General Motors and eBay are starting a car-shopping website to rev up sales.
The test program, which makes its debut Tuesday in California and lets consumers negotiate with dealers, represents a major change in how new cars are sold online.
It's also aimed at revitalizing GM, which is trying to recapture lost market share a month after it emerged from bankruptcy, and eBay ebay, which is attempting to overhaul its Marketplaces unit, which generates more than half its $8.5 billion in annual revenue. The eBay Motors division, part of the Marketplaces unit, has typically sold used cars.
Some 225 of California's 250 GM dealers will offer GMAC, Buick and Pontiac models through eBay Motors until Sept. 8. If the trial is successful, the arrangement could go national, and eBay could team with other automakers, eBay says.
The trial expands an existing partnership with GM. Financial details were not disclosed.
Starting today, visitors at gm.ebay.com can browse 2008, 2009 and select 2010 vehicles. There, they can negotiate a price with a dealer or purchase a vehicle at a fixed price. Cars will be picked up at the dealerships.
Another feature lets car buyers determine if they're qualified to trade in their old car for money toward a new one under the government's cash-for-clunkers program.
"It amounts to a virtual showroom on eBay," says eBay Motors Vice President Rob Chesney. He says the companies decided to run the trial in California because there are many tech-savvy consumers there.
EBay Motors has sold more than 3 million cars since 2000, when the company realized so many people were selling vehicles on eBay that it set up a separate auction site. EBay won't say how many cars it expects to sell this year.
Though eBay made its name as a quirky online auction site for antique and used items, it has struggled to reinvent itself in the face of intensifying competition. Rivals such as Amazon.com continue to grab a bigger slice of the e-commerce market with fixed-price items and free shipping.
"What eBay is doing with GM is a continuation of raising their profile to potentially move higher-priced merchandise," says Sucharita Mulpuru, an analyst at Forrester Research.
More than 70% of consumers research new cars online, but most go to a dealer to buy, Chesney says.
Whether car dealers have the Internet resources to close the deal is key to this program's success, says Scott Wingo, CEO of ChannelAdvisor, a software company that helps retailers sell on eBay. "It will be interesting to see how effectively (dealers) can negotiate online," Wingo says.