General Motors to sell new cars on eBay

Sources: By Tracy Seipel
tseipel@mercurynews.com
Posted: 07/10/2009 07:00:00 PM PDT
Updated: 07/13/2009 03:28:42 AM PDT

General Motors, looking for new ways to sell cars as it emerges from bankruptcy, Friday announced a partnership with San Jose e-commerce powerhouse eBay to market new cars online.

GM CEO Fritz Henderson said the two companies are teaming up in a pilot project, but only in California. The cars sold through eBay would still be purchased from GM dealers.

Under state franchise laws, car manufacturers have the right to sell cars to dealers, but cannot sell directly to consumers.

"Nothing about that will change," said GM spokesman John M. McDonald. "This builds on that existing relationship. Dealers would control the inventory and what pricing they have out there."

GM dealers already sell used and certified pre-owned cars on eBay. And plenty of dealers already sell new cars directly to customers over the Internet. This experiment, said McDonald, "would enable dealers collectively to expose their new car products to a wider range of customers and generate leads."

McDonald said he didn't know when the pilot program would begin or how long it would last. But he said GM hopes the deal will be completed in the next several weeks.

Rob Chesney, vice president of eBay Motors, said the two companies have been in talks for a few months but that no plans have been finalized.

During a news conference Friday, GM's Henderson said customers would be able to bid on cars in an eBay auction, including the option of choosing a predetermined



Chesney would not confirm specifics and said there are "business and operational aspects that need to be discussed before making that a reality."

EBay is the No. 1 automotive Web site, according to Nielsen/NetRatings, and Chesney said it has more than 12 million unique automotive visitors every month. More than 30,000 U.S. franchises and independent car dealers in the U.S. use eBay Motors as a complementary sales channel for their businesses.

Automotive Web site Edmunds.com's senior analyst Jesse Toprak thought the pilot program was a smart move for both companies.

Even though GM's dealers can list their own inventory online, "they simply cannot match eBay's coverage," he said. And eBay stands to profit handsomely from the fees it charges car dealers to list cars, he added.

While Toprak doesn't see the partnership becoming a huge success, at least at the beginning, "if one more person buys a GM car because they saw it on eBay, and was not originally planning to buy from GM, that is a success for GM," he said.

On Friday, all 6,000 U.S. GM dealers received a one-page e-mail informing them of the plan, but it didn't give specifics.

John Moore, owner of Los Gatos Buick Pontiac GMC, said the lack of details was frustrating but that "anything that puts the customer in touch with the dealership is a good idea." Moore said 30 percent of his sales already come from the Internet.

At Gilroy Chevrolet/Cadillac, General Manager Troy Pelzl said about half the sales at his dealership are from online, and the number has been increasing year over year. To him, Friday's announcement was good news.

"Nothing can hurt the business, as bad as it's been. It can only help."