Ebay replaced failed dealership model?

A recent story published by NYTimes.com tries to talk down a possible EBay deal with GM, but would this actually make sense for struggling dealerships? GM is no longer the leading auto brand within the USA, so a move towards online sales may show they have nothing to loose?
General Motors announced in May 2009, that around 18% or 1,100 GM dealerships would be closed by October 2010 and recently GM & Chrysler have had to fight to block legislation that would hamper their moves to consolidate their dealer networks.

General Motors said that many of these dealerships were losing money and were in danger of closing, and plans to eventually cull upto 40% of its dealer network.  While it is important that GM have a healthy, viable network of dealers to survive this massive market downturn.  The axing of loyal partners whose profitability failure is likely because of GM policies and corporate decisions not the local dealers may not be the best decision.

The decision to launch officially with eBay Motors in California first makes sense as its the #1 auto market in the US. This market is essential for GMs post-bankruptcy survival as they fight to regain market share from Toyota, Honda & Ford.  The point that GM is missing is the huge demand for hybrid vehicles within California with around 24.2% of the nations hybrid market, are they trying to use eBay Motors to sell their low fuel efficient vehicles cheaper or are they pushing volume sales model again?

While the market in California is perfect for increased online sales as according to Californian Broadband Task Force 96% of residences have access to broadband, so an improved high quality auto portal would benefit GM.  They should to look to Ford who have an excellent online vehicle show room “Ford Direct” where you browse their range, build your own custom model or search their range of vehicles. The Ford portal is suited to broadband users with high quality graphics, dynamic content and virtual 360 degree views.

Ford the only US auto company not to receive federal bailout money understands there are only 4 key pieces of information that you want to filter its range by

• Price
• Fuel Efficiency
• Seating
• Towing Capacity

The important step that differentiates Ford is that the next steps feature “get an internet price” and “search dealer inventory”.  This important step offers a call to action for price conscious buyers and directly promotes its dealers inventory for your selected vehicle. This heavy promotion of the Ford dealer network helps build trust that they are not trying to kill the dealership model but also allows Ford to control direct engagement with consumers.

While Rob Chesney the VP of eBay Motors and Marketplaces said “We are excited about a potential new adventure that supports G.M.’s dealers by expanding on how they already reach consumers through new approaches.”

The main advantage is the transparency of the eBay model and that it will take a lot of pressure of dealers around the negotiation process with consumers. Tom Pyden of GM emphasised that it would be the dealerships that would list the new cars on eBay as they are not looking to sell direct to customers.

The advantage of eBay Motors is that it lets customers buy the cars at auction or use EBay’s fixed price “Buy It Now” option.  How much the “Buy It Now” price might vary from the manufacturers recommended retail price or GM might try to artificially inflate auction sale prices needs to be clear.

As with the efforts by GM to reduce their dealership network by 40% is that a smaller dealership will reduce possible delivery locations where customers can pickup their cars and may limit their potential market. This reduced local inventory may hamper GM and only benefit multi-brand dealerships and may fragment the GM dealership benefits.

To attract confidence buying a car online in Australia eBay Motors offers Vehicle Purchase protection upto $20,000.  This may protect you from fraud, breach of warranty or misrepresentation in the unlikely event that something goes wrong with your transaction.  This is only eligible for sellers that have this VPP logo next to their listings.

eBay Motors Australia moves to help buying a car online easier and safer with agreements with RACV and RACQ to purchase inspection services on cars they are considering buying. This helps as buyers can now inspect cars that are too far to inspect yourself with vehicle inspections.

What is a little embarrassing for eBay and shows that partnerships don’t always work out, both links from the map shown on eBay Motors to the websites of RACQ and RACV are dead.

Is eBay Motors just too general to be a solution for GM? The web marketing of eBay Motors interesting is that the domain is http://cars.ebay.com.au but the site is actually called eBay Motors and tries to be a complete place for anything that runs on gas.  eBay Motors advises that it sells cars, parts, accessories, motorcycles, scooters, caravans, boats, water craft, go carts, trailers, aircraft. Is a general market place the best place for a large brand such as GM or more suited to their dealerships that sell multiple brands?