The world's two largest car companies will announce major marketing agreements with two of America's biggest Internet businesses, probably next week at the North American International Auto Show in Detroit, auto industry sources said yesterday.
General Motors Corp., the biggest automaker, plans to unveil a deal with America Online Inc. to help consumers buy GM vehicles over the Internet. Ford Motor Co., the world's second-largest automaker, has signed a similar agreement with Yahoo Inc., according to Ford corporate sources.
There's a catch though: Neither company will provide details on pricing on the Web sites. Instead, visitors to the Ford-Yahoo and GM-AOL sites will have to use the information they get from those sources to shop at sites, such as GM's Buy Power, or Autobytel.com, where they can choose a dealer and discuss pricing.
Such is the power of car dealers. The nation's 22,400 franchised new-car dealers, represented by the McLean-based National Automobile Dealers Association, say that manufacturer pricing information undermines their business.
"We've been talking to people at both companies [GM and Ford] about these agreements," said NADA spokesman Michael Morrissey. "We've told them that we will oppose anything that marginalizes dealer involvement in the auto retail process."
NADA "would not want manufacturers to get involved in any way in the display of pricing information" because dealers bought and own the vehicles being offered for retail, "and it's up to the dealers to set the prices for those vehicles," Morrissey said.
Privately, automakers oppose that dealer stance. They point out that other automotive Web sites, notably Edmunds.com, offers consumers a wide range of details on pricing, including dealer invoice prices on vehicle options and the vehicles themselves.
"It makes little sense for us not to offer the same thing ourselves," said one auto executive, who asked not to be identified by company or name.
Still, even without pricing details, the manufacturers believe the deals will provide a major advertising opportunity, electronically expanding their reach beyond traditional newspaper, TV and radio outlets.
That advertising push, primarily aimed at young, affluent audiences, promises to yield millions of dollars annually in extra ad revenue for the Internet firms, analysts for electronic retail businesses said.
Nilesh Shah, partner in charge of e-business initiatives for KPMG Peat Marwick, said the lack of pricing details should be a drawback. "Dealers still play a significant role in servicing consumers," he said, while the importance of the automakers' agreements with the Internet companies is that "they complement GM's and Ford's advertising strategies."
Both GM and Ford have been trying to woo younger audiences, "most of which can be found sitting in front of computer screens, instead of in front of TVs," Shah said.
AOL, the nation's largest Internet access company, has 20 million subscribers. Yahoo said that 33.6 million people visited its site in October 1999.
Having access to those potential buyers is the driving force behind the car company-Internet linkups, Shah said.
"The dealers really don't have anything to worry about," because that expanded access could also steer more business toward them, Shah said.
Staff writer Ariana Eunjung Cha contributed to this report.