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GREENLIGHT.COM was an online buying service for automobiles that launched in January 2000. The service was initially available in four Southern cities, then expanded to 31 states by mid-2000. The company was backed by a combination of venture capital firms, large automobile dealers, and As the bear market took its toll on Internet stocks in 2000, the company laid off 25 percent of its workforce in December 2000. In February 2001, just over a year after it began, was acquired by, a competing service.


Like, which launched in May 1999, bought cars from dealers for re-sale to online customers at a fixed price, but claimed that it would be more dealer-friendly than other online buying services. gave dealers direct contact with customers, and customers took delivery of their vehicle from a dealer that would handle most of the post-sale customer service.

The first step in buying a car through was for a customer to describe the vehicle they wanted and the state in which they wanted to take delivery. then provided a guaranteed, no-haggle price. If the price was right, the customer would then fill out an online order form. promised that a dealer would reply to the customer within 24 hours with a confirmed delivery time. The customer then took delivery of the car from the dealer.

Dealers were granted exclusive territories from, but they had to respond within 24 hours or would send the customer to another dealer. If the selected dealer did not have the car in stock, would help arrange a dealer trade. did not charge fees to the dealers; rather, it made money on each vehicle's markup. Dealers who were part of 's network were free to continue their relationships with other online buying services and to receive leads from their own stand-alone Web sites.

ATTRACTED THE INTEREST OF LARGE DEALERS was formed in 1999 and launched in January 2000 by Asbury Automotive Group, based in Conshohocken, Pennsylvania, and the venture capital firm Kleiner Perkins Caulfield & Byers with about $15 million in venture capital. Kleiner Perkins Caulfield & Byers had participated in the launch of such Internet giants as and Netscape Communications. With more than 70 dealerships in 10 states and some $4 billion in annual revenue, Asbury Automotive Group was the largest privately held dealership chain in the United States. For the service, which had its headquarters in San Mateo, California, the company was seeking to sign up more dealers that had multifranchise coverage in major markets and that were comfortable using the Internet for business.

In its first month of business struck a deal with For an undisclosed amount, took a five-percent interest in Under a marketing agreement between the two companies, would receive $82.5 million over five years for promoting to its customers. At the time had about 16 million customers. gained important credibility among automobile dealers when Joel Manby, former CEO of Saab Cars USA Inc., joined the firm as its president in April 2000. Manby's immediate goals were to build a committed network of dealers and to gain the support of the major automakers. Dealers were offered the opportunity to take an equity stake in One of the first dealer groups Manby signed up was Sonic Automotive Inc. of Charlotte, North Carolina, which operated 110 dealerships and had a large presence in the Southeast, California, and Las Vegas. It would take about six months for all of the Sonic dealerships to be set up for referrals. Meanwhile, the large auto-makersincluding Ford Motor Co.'s Ford Division and Lincoln Mercurywere opposing services like 's by threatening their dealers with severe penalties if they sold new vehicles to Internet brokers for resale.


In July 2000 added 10 dealer groups to its service. The largest was the Hendrick Automotive Group of Charlotte, North Carolina. With annual sales of more than $2.5 billion, Hendrick was ranked sixth by Automotive News among the top 100 dealer groups. Hendrick had 48 dealers with 61 franchises in nine states and the District of Columbia. Altogether, the 10 new dealer groups represented 130 dealers with 150 franchises in 14 states and D.C., bringing 's total to 1,500 affiliated dealers in 31 states. None of the new dealers made any cash investments in However, they were made equity partners, which gave them the opportunity to earn equity shares in based on their performance and the performance of Of 's more than 1,500 affiliated dealers, nearly 900 had a "platinum" arrangement whereby they could earn stock in

Manby predicted that would have affiliated dealers in every state by the end of 2000. He claimed that was reaching 75 percent of all e-commerce customers and about 45 percent of the total population. The company recently signed deals with and, both of which agreed to use as their new-car partner; they provided links on their Web sites to In August 2000 announced it would begin selling cars on its Web site with a new link to The link, which would present automobile information in the familiar format, was part of Amazon's new ventures section. It gave access to Amazon's growing customer base of 23 million Internet purchasers.

It was around this time that received an additional $39 million in financing from investors, including, Techno-Venture Co., original investors Kleiner Perkins Caulfield & Byers and the Asbury Automotive Group, and others. The terms of 's agreement with were changed. Instead of paying $82.5 million over five years, agreed to pay $15.25 million over two years in exchange for being the exclusive new-car buying service on The new terms were made in part because of the difficulty Internet firms were having in raising capital in 2000. The company's top management also changed, with CEO and co-founder Todd Collins becoming the firm's chief strategy officer. Manby replaced Collins as CEO, and Mark O'Neil, former division president of CarMax Inc., was hired as president and chief operating officer (COO). also moved its headquarters from San Mateo to Livermore, California.


In the second half of 2000 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 agreed to be acquired by for an undisclosed amount. Visitors to the site were referred to, 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.


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