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First casualty in US dotcom war

New companies offering aggressively-priced cars online dominated the US National Automobile Dealers Association annual convention in January.

Dealers who flocked to Orlando, Florida, heard how, among others, would revolutionise car selling. But last month, set up with £65m backing from a Texas software company, became a major casualty as its website closed.

Automotive News, the US car industry newspaper, reported the news with the headline: 'Web wars heat up, and dotcoms fight to survive'. It forecast “a bloody internet shake-out” among those with car retailing interests.

At the NADA convention president Brian Stafford, aged 23, said his Texas-based company planned to become the first e-dealer.

He planned to build a national chain of dealerships. Buyers would go online to create the specification package they wanted. Then the company would obtain the car from one of its dealerships, and deliver it to the customer's home. It did not acquire a single dealership.

According to Automotive News, dotcom companies which at the beginning of the year appeared to threaten car dealers were “today swimming in red ink”. Some were now looking for dealers and healthier websites to bail them out of trouble.

The newspaper added that “the clock is ticking” for and, which charge dealers for referrals. Both hoped to move into profit next year but documents filed with the US Securities and Exchange Commission suggest they could exhaust their operating cash within a year.

In the first six months of this year Autobytel's loss was around £12m. Chief executive Mark Lorimer said the company had about £60m “to cover expenses”.

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