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Report: Online Car Market Set to Explode

New and used automobile sales initiated via the Internet will rise from three percent of all U.S. auto sales in 1999 to 20% in 2002, according to a new Gomez Advisors forecast.

"This is an explosive online market in terms of consumer aggregation and revenue building," said Senior Analyst Adam J. Weiner.

Gomez Advisors, a provider of Internet research and analysis, released the results of its Internet Auto Buying Scorecard for fall 1999. Newcomer CarsDirect.com landed the top overall ranking based in part on the strength of its ability to guarantee consumers pricing and delivery for new automobiles. Rounding out the Gomez Advisors top five are Autobytel.com, Cars.com, CarPoint, and DealerNet.

As Internet car sales continue to rise, Gomez Advisors predicts brick-and-mortar car dealers and manufacturers will be forced to make significant investments in their online offerings to effectively generate awareness and capture customers.

"The Internet auto buying sites are coming out of the gate very aggressively with enormous marketing and advertising campaigns and this will make it difficult for stand-alone bricks-and-mortar dealers to compete," Weiner said.

"CarsDirect.com recently launched a $20 million advertising campaign through the end of the year. Similarly, Autobytel.com is spending $15 million on its fall campaign, and other sites will be spending heavily, too."

"Consumers are now in the drivers' seat and can exert force on dealers to meet or beat prices they have obtained online. Those dealers capable of integrating their physical and Internet presence stand to gain the most in the future," Weiner said.