GM Proposes Formation of Internet Firm as Joint Venture With Auto Dealers

General Motors Corp. and its dealers on Sunday discussed the formation of a new independent online company, known as AutoCentric JV, to sell cars and trucks on the Internet.

The company said in a news conference after the meeting that it has proposed the joint venture to its dealers and that it would go ahead with it only if they agreed. Company executives met with dealers at the National Auto Dealers Assn. convention in Las Vegas.

GM is trying to come up with a plan to work with its car dealers to harness the growth of the Web and compete with third-party Internet companies that want to circumvent the dealers and sell cars directly to consumers, analysts said.

“The Internet is here to stay,” said Alan Starling, owner of Holiday Chevrolet-Oldsmobile in St. Cloud, Fla., and the GM dealer representative in the dealers association. “There’s no doubt in my mind that we need to use the Internet. I think most of us want to do it with GM.”

Bill Lovejoy, GM’s vice president of U.S. sales and service, said he expects about 5% of car sales to be completed via the Internet in five years.

He said the company’s choice was either to get into the Internet sales business or cede the sales to competitors.

GM disclosed the AutoCentric plan in a filing Friday with the Securities and Exchange Commission. Chief Executive Rick Wagoner said GM filed with the SEC to allow discussion of the plans this week with dealers attending the dealers convention. He said the company had not yet decided to go ahead with the plan.

Along with information on makes and models, Detroit-based AutoCentric would allow buyers to view GM inventories “across a complete market area,” purchase the vehicle at a “guaranteed e-price” set by the GM dealer, and pick a GM dealer for delivery, the filing said.

While researchers have predicted sharp growth in online car sales for several years, translating potential sales into profitable businesses and ready capital has proved difficult.

Many start-up Internet car sellers, including CarsDirect.com Inc., Priceline.com Inc., Autobytel Inc. and Autoweb.com Inc., have struggled to meet expectations.

In the filing, AutoCentric said 54% of all new-vehicle buyers already use the Internet to help them research and buy cars, according to J.D. Power & Associates.