As it emerges from bankruptcy protection, General Motors is hoping it can capitalize on an untapped market for car sales, eBay, becoming the first automaker to utilize the popular online auction site for new vehicle sales. While the move is without precedent, eBay already does a brisk business in used vehicles through its eBay Motors brand, making the partnership a natural next step, particularly in light of data showing that during 2008 three quarters of new car buyers performed some research online prior to making a purchasing decision. Add this trend to eBay’s claims of 84 million active users worldwide, and G.M. feels that with Tuesday’s launch, they have a formula in place to leverage a much wider audience.
Despite the early optimism, G.M. is tempering early expectations by choosing to test out the service among their California dealerships, before rolling it out on a nationally. The initial program runs through September 8th, a decision made in part because because G.M.’s market share in California is just 13.5 percent, far below its national share of about 19.5 percent, giving the automaker a chance to see how the release affects sales.
The announcement comes at a time when G.M. is attempting to maintain its position as the leader in new-vehicle sales, even as it simultaneously cuts four of its eight brands, a move that could cause the company to lose further ground to Ford and Toyota. Still, it represents a shift in philosophy for an industry that is solely in need of innovative thinking to help bolster lagging sales and recognizes the potential opportunity offered online.
According to the NY Times, “Vehicles will not be auctioned to the highest bidder but rather listed at a “buy it now” price equal to G.M.’s supplier price. Shoppers also can submit a lower offer that the dealer can choose to accept or reject,” opening the door for negotiations without having to be face-to-face. And while this ability to anonymously shop might be appealing to would-be buyers, it can’t hope to simulate the actual driving experience provided by going down to a dealership.
Given that purchasing a vehicle is still a major decision for most consumers, it’s hard to image significant numbers flocking to a website to buy one sight unseen. Unless of course, the deals are that good and the transactions that easy. Regardless, if the platform manages to draw in customers willing to give G.M. a second look, then it has to be looked upon as a positive first step. Beyond that, it will ultimately fall to the vehicles and not the platform to close the deal.