GM to Hawk New Cars on EBay in California
Tuesday, August 11, 2009
Hate car salesmen? Want to skip the test drive?
General Motors has some cars to show you.
The government-rescued automaker announced on Monday that it is starting a trial in which consumers can buy new cars through eBay, the online sales site, allowing them to purchase Chevrolets, Buicks, GMCs or Pontiacs without setting foot in a dealership.
The program is being limited initially to California, but the company hopes to extend it across the country.
The company pitches the effort as a sign of renewed innovation at the automaker, which underwent a bankruptcy filing earlier this year and has been kept afloat with a $50 billion investment by U.S. taxpayers. For years, industry critics have said that the old way of buying cars should be scrapped, with haggling at the dealership replaced by online, fixed-price sales.
"GM and our dealers are reinventing the car buying experience," Mark LaNeve, GM vice president of U.S. sales said.
GM may be the first automaker to so fully embrace online sales, but analysts say the program's popularity will depend on its execution.
Currently, eBay lists many cars for sale, but a large majority of those are used. This latest program makes more new GM vehicles available online.
When the site, gm.ebay.com, begins operation Tuesday, consumers will be given the option to "buy it now," without haggling, or begin a more traditional sales negotiation by making an offer on a car. They can also simply do research: They can compare prices across models and dealerships, determine the value of their trade-in and check whether they qualify for the federal "Cash for Clunkers" program.
"Buy it now" prices will be less than the sticker price, a company spokesman said, but they will be set individually by the dealers.
One key to the program's success may be whether consumers come to believe that the "buy it now" price is as good as the one they could get by negotiating face-to-face at the dealership. If not, consumers will skip the Internet to try to strike a bargain at the dealership.
"The 'buy it now' feature won't make any sense unless it is set at a competitive price," said Jeremy Anwyl, chief executive of Edmunds.com. "We'll be watching this . . . . It's incumbent on the dealers to take advantage of this opportunity."
While past proposals to sell cars over the Internet have angered dealers who feared they would be cut out, the new program enlists GM dealers and connects them to consumers through the Web site.
About 90 percent of the 250 eligible GM dealers in California have signed on for the program, and collectively they will be listing about 20,000 cars.
A company spokesman said California was chosen as the trial site because GM would like to build its market share there. Currently, GM has a 13.5 percent market share in the state, far behind its national market share of 19 percent.
"Many people don't like to set foot in a dealership," said GM spokesman John M. McDonald. "This affords them opportunity to do all their shopping online."
Jack Fitzgerald, a Maryland-based dealer and critic of GM, said he's skeptical of the idea that online car shopping will replace the dealership experience. He said he has used his company's Web site to help sell cars for years, but he said consumers generally use it to gather price and other information as they research a purchase.
"People buy things online if they know exactly what they're getting," he said. "You can't do that with a brand new car unless you've driven it. They want to go look at a car, touch the car and feel the car."