General Motors and eBay announced an experiment to facilitate new car sales through online auctions. The logistics of the auction process seem identical to the eBay purchase process for other goods, right down to the “Buy It Now” option. Go to gm.ebay.com to take a look. Excerpts from article:
“General Motors Co. will let customers buy cars and trucks online from some California dealers through eBay starting today.
Chevrolet, Buick, GMC and Pontiac brands will be available at gm.ebay.com through Sept. 8, the two companies announced Monday…
…Representatives of Inland GM dealerships said they’ve had Internet sales for years, but this is the first time they’ve participated in an eBay auction for new cars. The auctions are seen as yet another tool to interface with consumers, following offline incentive promotions such as cash for clunkers.”
The Wall Street Journal also reports (subscription required) that the Cadillac division opted out of GM’s experiment for fear of brand deterioration.
The experiment is certainly interesting and presents limited downside for both GM, which would love to unload excess inventory, and eBay, which wants to position itself as a legitimate auction site for high-end goods.
More interesting to us at ClearMechanic is why the most thought-provoking experiments at dealerships occur in the car sales divisions. An underlying macro thesis of our business is that there needs to be more innovation on the service side of the dealership industry. As we often tell investors, the majority of a dealership’s profitability stems from aftermarket services and parts. It would make sense, then, to invest resources in online experiments and partnerships on the service side that could generate buzz comparable to the GM-eBay initiative.
Admittedly, auto manufacturers like GM are behaving rationally when they focus on car sales more than repairs, so it’s tough to lay the blame at their feet. But, we believe that major dealerships will soon begin to realize the profit potential of their service centers through customer service innovations, particularly in the realm of Web services. Plus, the car sales reps will also appreciate this strategy in the long run. Satisfied repair customers are more likely to choose the same dealership for future car purchases.