Expanding auto market via the Internet
helps, hinders Iowa businesses

March 16, 2004

By Virginia Wilber
Iowa's Internet

DES MOINES, Iowa -- Being able to buy and sell cars and parts on a national and global scale through the Internet has its advantages and disadvantages for the auto industry of Iowa. This expansion of market has allowed automotive businesses to more easily find cars and parts but has also increased competition and prices.

Gary Wendell, owner of Chase Auto Parts Inc. in Waterloo and Cedar Rapids, said increased access to cars and parts online has really made it harder to actually buy what you need.

"It's a two-edged sword; it's harder to buy cars, and appropriate pricing will be imperative because people shop a lot more," Wendell said.

Gary Galinsky, president of Sam's Riverside Inc. in Des Moines, agreed with Wendell and said that while the Internet has had a positive impact by expanding the auto market, the cost of products have in turn increased.

"It's getting tougher and tougher to buy inventory, and we have to deal more in volume to compensate," Galinsky said. "Totals are about the same overall, but the Internet has really created a kind of monster."

With the Internet, the market for cars and trucks is "broader than ever" nationwide, according to Wendell, but this ability to access parts and cars from different parts of the nation has made business more competitive.

The majority of parts Galinsky sells are within the country and the surrounding states of Nebraska, Illinois, Minnesota and Missouri. However, Galinsky said market expansion even globally has affected his three businesses tremendously. With the help of the Internet, he has shipped cars as far away as Australia, Nigeria and Kuwait.

"We are reaching a lot of countries we never would have without the Internet," Galinsky said. "We are having to also bid against businesses in Russia, Mexico, Israel and countries I've never even heard of."

Through the Internet and such programs as Hollander Interchange, automotive businesses can access millions of parts and "their interchangeable equivalents" through connections with salvage yards across the country. According to Hollander Interchange's Web site, individuals repairing domestic or foreign-made cars can simplify their search for often hard-to-find replacement parts.

Such programs not only sell car and truck parts, but also sell cars and trucks that are rebuildable. Therefore, anyone can buy or sell products whether they are a dealership, mechanic, body shop or just an individual.

However, access to such programs and computer software does not come cheap. Wendell estimated he spends about $700 a month on membership to part-finding programs and technology. Access fees to the electronic Hollander Interchange, one of the most popular services, alone is $300 a month and the locating service is about another $200.

Galinsky said updating his business' inventory online and maintaining his businesses' Web sites have also required more manpower. He said it takes one extra person just to run the computers. Each of his three businesses has its own Web site.

Wendell is in the process of creating a Web site for his two businesses but said so far it has not required an extra employee.

The Internet, and access to numerous businesses online, has also led to more knowledgeable customers. Galinsky said today they are dealing with a more "sophisticated customer."

"People are more aware of products and what they are buying," Galinsky said.

Car and truck auctions have also been affected by the Internet. They are now required by most insurance companies to include Internet bidding. Galinsky said his auto auction business, Metro Salvage Pool in Des Moines, was required by his insurance company to have a Web site and provide Internet bidding.

Some car and truck auctions have converted completely to conducting business online. One such nationwide auction that relies on virtual auctions is Copart. Copart, according to its Web site, "offers vehicle suppliers a full range of services that expedite each stage of the salvage vehicle auction process and minimize administrative and processing costs."

Along with the virtual auctions, Copart also operates in 105 facilities throughout the United States and Canada and even operates on the New York Stock exchange.

This expansion via the Internet, according to Galinsky, has both helped and hurt business but is essential to survive in the auto industry.

"Even though I'm not wild about it, you've got to have it." Galinsky said. "You can't escape technology. Although as time goes along, technology does get better."