GM To Sell Used Cars Online

Indicating that Detroit automakers have recognized the power of e-commerce, General Motors has launched an Internet-based used car dealership that may become a prototype for stores nationwide.

In spite of objections from dealerships who are unsure about the prospect, GM has moved ahead with its plans to sell used cars online.

“We found a strong, unmet consumer need,” said Roy Pikus, chairman of GM’s DriverSite online used-car sales division. “We were really looking for a non-traditional way to buy a used vehicle.”

For its initial foray into the world of Internet auto sales, GM chose Houston, Texas, a city that Pikus says offers the company distinct advantages: Sheer size and a citizenry that research indicates is among the most Internet-savvy in the United States.

Keeping Up With The Dot-Coms

Despite GM’s claim of the “unmet consumer need,” the fact is that many different Web sites, such as autobytel.com and autoweb.com, have been selling used cars for some time.

Still, the announcement from GM has significant implications, because it establishes GM as the first major U.S. automaker to acknowledge the broad reach of the Internet in its sales effort.

Making It Easy To Buy

Prospective customers will log on by supplying their zip code, after which they will be able to scan a retailer’s inventory, including photographs of vehicles, descriptions and no-haggle prices on available cars. The user, for a refundable $100 (US$) deposit, can even set up a test drive at the location and buy it on the spot.

Although the Houston location was ready for business in July, GM ran into some unexpected roadblocks when the company learned that a new Texas law prohibits automakers from selling used cars. A prominent Houston auto dealer solved the legal dilemma by acquiring the DriverSite outlet.

GM, meanwhile, salvaged its dealer relations by allowing other local dealers to buy cars off the Web site at the same wholesale price that the DriverSite outlet owner paid.

Still, Houston dealers have been slow to support the new concept.

“There are a lot of unknowns,” said Rocky McCullough, general manager of Goodson Honda-Pontiac-GMC, a dealership not far from the DriverSite locations. “It seems to me that when things are discussed [about the new concept] people tend to think the worst.”

Rolling Into The Future

Pikus described DriverSite as a “clicks and mortar” mix of virtual showroom with a physical point of sale. Only the suburban north Houston location is open now, but the concept could expand next year if the prototype succeeds.