Start-up joins online car-sales fray

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A dot-com start-up is trumpeting a new approach to selling used cars.

Visitors to iMotors.com request the model, make, options and even color of the car. The company searches for, buys and reconditions the vehicle, which customers can pick up at a local delivery center.

The service began in San Francisco in September and expanded to southern California last month. An assault on the East Coast is planned for early next year, said Rob Erlichman, VP-marketing.

DOCUMENTARY STYLE

The auto retailer kicked off a $10 million, six-month ad campaign in California last week. The TV, newspaper, radio and out-of-home effort was handled by Saatchi & Saatchi, San Francisco. Ads carry the tagline "You've never bought a used car like this."

Two TV spots feature real-life mechanics saying they'd rather work on cars than play chess or have a girlfriend. Another spot shows inspectors checking off the features of a car, while a fourth talks about one man's search for a "pearl white" car to match everything else he owned.

The goal of the documentary-style campaign is to humanize the company, said Julie Bauer, president-CEO of Saatchi & Saatchi, San Francisco. "Hopefully this will break through the clutter because it's quieter," she said.

IMotors.com takes a cut of the price it charges consumers but claims to still be able to charge much less than traditional dealers because it does not carry inventory. IMotors.com purchases some vehicles from dealers at wholesale prices and finds others through leasing companies, wholesale auctions and even private owners.

The vehicles come with a seven-day/700-mile money-back return policy. Mr. Erlichman said only about 1% of vehicles are returned. The vehicles also have a three-month/3,000-mile warranty.

STILL BUCKING TREND

Selling vehicles over the Internet has been an area of contention among traditional car dealers. Increasing numbers of dealers are responding to consumer demand for online information during the buying process. But many dealers still buck the trend that puts consumers in the driver's seat.

Ford Motor Co. and General Motors tried to sell used vehicles directly over the Internet in Texas earlier this year, but were rebuffed by state regulators.

The automakers were blocked because they are manufacturers, said Jim Moors, director of state law and franchising at the National Automobile Dealer Association. IMotors.com will need approval from regulators in every state because car dealers are required to be licensed, Mr. Moors said.

The site has some big-name backers, including Paul Allen's Vulcan Ventures; and Global Retail Partners, a venture capital fund within Donaldson, Lufkin & Jenrette's merchant banking group. The two funds were among a group that provided $57 million in backing to iMotors.com in the fourth quarter.

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