Virtual Used Cars

WOULD YOU BUY a used car on the Internet without being able to kick the tires?

Maybe not. But AutoTradeCenter.com, Scottsdale, AZ, is counting on the fact that used car dealers will. It has launched an online wholesale clearing-house through which individual dealerships, rental car agencies and finance companies can bid on used cars that they can later resell to consumers.

The 2-year-old company formerly known as the Auto Network Group last year generated $97 million in revenue from telemarketing and personal sales calls. The Web site should produce 75% sales growth in 1999, says Mark Moldenhauer, a vice president with the firm. He adds, “We just saw the Net as the natural evolution of our business.”

In 1998, the wholesale used car market consisted of 40 million vehicles. Sales totaled more than $375 billion.

The system works like this: Prospective customers submit copies of their dealer licenses and other documents to the company to get access to the site’s auctioning and selling pages. Once on the site (www.autotradecenter.com) they can view all the vehicles in the inventory, and make bids in a manner similar to that used by eBay and other online auction services.

Users gain secure access to the inventory through an intranet set up by the company. In addition, the firm can notify individual dealers about specific cars.

“We may get a couple of Rolls Royces in, and we’ll know dealers in places like California or Texas that might be interested,” says Moldenhauer.

He believes this online method can reduce selling costs by as much as 75% because wholesale customers don’t have to travel to look at the cars offered on the site. Moldenhauer says the average wholesale price of a used car is about $20,000.

So far, about 400 U.S. dealers have signed up for the service. As an incentive, AutoTradeCenter.com is offering prospects a free link to their own sites.

AutoTradeCenter.com currently is taking a low-key approach to making itself known, relying on word of mouth rather than advertising.

Another part of the company’s strategy consists of acquiring similar companies in what it calls the “independent wholesale market.”

To that end, in April it bought Walden Remarketing Services, a firm that assists dealers in reselling late-model, off-lease vehicles for auto manufacturers and their related finance companies. Last year, Walden reportedly helped remarket more than 100,000 such vehicles.