Autoscout24 and new competition in the online used car business

car exchanges on the internet competition challenges autoscout24.De and mobile.De out

Still dominated by autoscout24 and mobile.De the car trade on the internet. But a billboard sticker, google and the savings banks are challenging the duo.

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Nicola Carbonari

nicola carbonari, managing director of autoscout24: the top dog now has some unusual competition

An old exhaust pipe dangles above the desks of the five google employees, a white tailgate stands on the shelf. The guys have made every effort to decorate their workplace in Hamburg’s ABC street in an original way – anyone who comes in should see it right away: this is where hp freaks work. The boss views this with goodwill, because he is supposed to make a big difference with his people. Markus hinz, 41, came to google at the beginning of the year from the management of autoscout24 and has a simple mission: attack.

Dominated autoscout24 and mobile.De – a subsidiary of the auction platform ebay – have dominated the used car business on the internet in germany for many years, but now unfamiliar competition has formed. Cologne-based advertising entrepreneur dirk stroer joins google with his portal pkw.De, and the attack is also coming from an unexpected source: the savings banks have launched the web site used cars.De launched an ambitious offer.

The long-established and the newcomers are fighting for shares in a lucrative business. The telekom subsidiary autoscout24 aims to generate sales of more than 100 million euros this year, with an estimated return of between 20 and 30 percent. Mobile.De, which cost ebay a whopping 121 million euros to take over in 2004, doesn’t give any figures, but managing director peter schmid says: "in terms of sales, we are the largest german internet vehicle market."

expansion abroad

But regardless of which of the two is the bigger – they face the same problem: every month, half a million cars change hands, but according to estimates by the center for automotive research (CAR) at the university of Applied sciences in gelsenkirchen, 85 percent of those are already found in online exchanges. So there’s not much room for improvement, which is why both are expanding abroad.

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Another problem for the marketplaces is that customers only buy or sell cars every four years on average. "we want to accompany you in the time in between," says autoscout24 managing director nicola carbonari. plans to invest around 40 million euros in service offerings by 2011. Users will be able to maintain their own profiles and, if they wish, receive an e-mail when their tires are due for changing. Carbonari dreams of a service provider offering an all-round service from pick-up service for inspection appointments to fleet management.

the challengers’ goals are more modest: "we see potential for a third player in the market," says boris polenske, managing director of pkw.De. The portal, launched at the end of 2007, is part of the private internet activities of dirk stroer, who owns half of germany’s largest outdoor advertiser, the cologne-based company stroer, and another poster company. "we have advertising opportunities that are not available to others," says polenske. Because, as was the case with its partnervermittlung neu.De stroer relies on the concentrated poster power of its own billboards to push the web site. Plus advertising on toilet walls on german freeways from the service station operator tank& race.

Tough battle with the top dogs

"we want to become number three," says karl-heinz werner, managing director of the savings banks finance portal, in which the savings banks bundle their internet activities. The savings bank is drumming up support for the program it launched in december in 16 branches nationwide.000 branches. There’s a reason why savings bank managers, of all people, launched a car exchange: savings banks want a bigger share of car financing – after all, six out of ten consumer loans in germany are granted for car purchases and eleven billion euros are spent on financing used cars. The savings banks want to double their small share of the market over the next three years. Therefore, everyone who is looking for a used car.De looking for a car, also offered the appropriate financing. In return, the displays are free of charge, as is currently the case with pkw.De. The two major competitors, on the other hand, earn primarily from the paid advertisements of car dealers.

The battle with the top dogs is tough. "It will be very difficult to close the gap," says CAR expert marcus kruger. However, the attack could lead to the cake crumbling into even smaller pieces – "you should never underestimate a player as big as google," says mobile boss schmid. Although his google colleague hinz declares that he does not want to open a car portal of his own. but in the classifieds service google-base you can already find numerous used. Another piece of the cake is much more interesting for google: hinz wants to advertise more with car manufacturers and dealers. And this puts the top duo under pressure, as advertising brings them lucrative side revenues in the double-digit millions. "the battle for marketing budgets is getting tougher," says mobile boss schmid.

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