AutoTrader Group gives the Internet its very own Motor Mile. The company operates the AutoTrader.com and KBB.com websites, which work to connect online buyers with those who have cars to sell. AutoTrader.com draws an average of about 29 million visitors a month who browse its extensive listings and popular features such as vehicle reviews, warranty information, insurance, and financing. In addition to used cars and trucks, the site offers listings for motorcycles and classic cars for collectors (at AutoTrader Classics), as well as some new cars. Its kbb.com website provides consumers with a ballpark car value when they set out to shop. Majority-owned by Cox Enterprises, AutoTrader Group has filed to go public.
The company hopes to raise $300 million through an IPO filed in June 2012. (Previously, AutoTrader filed in 2000 for a $65 million IPO, but was run off the road by the dot-com bust.)
AutoTrader operates its business through a pair of segments: digital media (89%) and software solutions (11%). Buying Kelley Blue Book in 2011 has strengthened its core digital media business.
Mergers and Acquisitions
In recent years, AutoTrader has been diversifying in the inventory management and data analytics software and services business, acquiring vAuto, Kelley Blue Book, HomeNet Automotive, and VINSolutions. In late 2010 AutoTrader.com acquired rival auto valuation service Kelley Blue Book, whose kbb.com website is a popular destination for consumers researching prices for a prospective car purchase. The add-on acquisition complemented AutoTrader.com's business model because typical visitors to the AutoTrader.com website are already aware of pricing and ready to buy a car. As part of the transaction, Kelley Blue Book became a subsidiary of AutoTrader.com.
Sales and Marketing
The company targets three customer groups: in-market car shoppers, car dealers, and brand advertisers. AutoTrader serves car shoppers through its websites as they search its vast collection of vehicle listings, research car reviews, and leverage the company's valuation and pricing tools. Car dealers tap AutoTrader to advertise the vehicles they have for sale and can purchase or license software from AutoTrader to make this task more simple. Brand advertisers buy display ads on AutoTrader to lure in-market car shoppers to buy their car brands.
AutoTrader.com maintains exclusive partnerships with America Online, Yahoo!, and Ford, which have helped to make the firm a top provider of used-car listings on the Internet. It also offers loans to customers through a partnership with LendingTree. AutoTrader plans to gain sales traction through several key strategic initiatives. For example, it's working to cross-sell its new vAuto, VinSolutions, and HomeNet software solutions to its more than 21,000 subscribing dealers; currently some 5,500 subscribing dealers have access to AutoTrader's full suite of software products. The company is also banking on its base of more than 25,000 dealer customers to increase their marketing spending through premium listing packages and add-on services such as Alpha, Spotlight, and TIM. To cater to brand advertisers, AutoTrader leverages its data, analytics, and market insights to develop core services for brands, including home page displays and behavioral targeting opportunities.
AutoTrader reported profits of $68.1 million on revenues of $1.02 billion in 2011. The firm had about $884 million in debt as of March 31, 2012. About 90% of the company's revenue comes from its digital media business (which comprises AutoTrader.com and kbb.com), with the remainder derived from its software solutions business.
Cox Enterprises inked a deal with Providence Equity Partners in 2011 that gave Providence a 25% equity interest in AutoTrader.com. – less
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