Despite a lack of profits and postponed plans for a sharemarket float, on-line
used car advertising medium AutoTrader.com has set some ambitious goals, Automotive
News reported.
The company still aims to go public – next year now – as well as acquiring
other car-related companies and becoming the leader in on-line used car classified
advertising.
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AutoTrader.com CEO Chip Perry reportedly told Automotive News that the company’s
owners are satisfied with the business plan and that the company will make a
profit in the next 12 to 18 months. Until then, the owners are prepared to continue
to pump cash into the online used-car classified service, Perry said. Documents
filed with the Securities and Exchange Commission show AutoTrader.com lost $US22.7
million in 1998 and $US46.7 million in 1999.
"We plan to be a consolidator in the online world," Perry reportedly
said. "It’s a disappointment that the market is not receptive to a good
idea, but we’re not discouraged. We plan to become the category killer for online
auto classified."
Automotive News quoted Perry saying that AutoTrader.com will target companies
that provide support services – such as inspections and warranties – to aid
used-car transactions.
AutoTrader.com carries 1.5 million used-car listings from almost 40,000 dealers
and 250,000 private owners and cancelled plans to go public in early November
because of depressed stock prices in general and a stock market backlash against
dot-coms in particular, Automotive News said.
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By GlobalDataThe newspaper quoted Perry as saying business has grown tremendously this year.
The number of dealers paying for ads such as links, logos, colour stripes and
titles on the web site increased from about 1,700 to 5,000; vehicle searches
on the site increased from 6 million a month to 16 million a month; and revenues
increased from about $US5 million to almost $US30 million.
Automotive News said Perry argues that AutoTrader.com reduces advertising costs
for dealers. Dealers paying for advertising on the site get about 200 leads
a month compared with about 20 leads a month for dealers who do not advertise.
Dealers who pay for advertising pay an average of $US550 a month or $2.75 per
lead.
According to Automotive News, Perry said that about 10% of the leads become
sales costing dealers about $US25 per vehicle sold. Newspaper advertising costs
dealer an average of $US250 per car sold.
"We’ve become a strong force in the used-car market," said Perry.
"We’re helping dealers sell cars for about one-tenth the cost of traditional
advertising."
