eBay Headed for a Collision in Car Auctions

Some 28% of used-car buyers who purchased a car they found online did so through AutoTrader.com's site, making it the No. 1 site for used-car purchases, according to J.D. Power & Associates. In contrast, just 5% of online used-car buyers found their car through eBay Motors.

Meanwhile, about 36% of used-car buyers who used the Internet to shop for their cars visited AutoTrader.com's site, making it the second-most popular site after Kelley Blue Book, according to J.D. Power. About 18% of used-car buyers shopped on eBay Motors.

"AutoTrader is the only entity out there that might be able to step into this auction aspect of the market and make it successful," J.D. Powers' Weitzman said.

But even if AutoTrader.com is able to make a go of it, the company will at best slow some of eBay Motor's revenue growth, Weinstein predicts. eBay will be saving about $36 million in fees that it was formerly paying to AutoTrader.com as part of their deal, Weinstein said. That money could be used to bring in another partner and to do a significant amount of marketing and promotion of eBay Motors, he said.

"I think for that money they can buy a lot of growth," he said.

eBay Motors plans to announce some new initiatives and partnerships next month, Tilenius said. She declined to give specifics.

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