Idealab Company CarsDirect.com Launches as First Nationwide Online Source for Car Purchase, Home Delivery.
First Internet Car Company to Partner with Bank One;
Investors Include Goldman Sachs, MSD Capital L.P., Primedia Ventures
CarsDirect.com -- the only nationwide online source that enables consumers to research, price, select, finance, order and take delivery of a new vehicle, at home or the office -- launches today at http//:www.carsdirect.com.
CarsDirect.com was conceived by entrepreneur Scott Painter and Bill Gross of Idealab, the Pasadena, Calif. incubator, with more than 20 successful online companies in its portfolio, including eToys, Ticketmaster, CitySearch, Free-PC and GoTo. After becoming frustrated with his own efforts at buying a car online, Gross realized current Internet options were not only inadequate but did nothing to leverage available technology on behalf of the car buyer.
CarsDirect.com, a benchmark in the evolution of E-commerce, gives a green light to Internet users who -- armed with access to complete and objective information -- have decided exactly what they want and are ready to make their vehicle purchase over the Web. Created as a straightforward alternative to the normally time-consuming car buying process, CarsDirect.com is a new model of consumer convenience, unlimited choice and simplified pricing.
According to industry analysts, nearly half a million vehicles will be sold online by 2003, a dramatic increase from the estimated 15,000 cars expected to be sold online this year.
"No other company, online or off, is committed to providing a more efficient and economical way to buy a car," said Scott Painter, CEO, CarsDirect.com. "We do this by bypassing intermediary steps, relying on volume pricing and using the Internet to cut overhead, and pass the savings on to customers. We place a huge premium on convenience, which puts the car shopper in complete control. That's what we mean by buying cars direct."
Leveraging Strategic Partnerships
Visionary leaders from both inside and outside the auto services sector comprise the strategic partnership backing CarsDirect.com, the first Internet car company.
Bank One, the nation's fifth largest bank and a major automotive lender, is collaborating with CarsDirect.com to fulfill a vision of a comprehensive, one-stop car-buyers' site. The site will ultimately enable Net users to do everything from choose a color and select stereo components to secure financing and insurance, and arrange delivery -- all from their personal computer.
Bank One is also working with CarsDirect.com to establish the company's preferred dealer network, which will supply the new vehicles for CarsDirect.com's buyers, perform the pre-delivery services, acquire the trade-ins, and provide warranty repair and service.
Edward Tinsley, President of BancOne Credit Company, Bank One's automotive finance division, said, "Auto dealers recognize that a growing segment of the population wants to buy cars in this way. By giving the dealers we serve an opportunity to be partners in the CarsDirect.com enterprise, we will create new business for them and help them prepare for the online future."
CarsDirect.com has received significant investments from Goldman Sachs; MSD Capital L.P.; Foundation Capital; Idealab Capital Partners, the venture capital affiliate of Idealab; and Primedia Ventures, a subsidiary of Primedia, the nation's largest automotive publisher, which includes such brands as Automobile, Wards and Intellichoice -- a leader in supplying comprehensive pricing data to the auto industry and to CarsDirect.com. The company has also formed a strategic relationship with leading industry market researcher J.D. Power & Associates.
In addition, CarsDirect.com has received a jump start in its ability to source cars through its strategic partnership with Autoland, one of the nation's largest credit union auto buying services. During its beta site phase, CarsDirect.com served 600 customers representing more than $20 million in car sales.
Complementing its Web presence, CarsDirect.com will have at launch local offices in nine major U.S. markets, including New York, Los Angeles, Chicago, San Francisco, Seattle, Miami, Atlanta, Denver and Washington, D.C. Representatives in these offices will serve customers and local partners alike. The company is planning an aggressive rollout strategy that will include more than 40 cities by the end of the calendar year.
For Car Buying, A New Model
Now poised to make major inroads among the 80 million Americans online today, the partners behind CarsDirect.com are dedicated to creating for buyers a consumer-friendly environment, offering online comparison shopping, real-time, competitive price quotes -- via a fixed-price quote configurator, which adds option prices to the base price as the customer "builds" the vehicle -- authoritative reviews of popular vehicle makes and models, and a range of direct delivery options including home or office.
"The car-buying experience has remained virtually unchanged since our grandparents bought their first cars - it's time for an overhaul that puts the consumer in control," Painter said. "We know how difficult car-buying can be. That's why we want to help in every way we can.
"We give buyers unbiased information and unparalleled choices, so they can make informed decisions - and then we provide the capability for them to purchase their vehicle from the comfort of their home in a way that benefits everyone: consumers of course, but also dealers who can now truly expand their businesses online, and manufacturers who get a major headstart in E-commerce," Painter added.
Rather than being confined to the specific brands represented on a manufacturer's site or a dealer franchise, CarsDirect.com customers can choose from among more than 2,500 makes and models produced by every major manufacturer -- the first truly objective new car buying experience. For participating dealers, it's an opportunity to capture the traffic generated by a true online auto mall.
CarsDirect.com is more than just an online transition from the "brick-and-mortar" paradigm. As the first Internet car company, CarsDirect.com has changed the very focus of the transaction from car selling to car buying. In this next-generation environment -- with virtually no emphasis on promotion -- cars are bought rather than sold.
Beyond Dealer Referrals
Unlike CarsDirect.com -- which enables buyers to complete the purchase transaction -- other auto Web sites only provide referrals, which are then submitted directly to a large network of dealers for a fee. From these sites, consumers and dealers still need to negotiate the final terms of the purchase. Dealer referral services have recognized that consumers demand more information about their vehicle purchase, and have proven that pent-up demand exists for online buying. They represent a first step toward satisfying that demand; CarsDirect.com provides the rest of the solution.
CarsDirect.com understands that the car-buying process involves many steps beyond research and referral, and it is developing its business to help consumers complete each step more easily. In fact, Internet car-buyers can initiate the actual car purchase in as little as 20 minutes.
The focus is on providing car shoppers with the data and tools they need to consummate the transaction -- from information on the car itself to full financing, insurance, warranty and documentation support, and the creation of ongoing relationships with customers, through maintenance and service partnerships. Other value-added features will include e-mail service reminders, online car repair histories, monitored discussion groups and a series of new car-related products designed to leverage both the interactive environment and CarsDirect.com's growing customer relationships.
CarsDirect.com is staging the number of cars available at launch, as a means of ensuring a consistent and high level of customer service for its initial buyers. The company's launch coincides with the closeout of the 1999 model year.
"CarsDirect.com was born from my own experience, which clearly proved that despite its fabulous utility, the Internet was still a place where you couldn't purchase one of America's most important commodities - a new car," said Gross. "I decided it was time to change that and CarsDirect.com is how we're going to make it happen."
Bank One Strategy
"The CarsDirect.com initiative reflects Bank One's increasing emphasis on electronic commerce," said Don Winkler, Chairman and CEO of Finance One Corporation, the Bank One subsidiary that includes automotive finance. Other recent Bank One eCommerce initiatives include creating a full-service financial center for Excite, Inc.'s 17 million monthly users; enabling consumers in 50 states to receive conditional approval for home equity loans within 50 seconds; becoming one of five banks on America Online's banking center; offering electronic tax preparation and filing; and offering electronic bill delivery to its online bill payment service. Bank One's First USA credit card unit sold more than 300,000 credit cards over the Internet in 1998. In addition, the Bank has numerous partnerships with on-line loan brokers, and websites for mortgage and education loans.
About Bank One Corporation
Bank One Corporation (NYSE: ONE), headquartered in Chicago, is the nation's fifth largest bank holding company, with assets of more than $250 billion. Bank One offers a full range of financial services to commercial and business customers and consumers. Information about Bank One can be accessed on the Internet at www.bankone.com.
CarsDirect.com (www.carsdirect.com) is a revolutionary new Internet company that enables consumers to buy a vehicle over the Internet. With CarsDirect.com, car shoppers can research, price, design, order and take delivery of a new car or truck right from their own computer -- selecting from among more than 2,500 makes and models produced by every major manufacturer. Unlike referral services, which simply point people in the direction of a dealer, CarsDirect.com customers complete the transaction, online, with full financing, insurance, warranty and documentation support.
Based in Sherman Oaks, California, CarsDirect.com is an Idealab company, with investors that include Goldman Sachs, Foundation Capital, Idealab Capital Partners, MSD Capital L.P., and Primedia Ventures, among others.