GM Races into E-Commerce

General Motors (NYSE: GM) announced Monday that it is launching a pilot program designed to streamline the sale of vehicles over the Internet.

Beginning next month, seven Oldsmobile dealerships in the Minneapolis-St. Paul, Minnesota area will take part in the program, which will allow consumers to scan dealer inventories, select a vehicle and arrange financing.

After the 90-day pilot program, GM plans to act on feedback received from dealers and consumers, and expand the program to additional market areas and brands. The Detroit, Michigan-based automaker hopes to roll out the program nationally by the end of next year.

Competing with Third Party Sellers

GM's Web initiative provides a way for the automaker to compete with third party online auto sellers, such as CarsDirect.com and Autobytel.com.

Although third-party online auto services allow consumers to compare vehicle models from more than one automaker, the sites are in some cases affiliated with a limited number of dealerships in a market area, meaning that customers cannot search the inventory of all local auto dealers for a specific make and model.

Scott McDonald, director of GM's global e-sales, told the E-Commerce Times that GM's pilot program and eventual roll-out will let consumers scan the inventory of all dealers in a market area, rather than having to search the inventory of each dealership separately. McDonald also pointed out that because the site is backed by GM, it will be able to provide customers with up-to-date inventory information.

Of course, the GM site will provide information about GM models only, while information about more than one automaker is available on the third party Web sites.

According to McDonald, at the GM pilot site, consumers will be quoted a market driven price that reflects what consumers in the market area are paying for a particular model, rather than the manufacturer's suggested retail price (MSRP). GM also said that customers will be able to bargain for an even lower price when they go to the dealership to complete the sale.

Expanding Online Presence

GM spokesperson Mike Gardner told the E-Commerce Times that the pilot program is an extension of GM's existing online auto sales program, GMBuyPower.com, and that the program was created following consultation with its 14-member e-Dealer Advisory Board.

According to Gardner, the Minneapolis-St. Paul area was selected for the pilot program because the people who live there are wired and Internet savvy. Moreover, because the market is relatively isolated, GM will be better able to control the test.

Cashing in on E-Auto Sales

GM's pilot program is the latest in a series of steps by major automakers to cash in an increasingly lucrative online auto market.

A study released last month by Jupiter Communications predicted that online-direct and online-influenced new vehicle sales will exceed $128 billion (US$) in the U.S. by 2004.

For its part, Ford announced it was partnering with a coalition of 4,200 Ford dealers to form FordDirect.com, which will enable Net users to purchase and finance new automobiles online from the dealer of their choice.