G.M. Sees eBay as a Way to Reach New Buyers
Posted: Mon Aug 10, 2009 5:25 am
Q- Is Walmart.com next? Craigslist?Published: August 10, 2009DETROIT General Motors will begin selling cars and trucks on the auction Web site eBayon Tuesday as it tries to reach new customers and regain lost market share.The venture will involve about 225 dealerships in California at first, but G.M. hopes toexpand it nationally as soon as September. As it came out of bankruptcy protection lastmonth, the company said it wanted to sell vehicles on eBay, prompting the Web site toquickly deny having a partnership with G.M. although it said the two companies were intalks.The companies have since set up a G.M. portal on eBay gm.ebay.com with the slogan Our best cars. Your best offer. G.M. said shoppers can use it to browse dealers’ inventories,ask questions, negotiate prices and arrange financing.Vehicles will not be auctioned to the highest bidder but rather listed at a buy it now priceequal to G.M.’s supplier price. Shoppers also can submit a lower offer that the dealer canchoose to accept or reject. Up to 20,000 vehicles will be listed on the site at first, G.M. said. I think we’ll sell quite a few cars in this promotion where the customer never sees thedealership, Mark LaNeve, G.M.’s vice president for United States sales, said. We’re making it easier for customers to shop and figure out what the price is, Mr. LaNevesaid. If the sticker price is $21,000 and their budget is 18, a lot of times they’re embarrassedto say, ‘Well, I’ll offer you 18.’ But now they can do that anonymously online. So we thinkit’s going to give us some opportunities we didn’t have before. Together with eBay Motors, G.M. and our dealers are reinventing the car-buying experiencefor our California customers, Mr. LaNeve said in a statement.G.M. will be the first automaker to sell new models on eBay, though more than three millionused vehicles have exchanged hands through eBay Motors; many were listed and sold byindividual dealers, some of which also list their inventory of new vehicles. The programinitially runs through Sept. 8, but Mr. LaNeve said the deadline was meant to control pricing,not an indication that sales through eBay would stop at that time.The partnership with eBay is a crucial part of G.M.’s effort to return to profitability after fiveyears of heavy losses and to remain the new-vehicle sales leader in the United States. It iscutting four of its eight brands, a move that could cause it to fall behind the Ford MotorCompany and Toyota unless it manages to increase sales of the remaining brands. Onesurviving brand, Cadillac, is not participating in the eBay program.G.M.’s new chairman, Edward E. Whitacre Jr., vowed last week to remain the top-sellingautomaker in its home country, but the company conceded in a regulatory filing on Friday thateliminating half of its brands would probably reduce its total sales, possibly significantly. Itchose California to test online sales in part because G.M.’s market share in that state is just13.5 percent, far below its national share of about 19.5 percent.G.M. hopes eBay, which claims 84 million active users worldwide, will help it reach potentialbuyers who might not otherwise visit a G.M. dealership. Its new vehicles have been widelypraised by critics and analysts, but getting shoppers some of which swore off G.M.products decades ago because of poor quality or bland designs to actually visit showroomsand look around has remained difficult.More than three quarters of new-vehicle buyers in 2008 researched their purchase online,according to a study by J. D. Power and Associates, but actually completing a sale throughthe Internet remains uncommon. A lot of them actually end up going to the dealer in person and test-driving the car beforefinalizing the transaction, Rob Chesney, a vice president for eBay Motors, said. But there’sa lot of that purchase process that we can make easier with Web-based technology. Mr. Chesney said eBay hoped to expand the G.M. program nationally and was open toworking with other automakers if it was successful.