AOL Buys Time Warner, Still Can't Sell Cars

This week reminded us why weekly and monthly mags have Web sites. Why wait until the February issues to get Forbes' and Red Herring's analysis of Ford and GM's Internet plays? They both covered the story ably on their daily-updated sites within a day or two. The consensus? These big deals were no big deal.

When General Motors and Ford signed deals to market their cars on AOL and Yahoo, respectively, not much changed in the auto industry. "[T]he deals represent not much more than big advertising contracts for the automakers," said Red Herring writer Julie Landry. The aim was to increase customer loyalty by giving out information online, not to sell new cars. Making existing customers happy can be lucrative in its own right, however, if those customers need their cars serviced. Landry explained that a new $20,000 car may generate $300,000 in financing and repair revenue over its lifetime. Happy customers also tend to be return customers. Point taken, but that $300,000 figure looks awfully big.

Forbes writer Penelope Patsuris made a slightly different case. While Ford's deal with Yahoo is supposed to get it buddy-buddy with existing customers, GM "looks to boost sales leads" with its AOL deal, said Patsuris. Either company can only improve leads, not sales, because government regulations don't allow car companies to sell directly to customers. No matter how many content deals GM and Ford cut, you'll still have to buy through middlemen like Autoweb.com, Autobytel.com, or your friendly neighborhood car salesman. The two companies will get one new perk usually limited to dealers: information about buyers.

Even scarier, Patsuris mentions GM's new ability to target AOLers - 25 percent of whom own GM cars - with instant messages. We hope that that won't be as intrusive as it sounds.

Forrester analyst James McQuivey told Julie Landry that this week's deals will make more sense when in-car Web and wireless applications are as ubiquitous as power steering. What do AOL and Yahoo get out of the deal? McQuivey said they're "moving beyond being just portals" and trying to be - get this - "the dashboard to people's lives." All this without actually selling the cars. Until the Feds give the nod to direct sales online, the online auto industry will be, dare we say it, stuck in neutral.

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