Tag Archives: carpoint

Hindsight to be the next carsales


We’ve all talked with friends about super powers and asked each other which one you’d want. Mine would be the power of hindsight.

In my post The Hard Decision carsales had to Make, I talked about the leaders of Reynolds & Reynolds Australia using sound business acumen to make the right decision in persevering with carsales as a startup (it is now an ASX Top100 company with a market cap of ~$2.5b).

One of the learnings they used was the decision of Reynolds & Reynolds Inc out of Dayton, Ohio, to sell DealerNet.com in favour of being a business partner to Microsoft’s Carpoint.com.

Reynolds acquired DealerNet.com in 1995, the same year Autobytel was founded, and was one of the first online automotive classified sites in the US to list used cars. It was described as a “pioneer” in bring dealers to the Internet.

An article in Automotive News (26 June 1995) said ” DealerNet allows a computer user to hook on to the World Wide Web to get information on current car and truck models…..a consumer can get further information and even negotiate a deal via E-Mail – without ever stepping foot into a showroom”.

Reynolds was ahead of the curve with DealerNet.com with current day online heavyweights Autotrader.com and cars.com starting in 1997. Today each of them are worth billions of dollars as a couple of the leading online automotive classified sites in the world.

In the same year that these two now internet giants started, Reynolds sold DealerNet.com to The Cobalt Group so that it could focus on it’s non-equity strategic partnership with Microsoft’s Carpoint.com which was launched the previous year (1996).

When you look back now, this was a pretty big mistake no matter which way you look at it and would have been realized early.

So why did they make the decision to sell DealerNet.com?

Automotive News at the time said that Reynolds wanted to sell it to focus on its relationship with its new partner, Microsoft CarPoint.

They quoted the Reynolds director of online services saying “With CarPoint, we’re better able to fulfill our mission of linking dealers to buyers”.

The irony with this comment is that DealerNet.com, Reynolds had exactly the same assets as what Reynolds Australia had with carsales – they were the number 1 dealer management system provider to franchised new and used car dealers in the US.

What they didn’t have was the foresight that Reynolds Australia had – they couldn’t see that Microsoft had started CarPoint because it saw something big. Had Reynolds realized at the time that if this was a big enough opportunity for Microsoft to invest in then instead of taking a back seat and helping them try to build something big, they would have committed to DealerNet themselves.

The other irony is that CarPoint ultimately failed because it concentrated on new cars as opposed to used cars, using Reynolds as the link to the new car dealers instead of using Reynolds for integrating used cars online which is the path Reynolds Australia took to make carsales so successful in Australia.

Microsoft found that it was bloody hard building a profitable online automotive portal. They bet on the wrong horse (new cars).

If Reynolds were able to use hindsight they would have realized that if it was hard for them to build DealerNet.com, imagine how hard it will be for someone outside of the dealer eco system?

We’re never wrong hindsight, I know that but I wonder if there is anyone still at Reynolds who thinks “what if”.