GM teams with dealers to sell cars online

In a bid to keep pace with third-party online car brokers, General Motors in Detroit yesterday launched a joint venture with participating dealers to offer vehicle sales, pricing and competitive information online.

The world's largest automaker will allow consumers to purchase vehicles through its dealers directly over the Web, in response to the growing popularity of online vehicle sites such as in California. GM's new Web site, which the automaker will begin pilot testing this fall, will also offer consumers information on competitive vehicles, pricing and links to dealers.

GM will form a joint venture with participating dealers to operate the new Web site. GM and the dealers will share ownership of the still-unnamed operating company, which may run separately from, GM's consumer Web site.

That site only offers information on GM vehicles and doesn't supply invoice pricing.

At stake is control of the initial customer-relationship and sales data. In the past, GM relied solely on its channel of 7,100 dealers for sales and marketing data.

In a letter to dealers last week, GM's North American sales chief, William Lovejoy, laid out the goal of using the Web to "take on those intermediaries whose mission is to come between us." With the growing popularity of online vehicle sales sites, which sell leads to dealers for a small fee, GM has wanted to reassert control of relationships with consumers, analysts said.

"GM cannot sell cars directly to consumers because of local franchise laws," said Robert DeSisto, an analyst at Gartner Group (US). "The goal is to get more data to help make GM more effective in its selling and marketing strategies." DeSisto said that as online vehicle sales proliferate, GM will shift its dealers to service-oriented businesses, as opposed to outlets focused on deriving profits from vehicle sales.

"With invoice pricing more readily available, it's tough for the dealers to get the same product margins as they got before," DeSisto said. "The next logical market for dealers to expand into is services." GM officials said the company is considering purchasing a third-party vehicle sales site or creating a new site from scratch. Last year, Ford Motor purchased an equity stake in Microsoft's CarPoint, a top third-party site.

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