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Autoweb rises on AOL deal

Shares of the online car dealer rise more than 52 percent after it inks a marketing agreement with the online giant.

    Shares of Autoweb rose more than 52 percent this morning after the online car dealer inked a marketing agreement with America Online.

    The companies signed a four-year deal that brings Autoweb's content and services to AOL's online car sales section with the potential to reach over 22 million AOL subscribers. The financial terms of the deal were not disclosed.

    The deal breathed life into Autoweb shares, which climbed $1.88 to $5.44 after hovering around a 52-week low. The stock, which went as high as $40 when it started trading about a year ago, has swung from highs around $20 to as low as $2.88 in the past year.

    AOL, the largest online service provider, formed a partnership earlier this week with auto dealership chain AutoNation. The companies said that AutoNation will be the exclusive retailer of new and used vehicles on the new site, called AOL AutosDirect. Also this year, General Motors and Ford cut deals with AOL and Yahoo, respectively, to market their cars on the portals.

    Just last month AOL rival Lycos took a 10 percent stake in Autoweb.

    Automakers and dealers, both online and offline, are expecting the online car industry to become one of the largest market opportunities in e-commerce. Forrester Research has estimated that the online market will grow to about $16.6 billion in 2004 from about $400 million in 2000. Nearly 40 percent of new car buyers shopped for cars online last year, according to J.D. Power & Associates, an automotive research and marketing firm.

    In today's deal, Autoweb agreed to license its automotive content, data and technology to AOL, letting AOL subscribers research and buy cars through several AOL Web properties, including AOL.com, CompuServe and AOL Digital City.

    Visitors will be able to configure a car by manufacturer, make, model and other options. They will also be able to compare different vehicles.