Cobalt Group Shares Double on Auto-Dealer Web Plans

Cobalt Group Inc., a provider of internet-based services for automakers and dealers, said it will set up a Web site combining its dealer services to attract more users.

The Motorplace.com business-to-business site will be a way for more than 12,000 auto dealers to buy and sell vehicles and parts, the company said. It also may help dealers regain some of the leverage lost to individual vehicle buyers because of internet information and services. Dealer access will be flee, and Cobalt hasn't decided how it will make money from the site, said Co-Chief Executive John Holt.

"This company has well-established relationships with a third of the nation's dealers, so this will only help add to their business," said BancBoston Robertson Stephens analyst Jordan Hymowitz, who rates Cobalt a "buy."

The new site is scheduled to be running by the end of this month and to be available to all U.S. dealers. It also will have automotive and national news, sports scores and weather information to help get dealer employees to use it, Holt said.

Revenue Sources - Cobalt now gets revenue by designing and maintaining Web sites for auto dealers, by providing parts information and through internet advertising and endorsements by automakers such as General Motors Corp., DaimlerChrysler AG and Honda Motor Co.

Charging a user fee or carrying advertisements are among the revenue options for Motorplace.com, said Holt and Chief Financial Officer David Douglass.

Through three quarters of last year, Cobalt said it had revenue of $14.9 million, almost a fourfold increase from a year earlier. Its loss widened to $11.7 million from $1.5 million.

Cobalt indirectly competes with such companies as Autobytel.com Inc., CarsDirect.com and Priceline.com Inc. in referring buyers of new and used cars to dealers, Cobalt said in its IPO prospectus last year. Autobytel, CarsDirect and Priceline also have started direct online auto sales, and the automakers have expanded their own internet sales sites.

Those services have given consumers an easier way to get vehicle prices and other information and given them a stronger bargaining position with dealers. More than 5 percent of new-car shoppers used the internet last year to research their purchase, according to market-research firm J.D. Power & Associates. Parts purchases via the internet ale also rising rapidly.

"This allows Cobalt to position themselves as the ally to dealers, who see the internet as the enemy," said Jeremy Anwyl, an analyst at Marketec Systems Inc.

Cobalt's Motorplace.com site will include a locator for new and used vehicles with more than 550,000 vehicles from more than 3,750 dealers, as well as a locator for more than 35 million original-equipment parts from more than 10,000 dealers.

The company said it has set up and maintains Web sites for more than 5,000 dealers, and that more than 10,000 dealers use its PartsVoice auto-parts locating and data-management service. AutoNation Inc. and CarMax Group are among the publicly traded dealership companies that use Cobalt's services.

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