The days of haggling with a car dealer could be fading away.
General Motors Co. is unloading new cars online today in an experiment to see whether computers can replace car lots. The Detroit automaker is partnering with EBay, the online auction site, to sell new Chevrolets, Buicks, Pontiacs and GMCs.
The trial, which runs through Sept. 8, is GM’s latest attempt to connect with consumers after its exit from bankruptcy protection.
“We’re reinventing our company,” said Susan Garontakos, a GM spokeswoman. “We’re also reinventing the ways to reach out to potential buyers.”
The trial initially is going to be limited to California but could be extended nationwide, she said. About 225 of California’s 250 GM dealers have signed on to the program, allowing consumers to place online bids for new vehicles.
Starting today, car buyers can visit gm.ebay.com and peruse new models. They can either negotiate a price with a dealer or buy at a fixed “buy it now” price that is set below the sticker.
The site allows consumers to find out about financing and trade-ins. It also lets them know whether they qualify to participate in the federal government’s “cash for clunkers” program. Once a deal is made, vehicles can be picked up at dealerships.
GM is not selling the vehicles directly to consumers. Any cars bought on EBay will still come from dealers.
That’s a relief to Jason Warren, a general sales manger at Community Chevrolet in Burbank. When Warren first heard about the program, he worried that GM, which recently ended its relationship with hundreds of dealers, was trying to sell around them. But now that he knows the details, he’s looking forward to participating.
“We’re really excited about it,” he said. “GM is going after it with a major advertising campaign, which will get us more exposure than we’ve ever had.”
California car dealers can ship vehicles to buyers outside the state, said Rob Chesney, EBay Motors vice president. He hopes that there’s interest nationwide.
“We hope this program will evolve,” Chesney said. “If everything does well, this has the potential to be long-term.”
Many California car dealers, including Community Chevrolet, already sell used vehicles on EBay. The online auction company has about 30,000 participating dealers nationwide. More than 3 million vehicles have been sold through EBay Motors since 2000.
The new program makes sense, said Alexander Edwards, automotive president for marketing firm Strategic Vision. The Internet is a major resource for people seeking advice on buying a vehicle. A Strategic Vision survey found that 82% of almost 112,000 people went online for advice.
But Edwards has doubts that the program will work. He said that aside from a home, buying a car is the biggest purchase of someone’s life.
“When spending this much money, most customers will demand a personal interaction with both the vehicle and a representative of the vehicle,” Edwards said.
Face-to-face transactions provide two benefits, he said: security and reassurance to the buyers that if anything goes wrong someone will be there to assist them, and the ability to see the car firsthand so they don’t get ripped off.
“It will be at least a decade before people will trust EBay enough to replace dealers,” Edwards said.
The EBay program says more about GM than it does about car buyers, said Gary Dilts, senior vice president of global automotive at J.D. Power & Associates. It shows that GM is changing its ways of doing business, he said. “GM is making a statement. They’re trying to connect with customers on a more personal level.”
California is a good place to try it, Dilts said. GM has only 13.5% of the market in the state. Across the entire U.S., it has 19% of the market.
Jeremy Anwyl, chief executive of auto website Edmunds .com, said the program could see success right away. “If prices are viewed to be more competitive, then this could really take off.”
Anwyl added that customers have more control of buying a vehicle than ever before. Now they won’t even have the pressure of a salesperson looking over their shoulders.
Haggling is one of the most daunting parts of buying a car, said Wesley Brown, a consultant with Iceology, a Los Angeles consumer research and consulting firm. “Very rarely will you find a guy that says he loves buying a car and haggling with a salesman,” Brown said.
People spend hours trying to get a deal done, he said. The process is too long and difficult.
“People want an easier way to buy a car,” Brown said. “But I don’t know if EBay is the solution.”