Greenlight.Com - Cutbacks Followed By Sale To Carsdirect.com

CUTBACKS FOLLOWED BY SALE TO CARSDIRECT.COM

In the second half of 2000 Greenlight.com was faced with a tightening capital market and increased competition from other online car buying services. The major automakers were opposed to their dealers selling to Internet brokers and were looking for an appropriate Internet model that would satisfy their dealer networks. In December 2000 the company laid off 25 percent of its staff as a cost-cutting measure. In February 2001 Greenlight.com agreed to be acquired by CarsDirect.com for an undisclosed amount. Visitors to the Greenlight.com site were referred to Cars-Direct.com, and the combined companies claimed to offer access to more than 400,000 vehicles. The acquisition gave CarsDirect a base of more than 3,000 affiliated dealers.

Analysts noted that while more Americans were using the Web to research their vehicle purchases, fewer were actually buying cars over the Internet. E-Commerce Times reported that a recent study by the Gartner Group found that while 45 percent of U.S. households used the Web as part of their car-buying process, only 3 percent actually bought their cars online. Another study by Forrester Research projected that 28 percent of all new-car buyers would visit an online auto service by 2003, three times the current level, and technology research firm IDC predicted that new car sales over the Internet would climb from 15,000 in 1999 to more than 500,000 by 2003.