Would You Buy a New Car on eBay? GM Hopes So

PHOTO Starting today, consumers can negotiate the prices of General Motors vehicles online through a new car-sales program established between the automaker and eBay.

After closing hundreds of dealerships, General Motors, the troubled car maker that emerged from bankruptcy last month today opened a virtual car lot, selling cars online through eBay.

Bidding for up to 20,000 new GM vehicles started at 12:01 a.m. PT today, a GM spokesman said. Through the trial eBay program, consumers can negotiate the prices of new vehicles with California dealerships.

About 225 of GM's 250 dealerships in California will participate in the test, which is set to run through Sept. 8. The dealerships will sell new Buick, Chevrolet, GMC and Pontiac vehicles on co-branded Web sites, including gm.ebay.com, Chevrolet.ebay.com and gmc.ebay.com.

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If the program, which boasts the slogan "Our Best Cars. Your Best Offer," is successful, it could be launched nationally, the company said.

The troubled automaker emerged from Chapter 11 bankruptcy in July, thanks to a government bailout. The leaner, new GM now focuses on four brands -- Chevrolet, Cadillac, Buick and GMC-- in hopes return to profitability.

As part of its restructuring, GM announced earlier this year the discontinuation of the Pontiac brand, the layoffs of 21,000 U.S. factory employees and a 40 percent decrease in dealerships.

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California was chosen for the trial program because of the number of consumers there who are comfortable with technology, GM spokesman John McDonald said.

The move is also an attempt to improve market share in the Golden State-- the nation's number one auto market, McDonald said. GM's market share in California is approximately 13.5 percent, below its national average of 19.5 percent.

With the new program, customers outside of California can arrange to purchase a car with a California dealer, but they would need to work directly with the individual dealer to make arrangements for vehicle pick-up or shipping.

eBay Sales Could Boost GM, Analysts Say

In eBay fashion, customers will have a "Buy It Now" option to pay a fixed price equal to the supplier's price, as well as a "Best Offer" option to bid and negotiate a price on the vehicle.

Customers can propose a price lower than the fixed price, which can then be rejected or approved by the dealer. GM representatives said they hope the trial program will trigger the negotiating process between customers and dealers. Once a deal is finalized, buyers can pick up their cars at the dealership.

GM CEO Fritz Henderson first announced the possibility of an "innovative new partnership" with eBay in July, before a deal was finalized.

"It's something we've not done, it's something we're excited about," Henderson said on Monday.

McDonald said he could not comment on how much the company hopes to improve its sales.

Analysts said the move online could be a smart one for GM.

"While not groundbreaking, GM aggressively facilitating the placement of dealer inventory on eBay can only help sell more vehicles," said Jeremy Anwyl, CEO of Edmunds.com, a car sale Web site. "The most intriguing aspect is the 'But It Now' pricing. It will be interesting to see how this feature is used by dealers."

Currently, 70 percent to 80 percent of customers who make a purchase in GM showrooms have previously done online research about the car, McDonald said.

"Clearly, the Internet is where consumers are," McDonald said. "This is one more way we can extend our showroom from the blacktop to the laptop, at their convenience."

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