MSN Carpoint Partners with AutoNation

In yet another example of consolidation in the online auto market, MSN Carpoint and AutoNation announced Friday that they have signed a deal that makes AutoNation the primary distributor of the car sales leads generated by Carpoint.

The companies said that the three-year agreement will create the largest online dealer network in existence. In addition to the 400 new and used car franchises it owns, AutoNation also works with more than 1,600 dealers outside of its retail network.

"When a car shopper goes online with questions, they want answers and we need to be there with a fast response and the car they want," AutoNation chief executive officer Mike Jackson said about becoming a fulfillment partner for MSN Carpoint.

Jackson said that the agreement will mean "keeping the flow of high-quality, Carpoint sales leads flowing to the greatest number of e-dealers possible."

Quick Rollout

The partnership calls for AutoNation to begin distributing sales leads in March, followed by a full distribution program by June. The companies also said that they will use customer demand data to "dramatically expand Carpoint's dealer network to better serve online car buyers everywhere."

Carpoint and AutoNation said they also plan to develop additional tools to improve the online car shopping experience for both consumers and dealers.

Marriage of Giants

AutoNation and Carpoint are well positioned to grab a large piece of the growing online auto market. According to Forrester Research, the online cars sales market will swell to $16.6 billion by 2004.

Carpoint says it is the most visited online automotive site on the Web, with 6 million customer visits each month. It also claims to generate more than $8 billion in auto sales for the dealers in its network each year.

In addition to its consumer-driven site, Carpoint also generates revenue by licensing its Dealerpoint customer relationship management (CRM) tools to dealerships across the U.S.

AutoNation also brings a sizable amount of business to the table. Last year the Fort Lauderdale, Florida-based company sold more than $1.5 billion worth of automobiles online. Its sales were impressive enough to earn it 63rd place on last year's Fortune Global 500 list.

Market Drivers

Competition in the online auto sector is heating up and fueling a series of partnerships and mergers. On Wednesday, CarsDirect.com announced that it is purchasing Amazon-backed Greenlight, one of its rivals in the Web car sales business.

The acquisition, which will give CarsDirect.com a base of more than 3,000 car dealers, was called a "home run for dealers, partners, investors and most importantly, consumers" by Greenlight.com chief executive officer Joel Manby.

Although analysts agree that Americans are increasingly using the Web to research car purchases, there are signs that few actually buy cars online. A recent report from the Gartner Group found that while 45 percent of U.S. households used the Web in the car buying process, just 3 percent actually bought autos online.