GM Set To Experiment With Selling Cars On eBay

Tuesday will mark the beginning of a program that will allow hundreds of General Motors dealers in California to haggle over prices of new cars and trucks with customers on eBay.

Approximately 225 of California’s 250 GM dealers are planning to take part in the program. They will be selling Buick, Chevrolet, GMC and Pontiac vehicles on co-branded Web sites through eBay Motors until September 8, on eBay Inc.’s online auto marketplace.

The companies had mentioned before that a trial like this was in the making, but details were not released until Monday.

It will be part of General Motor Co.’s turnaround plan. They will make the practice of selling cars on eBay official, rather than having only some dealers participating in it on their own. The trial goes beyond the existing partnership that covers GM certified used vehicles sold through eBay.

This will also be quite a shift for eBay, since most of the vehicles sold on eBay Motors have been used.

Beginning on Tuesday, eBay visitors will be able to view Web pages like gm.ebay.com and chevy.ebay.com, where new 2008 and 2009 vehicles will be listed. They will also be able to question dealers about the vehicles and sort out financing. Select 2010 models also will be available.

The co-branded sites will also sport a Web tool currently available on eBay Motors that assists shoppers in determining whether or not they are qualified to trade in their old car for money toward a new one under the government’s newly refilled "cash-for-clunkers" stimulus program.

Those seeking to buy a car will be able to choose between the two standard options  offered on eBay Motors. They can either negotiate a price with a dealer on the site or buy the vehicle at a fixed price. The cars can then be picked up at the dealerships.

Vice President of eBay Motors Rob Chesney said the companies decided to run the trial in California because of the high number of tech-savvy consumers there. EBay users living outside California can contact dealers to see if they are willing to sell and ship vehicles to them, he said.

This trial run is coming a month after GM’s unusually fast exit from bankruptcy protection with ambitious plans of becoming profitable again and making cars that people are eager to buy.

Once the world’s largest and most powerful automaker, the new GM is now for efficient and focused, after being cleared of massive debt and burdensome contracts that would have taken it under if it were not for the additional federal loans.

In July, GM CEO Fritz Henderson said that the company was working on an experiment that would allow eBay users in California to bid on vehicles or buy them at a fixed price, but no deal had been made at that time.

Mark LaNeve, GM’s vice president of U.S. sales, believes that getting the auto maker directly engaged in new online sales will give customers a larger sense of security about buying a car on the Internet. Many consumers currently research new cars online, but the majority still see a dealer in person for the actual purchase.

He hope that this measure will build a stronger interest in GM vehicles in California, where he says the company needs to improve their market.

As far as eBay is concerned, the program goes along with its strategy of growing its market for things that are still new but not necessarily the latest models. It is also an opportunity to encourage people to make new, large purchases on a site best known for its sales of hard-to-find collectibles.

According to Chesney, the sale of used cars on eBay is already proof that consumers are increasingly comfortable purchasing more expensive items online.

"New cars are like the next frontier of that," he said.

Although the companies would not disclose the financial details of the deal, GM spokesman John McDonald said that the arrangement will likely be profitable for both companies.
 
If the trial is deemed successful by the companies, they want to expand it across the country. Lorrie Norrington, president of eBay marketplaces, said eBay may eventually try doing the same thing with other auto makers as well.

Inder Dosanjh, a Dublin, Calif.-based dealer who owns four GM dealerships and currently sells used cars on eBay, said the program reveals GM’s willingness to step outside the box and find new ways to sell cars. He plans to list all his new inventory on eBay this week.

"I think they should have done this a long time ago," he said.