As consumer interest in Internet shopping grows, so do the web sites where car buyers shop.

The appearance of new Internet car-buying services - such as Cars.com, Drive Off.com, Cars Direct.com - on the heels of pioneers such as Auto-by-tel, AutoWeb, AutoVantage and CarPoint, is but one indicator of the buying and selling power offered to consumers and dealers alike by the new world of electronic commerce.

The latest blip on the e-commerce radar screen is the merger of two already-significant car-buying Web sites - AutoConnect and Trader Online - to form one giant used-car web site.

AutoConnect is owned by Manheim Auctions and ADP while and Trader Online is owned by Norfolk, VA-based Trader Publishing Company, publisher of numerous automotive classified advertising tabloids in cities throughout the U.S.

The combined circulation of Trader's local car ad publications totals 2.5 million. Cox Enterprises, owner of Manheim Auctions, holds an interest in AutoConnect and, with Landmark Communications, is co-owner of Trader Publishing Company and the main impetus of the merger.

The new Web site, AutoTrader.com, which is slated to be up and running by this month, will contain used-vehicle listings not only of franchised new-car dealerships, but also those of independent dealers and private party sellers. AutoConnect currently lists the pre-owned inventories of 32,000 new- and used-car dealers, while Auto Trader Online lists vehicles from 18,000 dealers and 120,000 individuals. Vehicles advertised in Trader Publishing's print publications will be posted on the AutoTrader.com site for free.

Based on current traffic at AutoConnect, Auto Trader Online and a third site, AutoMart, AutoTrader.com expects to attract up to 2.5 million unique visitors per month.

Bigger is definitely better, says David Mancinelli, general sales manager at Bryner Chevrolet just outside Philadelphia.

"The more customers who have access to our inventory so they can do their information-gathering and price-shopping, the better," says Mr. Mancinelli. "Being able to find so much information on the Internet can condense the customer's shopping time and save them having to drive to 15 different dealerships just to get an idea of what's available."

AutoConnect officials say the decision to target the used-vehicle market is based on the fact that the pre-owned vehicle market is larger and more profitable than the new-car market. It's four times larger (40 million used units versus 10 million new) and significantly larger in terms of revenue, which totaled $370 billion in 1998 compared to $310 billion for new vehicles.

The focus on used cars also is driven by the fact that selling used vehicles requires different techniques and strategies than for new cars.

"The new-car marketing model (on the Internet) doesn't translate well to the used side," says Peter Ill, vice president and general manager of electronic media at Trader Publishing. "We want as many used cars from as many dealers as possible in our database so that the consumer has the widest possible selection to choose from."

That sentiment is echoed by dealership sales managers, some of whom are turning from 10% to 20% of their Internet hits into sales.

"You can buy a new car on the Internet without having to come to the dealership," says Joe Durham, Internet sales manager at Big Billy Barrett Mitsubishi-Isuzu-Hyundai in Mesquite, TX. "But used cars are a whole different selling process. You've got to get people to the dealership, and you've got to have the pricing right when people get on the Internet to comparison-shop or else they won't come."

But what good does it do a dealer in New Orleans to have his or her inventory listed online in Seattle or Philadelphia? In the first six months after subscribing to AutoConnect, independent used-car dealer Ray Stephenson of Atlanta sold one car to a buyer in Detroit and another to someone in Tallahassee, FL.

Ms. Durham agrees that the Internet makes the occasional long-distance sale more possible, especially when it comes to specialty vehicles.

"We had someone come all the way from Pampa, TX, for a VW diesel we had listed on the Internet," recalls Ms. Durham. "They really wanted that particular vehicle."

In essence, the new super site will refashion the used-vehicle marketplace, says Auto Trader's Mr. Ill.

"If we create the marketplace for used cars by providing an inventory that will be bigger than all the other used car sites combined, dealers will feel the need to be on our site," says Mr. Ill. "We're very careful in letting the dealer know we're not selling the cars, we're trying to drive ups into the dealership so they can sell the cars."

And luring people to the dealership is a greater likelihood with the used-car shopper, says Mr. Mancinelli of Bryner Chevrolet.

"The condition of the vehicle is the most important factor that determines whether or not people will buy a pre-owned vehicle," he notes. "And the only way to inspect the condition of the vehicle is to visit the dealership."

No one disputes the enormity of the electronic market, if only vendors can reach it. The new-car shopping site's electronic reach will be significant in that AutoConnect's current distribution relationships will remain in place after the merger. AutoConnect is currently partnered with three America Online properties: AOL, AOL.COM, Netscape and Compuserve; as well as @Home, Lycos.com, HotBot, Snap.com, WebCrawler, Yahoo!, and Cox Interactive Media's network of local city sites.

With such wide-ranging Internet exposure, AutoTrader.com has the potential to reach virtually every online household in the United States. According to a survey by Mediamark Research, more than 64 million adults - about 1/3 of the U.S. population over 18 - go online each month either at home or at work.

"Because we'll have the largest online inventory of used vehicles," says AutoConnect PR director Anne Webb, "we hope to be top-of-mind with consumers who are interested in purchasing a used car. Dealers will get free listings and leads, but they'll also be free to purchase a greater presence, such as banners and other types of advertising."

The merged company will continue to offer dealership Web site design services, such as those already offered by AutoConnect.

But the sheer size of the inventory listings will not, of itself, ensure the success of the site, says Ms. Webb. "Success will also depend on the relevance of the resources we have online," she adds. "We'll provide information on vehicle pricing and specifications, trade-in values, and some level of vehicle history. And, of course, locations of dealers listing their inventories on AutoTrader.com."

It is currently estimated that about 40% of new car shoppers go online to seek vehicle availability and pricing information - up from just 25% a year ago, according to research by J.D. Power & Assoc. By contrast, only 26% of used-car shoppers went online for similar information-gathering purposes, since the entry of used car sites has, until now, lagged behind new car buying sites.

The lower figures also suggest that the growth potential for used car Internet marketing offers greater immediate opportunities than the new vehicle segment. A recent Wall Street Journal article, citing research by Forrester Research Inc., Cambridge, MA, predicts that by the year 2003, the number of used vehicles bought via the Internet will reach 17 million.

Mr. Stephenson of Cars and Trucks Atlanta may be typical of the immediate future for Internet-savvy dealers. "AutoConnect built my site for me," he says, "and it's already getting about 1,000 visitors a month."