GM Testing New Car Sales on eBay
General Motors has gone straight from bankruptcy protection to eBay.
The company announced that roughly 90 percent of its non-luxury new car brands
sold in California will be available for purchase from the online site.
In all, there will be 225 dealerships participating in a test that
will run until Sept. 8. According to an Automotive News report,
it is likely that dealerships in other states will come onboard the eBay program
at that time.
General Motors began its eBay test in large part because it has
underperformed in the state. While the company’s share of auto sales is about
19 percent nationally, it is only 13 to 13.5 percent in California.
“Together with eBay Motors, GM and our
dealers are reinventing the car-buying experience for our California customers,” said
Mark LaNeve, GM vice president of U.S. sales, in a press release. “As the dealer
showroom expands from the parking lot to the laptop, this makes it easier for
a customer to browse available new-car inventory, make an offer, buy it now,
or send a message asking for more information from a dealer – all at the customer’s
convenience.”
Consumers
will be able to browse hundreds of online showrooms with thousands of new vehicles
from California dealerships. They will be able to ask questions, negotiate prices,
and work out financing with dealerships. Consumers will also have the option
of using eBay Motor’s “Buy It Now” function where they make a purchase based
on an advertised price or go the “Best Offer” route where they make an offer
and haggle with a dealer online.
“In the not too distant past, a customer
had to work too hard to find a vehicle and what might be the best offer to be
found. Now, with the custom-built GM/eBay microsite, customers can get all the
information they need about available inventory, compare features and price …
and make a decision to buy a vehicle now or make an offer.” said Ted Nicholas,
president and CEO of Three Way Chevrolet in Bakersfield, CA.
Mr. LaNeve told Automotive News that the company will be visiting dealerships
in other states to keep them apprised of the progress made in California. “We
would roll it out upon dealer request, but we’re not going to put it in any market
where the dealers are uncomfortable or don’t feel that they’re ready for it,” he
said.
Discussion Questions:
What do you think of General Motors taking its sales online with eBay? What do
you see as the most positive aspects of this deal? Where do you see potential
pitfalls?
Sounds interesting. Would I do it? For sure. From a dealer perspective, I have to wonder how they would compete with one another. Would they still be competing on price or would the sale go to the closest dealer?
Also, if I go for a test drive, would the dealer let me walk knowing I was going to hit up eBay?
This is an interesting online presence evolution for GM. Consumers have been able to prowl through dealer inventories on GM’s Web site for years. I did it 10 years ago. This adds the comfort of haggling in your pjs, which I suspect will be readily accepted by those who don’t like the in-person version.
The eBay partnership also gives GM access to things like PayPal and auction bidding. It sounds like they are not including high-end models at this time. As inventories deplete and buyers with financial means look for their favorite GM car, we might see auctions initiated. The new Camaro might be an early offering, since it seems to be hitting on all cylinders and maybe one of the last muscle cars out of Detroit.
The part I still hate is the haggle with the dealer mentality. Who wants that? I detest that mentality of distrust and who can out-haggle whom. I guess the fact that it’s online makes it easier for the customer to actually find a vehicle.
Perhaps the concept of shopper marketing needs to be considered in the automotive world. Does anyone really want to hear what the shoppers want, need and desire? I think it’s so broken that GM is afraid to ask shoppers how to fix it. Because perhaps it’s still not ready to hear the truth.
One might ask what took them so long. There are a lot of people buying online these days, or at least shopping and comparing online. This is a perfect example of companies that need to evaluate trends and consumer habits and evolve with them.
Online is a growing channel for car buyers and will continue to grow in importance. To bad the dealers didn’t figure out why people would rather web surf than deal with them before all those dealerships closed. A cynic might say the Internet offers GM and other auto makers a lower cost go-to-market channel. A consumer advocate might say it is an effective way of eliminating dealer noise.
This a great idea. Still somewhere along the line they will put you in the little room with a pretty lady who will desperate try to upsell you on extended warranties, Scotch Guard, rust proofing, and all the other useless add-ons. Anybody can buy a car at cost. In the past you have to play games with the sales people until they decided you were not going to give in. eBay takes away having to sit in the dunce chair at the dealership all afternoon.
Selling cars online is like selling houses online; you do a lot of looking but you still must “kick the tires” before you buy. Consumers are already going online to get educated about options, mileage ratings, etc, before going to the local dealer and buying. They will still want to buy local for warranty and service issues. And no matter how much information and logic they are armed with from their online experience, that new car smell and a good salesman can cause even the most savvy shopper to throw all that out the window.
My last car-buying experience showed me just how far we’ve come and just how far we have yet to go. My husband and I were helping his father buy a used car. I think he had last bought one fifteen years earlier, and we were worried about him not getting a good deal because he is definitely in the “laggard” category when it comes to technology adoption. The challenge with used cars is you can research all you want, but it depends so much on what’s in the inventory and not all dealers share exactly what they have. So I brought along my laptop and wireless card, and I would sit and research prices and reliability while “the men” test drove the car. I almost got kicked out of one dealership, when they realized what I was doing (by the way, the “list price” of their used cars was more than double Edmund’s “True Market Value” estimate).
The point of this story as it relates to eBay and GM? The dealership model of yesterday is through. Only calcification keeps it the way it is today, and even that is showing cracks thanks to the general downturn in auto demand. It was a model based on imperfect information: dealers had it all and consumers had none. It was a great model to support rapid expansion in an industry of big ticket items, but nowadays, other than repairs and test drives, what role does the dealer play? When you can buy a new car on eBay, for Pete’s sake, why bother with the very expensive infrastructure required to support a dealer model? I’m sorry, but I just don’t see it.
The fundamental question is this…did GM fall into bankruptcy because they weren’t selling on eBay?
Online sales of new cars is a good idea. As someone once said: “It can’t hurt.” There is already a brisk market for used autos on eBay motors.But I agree, one drawback is that dealer mentality.
Maybe if it works, we can get rid of that cash for clunkers program.
We have one big winner for sure and that’s eBay. I think this will work very well and be expanded quickly after they get a system worked out. It’s a shame that it took bankruptcy for them to try it.
eBay is the first step for GM to disintermediate their local dealers.
Having grown up a GM brat and still having GM cars as all three of my family vehicles, the entire story is hard to watch. The story, however, has been in the process of being written for a good portion of my lifetime. There is yet another chapter to the painfully long book.
A tremendous percentage of every new car or used car sold has an online influence as it is, this too may be a good idea. For my own latest used car purchase, the only thing I did at the dealership itself was actually close the deal. This however, is a completely different proposition.
While I think, “why not?” I do still have some reservations. GM’s historical problem has not been solely with car sales. In fact, for the last sales period before the ridiculous government intervention and clunker program, GM out sold Toyota. Yes, it is fact. No, it will never be reported.
The problem though, has never been just the sale. Buying a car today is easy with any brand. The problem with GM (as well as, Ford and Chrysler) has been the ownership experience. With Polk studies showing the average length of ownership growing at its fastest rate in six years, this is even more of an issue. Further, only 11 percent of buyers think that their length of ownership of a vehicle purchased today will be shorter than the previous one.
It’s a much deeper problem than a car at a great price and that great rush of winning the haggle that will improve GM’s position. It’s about how the consumer feels every single day for the next 56 plus months of ownership, on average. Every day–how will they feel?
Sure eBay is a great idea. It will probably work. I think it will. But how they do with delivering the experience required for true satisfaction for the next 1,642 days plus that will make the difference. Sure, I’ll predict success with the eBay thing. What is a murky outlook at best is the experience that follows that ‘Buy Now” click. I am not sure that GM even understands that part of the equation. Certainly a task force with neither retail or automotive experience–in fact very little real business experience–does either.