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CarsDirect Lays Off 90, Cites New Technology

November 17, 2000|DENISE GELLENE | TIMES STAFF WRITER

CarsDirect.com dismissed 90 of its 750 employees Thursday, raising the tally of e-commerce layoffs as the rapidly maturing industry undergoes a shakeout.

The company, based in Culver City, said the employees processed and fulfilled online orders for cars. Technological improvements made the positions unnecessary, the company said in a statement.

The layoffs affect 12% of CarsDirect.com's work force.

Co-founded by Pasadena incubator Idealab, CarsDirect.com is among the region's largest venture-backed e-commerce companies.

Its competitors in the online auto business have announced layoffs and executive changes lately, causing some analysts to wonder whether the category will succeed.

Last week, Maryann Keller resigned as president of Priceline.com's automotive division, which laid off half of its 22 employees. Keller said she concluded that third-party auto buying services won't succeed on the Web. In an interview with Automotive News, the former Wall Street analyst said manufacturers and dealers are best positioned to tap the Internet's potential.

The chief executive of Autoweb.com, Sam Hedgepeth, also resigned last week amid continued losses at that company.

Outside the car business, the list of recent e-commerce layoffs includes WebMD, Petopia and Garden.com, which this week announced it will shut down. Pets.com and Idealab-backed Eve.com have closed their doors amid red ink and dwindling investor interest.

CarsDirect.com fills orders by acquiring vehicles from dealers and selling them to online shoppers. In the quarter that ended in March, the latest period for which the company has provided financial information, the average cost of cars procured by CarsDirect.com exceeded what consumers paid for them.

According to a recent survey by J.D. Power & Associates, CarsDirect.com ranks third among online sellers in sales volume. Irvine-based Autobytel.com ranked first, followed by Microsoft's CarPoint.

In its statement, CarsDirect.com said the technological improvements would benefit its customers, but the company would not be specific about the changes. It also would not comment on the financial effect of the layoffs, citing government regulations restricting comment by pre-IPO companies. It filed its registration statement with the Securities and Exchange Commission last spring.

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