Firm proves people are ready to buy cars on the Web.

Shoppers are becoming more comfortable with using the Internet to buy books and CDs. But how about pointing and clicking your way to a new Honda Accord or Lexus RX300?

Just two months after its official launch, CarsDirect.com has grown at a feverish clip by convincing customers to do just that.

Revenues at the Sherman Oaks-based start-up are running more than $1.5 million a day, and the company has taken in about $100 million since December, when it sold its first vehicle through its Web site. (The official coming-out was in May.) The company's first full year could see sales of more than $400 million worth of cars and trucks.

"For a dot-com company, that's huge," said Scott Painter. CarsDirect's co-founder and chief executive. "But for any company that's huge."

A key reason for the big numbers, of course, is that cars and tracks sell for an average of $29,000 each. The portion of the sale price actually collected may be as low as 2 percent and profit margins are slim.

Nevertheless, CarsDirect's revenue performance makes it the fastest growing company to come out of Idealab!, the Pasadena-based incubator founded by entrepreneur Bill Gross that has spawned eToys, GoTo.com and Free-PC. CarsDirect also is poised to have higher first-year revenues than Amazon.com. Yahoo! Inc. or eBay had in their first year of being publicly traded.

Unlike those companies. CarsDirect remains privately held. Its biggest shareholder is Idealab, which owns about 40 percent. Other investors include Goldman Sachs Group Inc., Primedia Ventures Inc. and MSD Capital LP, computer executive Michael Dell's investment firm.

CarsDirect has raised $30 million in two rounds of funding - $7.5 million in the first and $22.5 million in the second. The company is currently in its mezzanine round, during which it expects to raise $150 million from past investors and two new partners, whom Painter declined to identify. There are no immediate plans to go public, but CarsDirect Chairman Howard Morgan said, "When it's appropriate, it's certainly one of the strategies." (Morgan is an Idealab general partner.)

Like many of its brethren in e-commerce, CarsDirect remains in the red. Next year, however, Painter expects it to be profitable, before advertising and other marketing costs. and in 2001, he expects the entire operation to be in the black.

"We are showing an operating profit in Los Angeles right now, which proves out the model," Painter said.

CarsDirect customers who log onto the company's Web site use a series of pull-down menus to select their cars, choosing the make, model and color as well as such options as CD players, specialty trim, cell phones and additional warranties. At the end of the process, the customer can choose financing. (The company has partnered with Chicago-based Bank One Corp. to form CD1 Financial.com. an Internet auto lending and leasing company.)

In California and some other states, the car can even be delivered on a flatbed truck to a customer's home or office. (In L.A., CarsDirect's trucks are painted with the slogan "Cars Delivered Fresh Daily.")

CarsDirect purchases cars from a network of 1.200 dealers - typically securing a better deal because it buys in bulk. Even after its own markup, CarsDirect claims it can usually offer a better deal than through a dealership.

In various guises, car-buying on the Internet is becoming a popular, and crowded, niche. Microsoft Corp,'s CarPoint. Autobytel.com Inc. and Autoweb.com Inc. are among the major players - though they only help customers shop for a vehicle before directing them to a dealer. CarsDirect is the only company through which a customer can make a complete purchase on the Web.

For the moment, many dealers seem satisfied with the arrangement, even if margins are smaller.

"If you sell a larger number of cars, that small margin of money adds up," said Sunny Lim, fleet and Internet specialist at Lexus Santa Monica. which has sold 53 cars through Cars-Direct in the last three months. "That's what I'm counting on - the long term."

And plenty of consumers seem willing to make a five-figure purchase over the Internet, sight unseen. "CarsDirect is showing the world that this can be done," said Andrew Thompson, principal at Primedia Ventures, an early investor.

Indeed, the number of new-vehicle buyers using the Internet to help them shop has risen from 25 percent in 1998 to 40 percent this year, according to a recent study by J.D. Power and Associates. But Tony Cohen, senior research manager at J.D. Power, stressed that the number of people using the Net to actually buy a vehicle - as opposed to just getting information - remains relatively small.

"Certainly it's not a mainstream type of transaction yet," he said. "People are trying it. sure. But it's going to take some time to see if it's a proven. viable alternative means to buying a vehicle."