OpenAuto Launches Anonymous Auto Barter Site

OpenAuto.com announced the launch today of an online marketplace that allows car buyers to use the anonymity of the Internet to research and price cars and strengthen their bargaining position.

The model — which is currently under consideration for a U.S. patent — is the brainchild of two former Autoweb.com executives, John Truchard and David Graham. The founders say that the new site overcomes what they believe are the shortcomings of the other online car buying services: Face-to-face negotiation, and the inability to compare sellers’ final offers.

“We knew that the existing online car buying services were not the answer because buyers were still being referred to dealers with whom they’d have to negotiate, or buyers had to accept brokers’ ‘take-it-or-leave-it’ offers,” said John Truchard, president of OpenAuto.com.

Allows Comparison of Value-Added Packages

OpenAuto.com’s open market is available to all dealers — not just to an exclusive set — with no upfront fees. According to company officials, this environment creates a marketplace in which sellers’ offers can be compared in their entirety, including value-add packages, which offer lifetime lube and oil, convenience car while in shop, etc.

Accordingly, car sellers have the incentive to make their “best offer,” knowing that other sellers in the area have the same opportunity. The result, the company contends, is a fast and seamless process that provides car buyers with a selection of final offers, “empowering consumers to select the offer package with the greatest personal value.”

OpenAuto.com also offers buyers research, third-party reviews, a car option configuration engine, trade-in pricing, new car local-market pricing, as well as leasing, financing and insurance suppliers. Car buyers can research a specific make, model, year — or indicate their preferences on several aspects, generating a list of candidates.

How It Works

Using online research tools, buyers compare models, accurately configure a car with options, compare insurance and financing alternatives, then indicate the price that they are willing to pay. OpenAuto.com then sends that offer to all registered sellers in the buyers’ defined geographic area.

Within 24 hours, sellers respond to OpenAuto.com, where the responses are posted to the customer’s confidential OpenAuto.com account. A seller may respond with accept, reject, or counteroffer, but their response is binding.

The buyer then has 48 hours to accept an offer. Once the buyer has accepted an offer, a refundable $150 security deposit is placed to reserve the car at the accepted price and package. The only time that buyers see the dealership is to sign papers, meet the service manager, and drive off in their new car.

Only Time Will Tell

While industry observers concede that OpenAuto’s model is interesting, they point out that it still remains to be seen if the car-buying public will make any of the current Web sites profitable.

In addition, some analysts feel that if the model does prove to be a winner, large automakers will quickly jump into the fray and push out smaller players.

About OpenAuto.com

Privately-held OpenAuto.com was launched in November 1999. The Walnut Creek, California-based company has already established a network of about 1,350 dealers in its home state and plans to launch nationally in the first quarter of next year.