GM, eBay (EBAY) End Online Sales Effort – DUH!

October 2, 2009 10:41 am

Now this is a big surprise (wink). First, no one wants the GM cars to begin with. Then, an auction on ebay (EBAY)? Come on, there are better ways to get rid of the excess cars. For example, how about we have a countrywide sledgehammer fest to take out our aggravation with the way the government put $80 billion into GM?

SPAIN/

Or perhaps we could just give away the cars to those that actually could use them at a reasonable rate with a 72 month lease (which will surely come back to haunt us with soured loans eventually)

It would make for great late night TV idea. Give a bunch to David Letterman and let him throw them off of the roof . Some could even be given to Oprah and let her give out keys under every audience chair for months to come.

Silly? Well if you consider the inventory backlog and the fact that 2010 are about to be under construction there is a big question looming about what to do with the 2009s. Sales you say?

September auto sales drop 23% from a year earlier.

  • GM’s plunge 45%
  • Chrysler’s fall 43%
  • Honda and Toyota also report double-digit slides.
  • Kia and Hyundai have double-digit increases.

If you looked at the most recent numbers for the month it is clear that GM is not on the road to recovery just yet.

From the WSJ.com

By GEOFFREY A. FOWLER, SCOTT MORRISON and SHARON TERLEP

General Motors Co. is ending a seven-week experiment to sell new cars in California with eBay Inc., as many dealers report the online marketplace didn’t help sell more vehicles and led shoppers to offer low-ball prices.

The program, which ends Wednesday, was one of the most high-profile efforts so far to bring new-car sales online. But the experience illustrates why car retailing, which involves peculiarities such as franchised dealers with exclusive territories and the tradition of haggling in person, makes an odd fit for the Web, where consumers expect to comparison shop for the lowest price.

The companies declined to say how many cars were sold under the heavily advertised program, although GM said the number of sales directly connected to the effort was small. “We thought the program was successful but that this was not the right time,” GM sales chief Mark LaNeve said.

Mr. LaNeve said the program did generate customer interest, including 1.5 million visits to a special section of eBay’s Web site, and 15,000 customer leads for California dealers. He said GM hopes to try again with eBay next year.

When the program launched Aug. 11, GM Chief Executive Frederick “Fritz” Henderson said it was part of an effort to make car shopping more convenient.

Rob Chesney, vice president of eBay Motors, said he was “really pleased” with the results and would use lessons from the program to develop future programs for selling new cars on the site. He declined to say when or how that might happen. “We had no expectations in terms of what the measured result would be,” Mr. Chesney said. The test was to see “if we offer consumers a new way to interact with the purchase of a car, would they engage?” The traffic to the site, he said, proves “there is a real proposition that we can build upon there.”

Dealers say the now-halted GM and eBay program to sell new cars online drew interest from shoppers but led to low-ball bids and few sales. Above, Hilltop Buick Pontiac-GMC in Richmond, Calif., which participated in the program, is pictured last month.
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Dealers say the now-halted GM and eBay program to sell new cars online drew interest from shoppers but led to low-ball bids and few sales. Above, Hilltop Buick Pontiac-GMC in Richmond, Calif., which participated in the program, is pictured last month.  Dealers say the now-halted GM and eBay program to sell new cars online drew interest from shoppers but led to low-ball bids and few sales. Dealers say the now-halted GM and eBay program to sell new cars online drew interest from shoppers but led to low-ball bids and few sales. Above, Hilltop Buick Pontiac-GMC in Richmond, Calif., which participated in the program, is pictured last month.

The promotion didn’t allow customers to bid against each other, like they do in typical eBay auctions. Rather, they could click “Buy It Now” to purchase a car at a preset price, or send an offer to a dealer. Several dealers involved in the program said most attendees at a recent dealer conference in Las Vegas agreed it was ineffective. Richard Slade, general manager at FH Dailey Chevrolet in San Leandro, Calif., said too many people submitted ridiculously low offers, forcing staff to sift through bids that were highly unlikely to result in sales. He said one person submitted a $2,500 offer for a $40,000 vehicle.

“We don’t need to have fire sales. We need to promote the quality of the product,” said Mr. Slade, whose dealership didn’t sell any cars as a result of the program. But he did credit the promotion with generating awareness among potential customers.

He suggested that GM and eBay should have done more to set appropriate expectations among shoppers, many of whom had no idea where to start their price negotiations.

Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.

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