Reverse Car Auctions Come To The Web
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Written by Steve R. Lowry
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Wednesday, 21 January 2009 |
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Services let buyers set a price for dealers; Ford links its site to Priceline.com bidding
First it was plane tickets, then ocean-bound shipping containers and secondhand
goods. Now it appears even new cars are ripe for online auctions.
Last week, two auction services -- Priceline.com Inc. and CarPrices.com -- were launched, offering to cut haggling out of new car sales by putting the buyer in the driver's seat.
"Consumers are going online because buying a car sucks," quipped analyst James McQuivey at Forrester Research Inc. in Cambridge, Mass. "It's an adversarial process, and anytime a car buyer purchases a new car, they believe someone got the best of them. They want to know the prices up front. Consumers don't want to bargain."
Using Pacific Beach, Calif. based AutoFusion Inc.'s online reverse auction at CarPrices.com, car buyers set their own purchase prices for new vehicles with specific options. Visitors to Dearborn, Mich.-based Ford Motor Co.'s Web site have the option of linking to Priceline.com's auction to submit a bid.
Both CarPrices. com and Stamford, Conn.-based Priceline.com send their respective bids to car dealers, who in return send their best bid offers back to the buyers.
Heather Milne participated in the beta test of the CarPrices.com's reverse auction last month. Pressed for time and truck-less after her 1990 Mitsubishi Mighty Max pickup blew a head gasket, Milne placed her bid and bought a new vehicle in 48 hours. She plunked down $19,430, excluding tax, for a 2000 GMC Jimmy.
"I didn't want to haggle on the lot," Milne said. "By the time I stepped onto the lot, it was a done deal. I had nothing to do except sign the papers, so it was a painless process."
Lou Marcoccio, an industry analyst at Gartner Group Inc. in Stamford, Conn., said he expects to see a tremendous increase in Web auctions over the next six months.
"We already see auctions going into a lot of new areas, like concert ticket sales, but it will take longer to impact the car industry," he said, because most customers still want to test-drive and view the vehicles they're interested in.
But Troy Brown, customer relations and Internet manager at Hoehn Motors Inc. in Carlsbad, Calif., said he expects a steady stream of Internet car sales to flow from online auction sites. Brown said he will participate in CarPrices.com's reverse auction because the Web generates stronger leads and those sales tend to close more quickly than sales from walk-in customers.
"[Internet sales] may cut my commission, but it makes for a quick deal that flows. An Internet customer is truly looking to buy a car, but they want the best price," Brown said. "It's a mistake when sales representatives think they can make a Bill Gates fortune off of a little car."
Last week, Ford and Priceline.com began the service in Florida. CarPrices.com is initially launching its service in San Diego, where more than 80 dealers have signed up, officials said. CarPrices.com said it plans to roll the service out nationwide within the next three months.
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Last Updated ( Wednesday, 21 January 2009 )
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