Palo Alto pals co-found dot-com firm to reduce auto auction inefficiencies

Autodaq's executive list reads like an international who's who.

CEO Adam Boyden is a British native who worked as a business consultant in China before launching Autodaq, an Internet firm that's plugged into vehicle auction action.

Peter Kelly, Autodaq's vice president of operations, is an Irish native who worked in the U.K.

Jorge Borbolla, vice president of strategic alliances, got a law degree in Mexico City.

These young men share something else in common besides co-founding Autodaq last July in San Mateo. CA. They also hold master's degrees in business administration from Stanford University in Palo Alto, CA.

They are alumni in good standing because one of Autodaq's investors is the Stanford Graduate School of Business Trust.

A fourth co-founder is Andrew Iorgulescu, vice president of market development. He's worked in Spain and Argentina. Like his fellow co-founders, he also holds a master's degree in business administration, though from the University of Texas at Austin, not Stanford.

"We're trying to create an effective used-vehicle marketplace," says Mr. Boyden.

Dealers and wholesalers are at one end of that as buyers. On the other end are large volume sellers - leasing, rental and corporate fleet companies. Their market represents eight million units valued at about $100 billion.

Autodaq executives say the conventional auction supply chain is inefficient. They claim their system can lop off $5 billion of auction costs, including the expense of moving vehicles to auction.

Their business-to-business e-commerce solution is to let buyers and sellers transport information rather than automobiles and people to various auction sites.

"A lot of on-line companies are focused on the consumer," says Mr. Boyden. "We're focused on the dealers. They add a huge amount of value in this country."

Essentially both buyers and volume sellers use www.autodaq.com to see and show what's for sale. The "daq" in Autodaq stands for "dealer automated quotation."

Potential purchasers can buy instantly, bid or request notification when desired vehicles become available.

Autodaq also arranges shipping and delivery. The firm charges a buyer's fee for handling logistics and moving the vehicle. It charges a seller's fee for clearing the title and related paperwork. Such fees are proprietary information, says Mr. Boyden.

Early participants say they are saving money.

"So far, we have seen a gain of several hundred dollars per off-lease vehicle that we sell through Autodaq, says Keith Kendrick, president of Bank One's eCommerce unit.

He adds, "That's mostly because of lower transportation and auction costs and a faster sale that reduces capital and inventory costs."

Mr. Boyden, although a Stanford whiz-kid, doesn't pretend to be a know-it-all.

"We don't have all the answers, but we know things could be done better," he says.

After three and one-half years of development and testing, DealerKid.com is ready to bring its product to the dealership masses.

About six dealers have been putting the licensed "Enterprise"version of the customer relationship management system through its paces for about a year.

Approximately 100 retailers have been using the lower-cost web-based version.

The Enterprise system allows dealers to own its version of the system. The web-based variation is hosted and managed by the Cincinnati-based company.

"In the next 18 months, we'd like to get 10-20% of the market on board,"says Charles Shamblee, president and CEO of DealerKid.com.

In a market that seems to be overrun by Internet-based providers of one service or another, Mr. Shamblee, a former Chrysler dealer, says his products are different for a variety of reasons.

"We are one of the few products that was built from the ground up as an Internet opportunity,"he says. "Other solutions have been adapted for the Internet.

"There are three other ways that we are different,"he says. "One, every individual company can tailor the application for their specific business need. Two, it integrates the Internet, the telephone system and the DMS. And three, its usability is based on input from our customers."

Cars.com, a Chicago-based automotive on-line shopping service, acquired a minority stake in Marketdrive Interactive, and will label a version of the latter's customer relationship management software as ServiceCenter.

Dealers will be able to use ServiceCenter to host their customers' personal vehicle web pages. It will enable car owners to view their vehicle's service records and manufacturer recall information as well as schedule service appointments on line.

Cars.com also launches DealerCenter, a web-based suite of tools that help dealers more effectively manage sales leads and long-term customer relationships.

Additionally, Cars.com unveils a promotional agreement with CarsDirect.com that will provide visitors to Cars.com's national web site with a link to CarsDirect.com.

The company also has adopted the Chrome Data Corp.'s Web Carbook, an on-line configurator designed to allow consumers to more accurately specify their cars of choice and the options they want.

AT&T Media Services has changed the name of its cable TV advertising tie-in AutoMallUSA.com website to Vehix.com in an effort to steer clear of many other similarly named web sites.

AutoMallUSA was the brainchild of John Garff, a third-generation dealer of the Salt Lake City, UT-based Ken Garff Automotive Group family. His original partner, TCI Cable Services, was purchased last year by AT&T.

Dealers can participate with Vehix.com as an add-on when they buy advertising on the AT&T cable system.

Mr. Garff says AT&T is spending $35 million to publicize Vehix.com, which he claims is the most dealer-friendly service available in the industry. He says Vehix.com will never sell F&I products or any other service that would compete with his dealers.

"We believe that this strategy is the future of automotive advertising on the Internet,"says Mr. Garff.

He says proof of the success of the idea is in the retention rate of his dealer customers. He says he has more than 1,000 dealers and a 90% retention rate, in an industry where 50% is average.