E-BUSINESS - GM Proves E-Business Matters

By Derek Slater

PAGE 3

Retail.com/AutoCentric. This pilot, run in the Washington, D.C., area in 2001, was aimed at generating more leads for GM dealers, using the BuyPower "locate to order" model but presenting information about cars from multiple OEMs, not just GM. GM’s motivation lay in the discovery that there is little overlap (about 4 percent) between BuyPower users and those using manufacturer-independent sites such as Autobytel.com. The plan was to create a joint venture called AutoCentric in which GM and its dealers would each hold 50 percent equity stakes. GM formed a partnership to use Autobytel.com’s functionality as the engine underlying the effort, which was internally dubbed Retail.com. The pilot, initially scheduled to run 90 days, was extended by several months, but GM ultimately pulled the plug with the admission that "the business model just doesn’t work right now." Dealers reported that AutoCentric didn’t result in a rise in qualified leads, and the appeal of the equity stake idea went down the drain with dotcom share deflation.

Direct Sales Over the Internet. GM piloted this process in Brazil with a new car model called the Celta. Nearly 70 percent of the model’s 112,000 sales (by year-end 2001) were consummated online. Consumers can purchase a Celta either by accessing the Web from home or by using kiosks at Chevrolet dealerships throughout Brazil. Buyers can also customize their Celta via the Web. The dealer serves only as a drop-off point for the preordered vehicles.

According to GM, Brazil is a price-sensitive market where more than 60 percent of all auto sales are economy models and more than 65 percent of new car buyers have Internet access. Maryann Keller, author of two books about GM and the former president of Priceline.com’s automotive services group, entirely dismisses the Celta’s success as a tax dodge for consumers who benefited from a quirky legal loophole (online purchasers skipped a tax normally levied on the factory-to-dealer leg in a conventional buy). GM says that loophole has since been closed and attributes the price advantage of the online purchase?about $700 less than the showroom sticker price?to efficiencies built in to the supply chain. The Celta’s manufacturing process was designed from the beginning to reflect Internet demand rather than just to crank out cars and push them into showrooms and parking lots.

OnStar. GM’s satellite-based service can track vehicles and unlock car doors from outer space. Launched in 1996, OnStar was put under the eGM umbrella and now has 2 million subscribers, although it is not yet profitable, according to published reports. The cost to subscribers ranges from $17 to $70 per month, depending on the level of service. On a practical note, OnStar provides GM with something OEMs have never had: frequent contact with customers. GM hopes that will prove to be a platform for delivering more services, as it already has in the case of location-based weather and traffic updates, which were added based on user feedback.


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