Priceline.com (Nasdaq: PCLN) said Thursday it plans to expand its car buying service to five new states in a bid to grab part of the booming market for online automobile sales.
The JD Power and Associates 1999 Autoshopper study shows that more people are utilizing the Internet to gather information during their automobile buying process, with 40% of new vehicle buyers using the Internet, up from 25% last year, according to a report by analyst James Preissler at Paine Webber.
Shares in Priceline, known for selling leisure airline tickets, hotel rooms and home financing products on a name-your-price basis closed at 65 19/32 Wednesday. Shares in competitor Autobytel.com (Nasdaq: ABTL) closed at 15 15/16.
Preissler's report also says Autobytel.com continues to be the most popular and effective online buying Web site, which offers a real value added service for consumers and automobile dealers. Autobytel.com, according to the 1999 Autoshopper Study, is ahead in brand awareness for online buying services with 23.1 percent of respondents naming Autobytel.com. The other online buying services lag behind, with CarPoint at 7.9 percent, Autoweb.com Inc. (Nasdaq: AWEB) at 1.3 percent, Priceline.com at 0.9 percent and GM BuyPower at 0.5%. Preissler reiterated a "buy" rating on Autobytel, and set a price target of $65 on the stock.
Priceline is looking to change its ranking. The company's new car buying service will be available immediately in southern California, Florida, Connecticut, New Jersey and the greater Philadelphia area. The service had been available in the New York metro area and Tampa/St. Petersburg, and will expand to the rest of California later in September.
Company executives said they put a priority on entering these markets because of their high volume in new car sales. Depending on the success of the current expansion, Priceline said it may also roll out its service nationwide during the first quarter of 2000.
Priceline.com's name-your-price new vehicle service lets consumers name the exact car or truck model and options they want and the price or payments they want. Priceline.com does not maintain or warehouse inventories in any of its product lines.
The announcement comes on the heels of Wednesday's announcement the company plans to expand its home financing loan options, by extending an existing "name-your-price" mortgage through a joint venture with Alliance Capital Partners.
Priceline reported a smaller-than-expected loss in its second quarter on ballooning sales.