Ebay bids to remake $372B used-car biz

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Tom Florio does it eBay.

The Vogue publisher, accustomed to surfing the Web with 5-year-old son Jack to ogle vintage pickup trucks, a few months ago on a whim found himself in an eBay bidding war for a teal `58 Chevy pickup. He won, and two weeks later the truck was shipped from California to Mr. Florio's weekend home in the Hamptons.

"It's terrific," he said of his eBay auto experience. "It's a great truck."

Mr. Florio is far from alone in purchasing his wheels on eBay. Last year, the online auction site sold 300,000 vehicles, and 25% of its gross merchandise sales came from cars and other automotive items. This year, eBay is on track to ring up $5.3 billion in sales of automotive products, a spokeswoman said.

EBay started by focusing on rare or high-end specialty cars like Mr. Florio's truck. Now, the company that changed the nature of the flea market is trying to transform the $372 billion used-car business by taking its pitch to ordinary consumers in a national TV and print campaign.

The effort, from Omnicom Group's Goodby, Silverstein & Partners, San Francisco, continues the "Do it eBay" musical campaign using an adaptation of the Frank Sinatra classic, "I did it my way." This time, a woman in a traffic jam sings about getting a deal on her dream car. The spot, network and national cable TV effort breaks today.

print campaign

Carolyn Pollock, senior marketing manger, eBay Motors, declined to reveal spending, but said it was comparable to last year's holiday TV campaign. According to TNS Media Intelligence/CMR, eBay spent $15.2 million on broadcast advertising in November and December. In 2002, eBay spent a total of $52.6 million on advertising. Of the total, $12.1 million was dedicated to eBay Motors-overwhelmingly spent in magazines and radio.

The campaign includes print ads in 19 magazines including Time Inc.'s Sports Illustrated and This Old House. In July, the campaign will add an eight-page insert in a dozen publications reaching 28 million readers. The insert tells the story of a character who buys a car on eBay Motors. As part of the print effort, eBay Motors is conducting a sweepstakes involving online testimonials with a prize of $50,000 to spend on the used-car site.

Ebay Motors and other online used car transactions currently account for less than one-half of 1% of all used car sales, experts in the field said. Overall, 42 million used cars were sold in 2002, according to Manheim Auctions and CNW Marketing Resources. Sales were split almost equally among the three prime groups selling used cars: private owners, independent used car dealers and traditional automobile dealers.

EBay is transforming the used-car business in another way. Seventy-five percent of eBay Motors' used cars went to buyers who crossed state lines to pick up vehicles, unusual in a traditionally local business, said Shannon Stubo, eBay senior manager-corporate communications. "We're nationalizing the marketplace."

Some auto experts, however, are calling eBay Motors' used-car-sales claims old fashioned dot-com hype. "I don't know whether the market and consumers are ready to purchase used vehicles blindly," said Scott Weitzman, senior director, J.D. Power & Associates, adding he questions some of eBay Motors' projections. "I don't think we're anywhere near the point of supplanting traditional forms" of used-car sales, he said.

`sight unseen'

Chip Perry, president of AutoTrader.com, said his company's research indicates online used-car sales "are inherently limited by the fact that consumers are reluctant to make purchases sight unseen." His site offers consumers a "conditional bidding" process where the sale is not complete until a final inspection.

EBay Motors addresses the issue by offering insurance policies such as a one month limited warranty or "purchase insurance" up to $20,000 if a car is materially misrepresented, Ms. Stubo said.

contributing: tobi elkin

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