Thursday, September 21, 2000

New Net firm to swap leases

Object is to match auto seekers, sellers

By John Eckberg
The Cincinnati Enquirer

        Thousands of individuals in Greater Cincinnati who lease their cars are target customers of, the region's newest Internet startup.

        The company, created by brothers Richard S. Joseph, president, and Ronald G. Joseph Jr., chief executive, came alive on Wednesday when the Web site was fired up from the company's offices at Fourth and Vine streets.

        The firm offers an alternative for drivers with leased cars who want to end the lease but cannot spend thousands of dollars in a lump sum settlement to do so.

    • Lease terms have increased in recent years, with the average lease term at origination now exceeding 36 months.
    • An estimated 15 million cars and light trucks on the highway today are leased vehicles.
    • Used-car leasing has increased over 300 percent in the last five years.     • Online car sales will account for third of all automobile transactions by 2004.
    • Over 55 percent of new car buyers use the Internet as part of their shopping.
    Sources: CNW Market Research, Jupiter Communications, JD Power and Associates
        By posting descriptions of cars on the site, lease owners and buyers can meet in cyberspace before meeting in the real world to make a deal to transfer the lease.

        “People can now walk away from a lease without a financial penalty and they will get only qualified, pre-approved buyers,” said Ronald G. Joseph Jr.

        The service will cost $49.95 per month for a listing — the introductory price through Dec. 1 is $24.95 — with a $95 processing fee and $19.95 credit application fee charged to people interested in taking over a lease. The finance company will ultimately decide credit-worthiness, executives said.

        Unlike Web or newspaper automotive classified advertisements, the company will connect only people who are credit-worthy — applicants must submit to a credit review — with leaseholders.

        Although few market projections exist for the niche, the company estimates that by the end of 2003, could have revenues in excess of $25 million. At the end of four years, the firm projects that 500,000 vehicles may be listed.

        Both figures depend on whether the company is able attract investors and grow nationwide.

        “The benefit to the bank is that we're taking a workload off their hands by handling the new consumers,” Richard S. Joseph said.

        The company was born in a brainstorming session in the Mount Lookout kitchen of Ronald G. Joseph Jr. one evening in the fall of 1998.

        The brothers are sons of Ronald G. Joseph Sr., owner of Joseph Automotive Group, the 25th-largest dealer group in the country with 20 franchises in Greater Cincinnati and Dayton, Ohio.

        The brothers had managed car dealerships for the family business and knew that the Internet would be a wild card in the future.

        By the end of that evening, the two realized they could use it to solve a problem for people who needed to find an exit from a lease.

        “Maybe it's because of a divorce, a job transfer. Maybe the family just had twins and needs to get a van. ... It's for any lifestyle change,” said Ronald G. Joseph Jr.

        Richard S. Joseph said a direct-mail advertising campaign to 35,000 leaseholders in the region commenced this week in an effort to provide supply for the site.

        The company also plans to expand to other cities nationwide where there are high populations of people who lease automobiles.

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