Avis Europe To Form Online Used Car Venture

Avis Europe and U.S.-based e-commerce solutions provider Navidec (Nasdaq: NVDC) announced today that they are forming a joint venture to sell used rental cars worldwide over the Internet.

According to the companies, the new site will launch in the United Kingdom later this year and will eventually expand throughout major European markets. Avis Europe will own 65 percent of the venture, with Navidec holding the remainder.

The new company will have an initial capitalization of $10 million (US$), the companies said.

Avis Europe buys over 200,000 cars per year from a variety of manufacturers and sells some 80 percent of them back. The new venture will aim to sell the 20 percent of vehicles that are not sold back to manufacturers, and will seek other used car suppliers for the venture as well.

Proven Model?

Avis said it selected Navidec as a partner because of the systems the company developed with subsidiary Driveoff.com, an online auto broker which launched last September in the United States. Driveoff.com allows customers to conduct auto research, select a new car and complete financing through its network of sites.

“Through our incubation of Driveoff.com, we have already made a tremendous investment in the development of a proven model for successfully marketing automobiles online,” said Navidec CEO Ralph Armijo. “Combining Avis’ European network and market knowledge with Navidec’s systems expertise will create a strong force in the emerging online vehicle services market in Europe.”

The European Dynamic

The companies will have to overcome significant barriers to succeed. In addition to its less saturated Internet population, Europe has less of a tradition of buying used cars from dealers and brokers than in the United States. A significant proportion of used car sales in Europe is done privately between buyers and sellers.

The new venture will get in on the ground floor of the business however, and could be able to capitalize on the growing e-commerce trend in Europe. Statistics show that consumers in the UK, France, Germany, the Scandinavian countries and The Netherlands are coming around to Internet shopping like they have to their new Euro currency.

Navidec brings some experience to the mix for Avis. The Greenwood Village, Colorado-based company has some 200 corporate clients in addition to its online subsidiary. It booked revenues of $12.7 million for the nine months ending in September and a net loss of $4.6 million in the same period.

The company announced last week that it opened seven new regional offices from coast to coast in the U.S. and plans on opening five more.

Avis Europe serves more than seven million consumers a year in Europe, Africa, the Middle East and Asia, with 2,700 locations. The company booked revenues of over $1 billion last year.