Honk If You Bought Your Car Online

Young Japanese consumers embrace cyber showrooms

In electronic commerce, Japan is a laggard, trailing the U.S. by at least several years. Yet online consumerism is emerging, buoyed by a wired population of 14 million. Over 9,000 businesses have set up digital shop in Japan. Domestic E-commerce should exceed $1 billion in the latest fiscal year as Japa-nese consumers buy books, CDs, and computer equipment on the Net.

Nothing, however, has generated as much excitement as new-car sales. In recent months, trendy magazines have featured specials on the six online sites selling new cars. The operators of one site, .car24, say they are about to turn a profit just 10 months after its April launch. Quick-go.to, run by the company Quick, chalked up more than 50,000 hits its first weekend in operation last fall. "Suddenly, it has become very hip to buy a car over the Internet," says Osamu Sato, Quick's 33-year-old founder. Even Autobytel.com Inc., the first and biggest U.S. online car seller, is getting ready to assault the Japanese market this year.

BIG DISCOUNTS. New cars sold via the Net in Japan should hit 50,000, about 1% of the 1999 market. If that number keeps growing, these Internet car lots could end up doing Japanese consumers a great service. Japan's dealerships are tightly controlled by carmakers to keep prices high. But with the economy slumping, consumers are clamoring for bargains. Some renegade dealers are teaming up with the online car services to offer discounts of as much as 20%, a price cut previously unheard of in Japan.

So the online car business is accelerating, prodded along by such risk takers as Naohito Tamaya, 28, who runs the electronic commerce division of ASCII, a leading software house. When a colleague of his bought a Ford KA off the Net in 1997, Tamaya decided that ASCII could sell cars online, too. He started out by listing imported models on ASCII's home page. Then last April, he and his staff launched .car24, a car-selling site jazzed up with graphics, auto reviews, and the latest industry news.

On average, ASCII's .car24 Web site attracts about 20,000 visitors and handles 150 requests for price estimates daily. Boosted by its car operations, ASCII's E-commerce division generated $9 million in sales last year. The long-haired Tamaya and his marketing chief Takeshi Enokibori are gearing up to cruise into related fields, such as auto insurance. Tamaya sees sales zooming to an annual $90 million within three years.

SEAMLESS. Sites such as .car24 may offer an example for American online sellers to emulate. In the U.S., most online car brokers refer shoppers to auto dealers in exchange for an introduction fee. Japanese firms, by comparison, handle the process from start to finish, providing better service. Prospective buyers check out a site and, if they're interested, E-mail back a form requesting an estimate on a model. The online vendor then negotiates directly with the dealers, either by E-mail or phone, a process that can take from a few hours to several days. The vendor handles payment while the dealer provides the car and service.

By setting up an extranet link to 39 dealers, Quick's Sato can now generate estimates in a matter of 30 minutes after receiving an E-mail request. "The faster we respond, the more we sell," he says. Since starting up late last year, Sato has sold about 75 cars and expects to move about 1,000 in his first full year of operation. Another online vendor, Yoshikatsu Hieda, offers financing at the superlow rate of 1% to attract customers to his online firm, Reo. Hieda believes that online sites will be the main form of car marketing in the years to come.

Even if it does, selling on the Internet won't mean the demise of competition. Recruit, a publisher of employment magazines, is launching an online car business this month. The big auto makers may horn in, too: Toyota Motor Corp. and Nissan Motor Co. offer information online about inventory and prices. But for the moment, cool Web sites and nice discounts are giving entrepreneurs the edge.

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