eBay Revs Up Online Car Sales With Acquisition

By Ed Finn

eBay Monday said it plans to spend approximately $152 million to acquire mobile.de, a leading German classifieds Web site for vehicles.

The San Jose, Calif.-based online auction giant said the purchase would bolster its German automobile category, considering mobile.de’s market share and classified ad format. Based in Hamburg, mobile.de offers over 800,000 classified ad listings for a wide variety of vehicles from motorcycles to trucks and recreational vehicles to a country that has more than 53 million registered drivers.

“Combining eBay and mobile.de will allow our users to enjoy the best of both companies and create a tremendously efficient place to buy and sell autos and other vehicles in Germany,” said Bill Cobb, senior vice president of eBay International. Mobile.de boasts more than 22 million unique visitors per month, according to German Web site IVW.

The deal will depend on regulatory approval in Germany, as well as final pre-close requirements. eBay said it will pay cash for all outstanding shares of mobile.de, and the final purchase price will be affected by pre-closing price adjustments and dollar-euro exchange rates.

When asked why this deal was attractive to eBay, spokesman Chris Donlay told internetnews.com that “it’s the specific character of the German auto market. The auto market is much more inefficient than the U.S. market, because there’s no mass market for vehicles.”

Dealers sell predominantly to users, and there is little liquidity for those selling cars — which meant higher prices and less choice for consumers. The situation is a classic example of an inefficient market, according to Donlay: “the power of the Internet in that kind of market just gets amplified.”

eBay said it is still deciding how it will incorporate mobile.de’s business into its own, but says it will keep the German site’s classified ad model intact. Unlike eBay’s US automotive website, German users cannot request financing, insurance, shipping or other services when buying a car. However, eBay has flourished in Germany because of the ease with which Germans can conduct person-to-person wire transfers.

“It’s much easier, much cheaper for users to do that between themselves, than it is in the U.S,” said Donlay.

As eBay expands its international operations, the need for effective and trustworthy payment options is becoming increasingly important. About 10 percent of all eBay sales are international (which includes items shipped to or from the U.S.), and providing a universal payment system is crucial to eBay’s market liquidity, which makes online auctions attractive to consumers.

eBay runs auction sites in 11 European countries, and its online payment subsidiary PayPal is ramping up its European presence to match. It already operates in the UK and has established a headquarters for PayPal Europe in Dublin, which could begin offering services to other European countries as early as February.

“PayPal has begun rolling services internationally. Germany is a likely next market,” said Donlay.

eBay’s philosophy of developing local markets has led it create sites for 22 countries, but not necessarily to acquire local competitors. According to Donlay, eBay has no plans to make similar investments in other European automotive markets, since they do not see the unique opportunity they found in mobile.de.

“The basic concept of online trading seems to do very well in every country around the world,” Donlay concluded. “It fits a basic human need. We do best in markets that are inefficient, whether it’s collectibles or autos or vintage goods.”

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