General Motors Co. and eBay Inc. have teamed up to allow California car buyers to compare new automobile prices and negotiate their purchases on the Internet, a move designed to increase the troubled car maker's reach as it closes down hundreds of its physical dealers.
The new joint website, unveiled yesterday and set to go live today, will let customers look at the inventory at most of California's GM dealers, compare and set prices, and even arrange financing for a purchase. Rebates and trade-ins can also be calculated.
Users will be able to pay a fixed advertised price, or to try to negotiate a price with a dealer through the site. The cars will still be picked up at a dealership once a deal is done.
About 225 of 250 dealers in the state will participate, and if successful, the program could be expanded across the United States.
The Internet - and eBay in particular - has been used for years to buy and sell vehicles, but most have been second-hand.
The new-car selling site, which will operate for just one month during its test phase, won't likely displace physical dealerships even if the concept spreads, industry players and observers said yesterday.
For most customers, it is still crucial to see a car up close before they buy, said Don Folk, who owns a Chevrolet dealer in Kelowna, B.C. "What it always boils down to, is that before making a major purchase like an automobile ... a person would want to get in the vehicle [and] drive the vehicle," he said. "You're still going to have to touch the metal."
Mr. Folk pointed out that many car buyers currently use the Internet to do extensive research before they arrive at his dealership, and that has resulted in a much more informed clientele. But customers still want to come in and test drive the cars.
Huw Williams, spokesman for the Canadian Automobile Dealers Association, said dealers also play a crucial role in delivering vehicles to customers, providing warranty coverage and servicing the cars. That's very unlikely to change, he said.
Mr. Williams described the GM-eBay move as one of the many "imaginative marketing" tools the industry is now turning to.
Canadian auto industry consultant Dennis DesRosiers said the GM-eBay move is merely tweaking an already well-developed Internet toolkit that helps buyers make car purchases. Dealers will maintain a key role in the sale of cars, he said.
"Dealers are worth every penny that they earn," Mr. DesRosiers said. "I haven't found anybody on eBay who can fix a car, honour a warranty, or can help you choose a car."
Still, Toronto-based retail consultant Wendy Evans says the California test is an important experiment that could help the car industry renew itself and ensure it is giving customers what they want. While dealers won't disappear, they - like any retail network - will have to change to keep up with the times.
"[A dealership network] is like a store network - it constantly has to be updated," Ms. Evans said. "You have to move to where the population is, as opposed to where it was 20 years ago." Increasingly, she said, the population is on the Internet.
