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Greenlight, Amazon Will Sell Cars on Net

August 24, 2000|From Reuters

SEATTLE — Next time you go shopping at Amazon.com Inc. to pick up the latest Harry Potter book, Carlos Santana CD and Tom Cruise video, maybe you'll end up throwing them in the trunk of a new car too.

Amazon on Wednesday said it will start selling new cars on its Web site in the online retail pioneer's latest push to expand its lineup of products.

Amazon's virtual car lot will be backed by Greenlight.com Inc., which lets Web surfers compare car models and prices, secure a loan and trade-in, and contact real-world dealers.

The deal builds on a partnership that started in January when Seattle-based Amazon took a 5% stake in closely held Greenlight, with options to boost that up to 30% over the next five years.

In exchange for access to Amazon's growing and loyal customer base--which totaled 23 million at the end of June, according to the company--Greenlight will pay it $82.5 million over the five years.

"Greenlight combines the interests of all parties--the customers, the dealers and the manufacturers--producing a simple and fast buying experience for customers," Amazon Chief Executive Jeff Bezos said in a statement.

Amazon's shares rose $2.31 to close at $38.81 on Nasdaq.

The new service will be available in 27 areas around the country, including Los Angeles.

The move comes as Amazon finds itself under intense scrutiny from analysts and investors, some of whom think the company may be moving too hastily into new and untested markets.

Although just 4% of car sales in the U.S. last year were completed entirely online, more than 40% of car-buying decisions were influenced by the Internet, according to a recent study by J.D. Power & Associates.

Power predicts that within five years, 80% of car buyers will use the Web in some way to buy a vehicle, and 8% to 10% will actually do the deal online.

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