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GM to stop auctioning new cars on EBay

The 6-week-old program, which put tens of thousands of vehicles from over 200 dealers up for bid, ends Wednesday. The automaker says it will now focus on its current nationwide marketing campaign.

September 30, 2009|Ken Bensinger

The hammer has fallen on General Motors Co.'s experiment with EBay Inc.

The automaker said Tuesday that it would halt sales of new vehicles on the auction site today, just six weeks after the first new car went up for bid.

Neither the automaker nor the online auctioneer would reveal sales results, but car dealers said the program accounted for very few purchases and failed to fulfill its promise of upending the way cars are bought and sold.

"It was not a successful program, unfortunately," said Peter Welch, president of the California New Car Dealers Assn., whose membership includes 225 General Motors dealers that participated in the EBay sales. "I'm not sure whether their motivation was to sell cars or just create buzz."

GM and EBay said the program, which was limited to California, was useful in helping determine whether auctions would work on a nationwide basis. The online auctions were credited with generating 1.5 million page views and 15,000 sales leads for dealers.

"I think it brought a lot of awareness to consumers in California," GM spokesman John McDonald said.

But instead of continuing the program, the company will focus on a newer marketing campaign that, among other things, offers car buyers a 60-day money-back guarantee on new-vehicle purchases, he said.

Although GM and EBay declined to reveal sales results, The Times reviewed EBay auction data for the last two weeks. In that period, there were only 13 recorded sales out of more than 21,000 listings. (Data going back beyond two weeks were not available on EBay's site.)

GM and EBay said the online totals might not reflect sales that began with online negotiations but were concluded in person with the dealerships.

Greg Hewett, a sales manager at Marvin K. Brown GMC and Buick in San Diego, said the dealership sold a Buick Enclave crossover and a GMC Sierra pickup on EBay. Hewett said he was glad to rack up the sales, but he saw little benefit from the program in terms of generating sales leads.

"We didn't have many people coming into the store, and the offers being made were rather low," Hewett said. Still, he said, considering the anemic sales environment, "any sales promotion that brings customers is a good thing."

Hewett also complained that the program left little room for dealers to sell add-ons or options to customers.

When GM Chief Executive Fritz Henderson announced the EBay partnership -- on the same July day that the automaker exited bankruptcy -- there was certainly no lack of buzz created. Breathless reports predicted that the transparency of online auctions could utterly shift the car-buying paradigm.

Early signs were promising. GM extended the program beyond its initial end date of Sept. 9, saying it was responsible for triggering 4,000 negotiations between customers and dealers.

But sales didn't keep pace, with some customers complaining that the auction process added needless steps to an already cumbersome process.

"I think even the dealers didn't understand the program," said Cal West, a would-be car buyer who is a manager at Kaiser Permanente in Northern California.

West said he bid on, and won, six auctions for Pontiac Solstice coupes before completing a sale. In each case, he said, the dealers refused to honor the online selling price, and it was only after protracted negotiation with a dealer in Southern California that West was able to seal the deal, paying $30,700 for the vehicle.

Under the program, shoppers had the option of buying a car at a fixed price or making an offer below that price.

Because franchise laws require cars to be sold by a dealer, customers had to take delivery of their vehicles through the dealer.

EBay, which normally makes money off listing fees and sales commissions, would not discuss its financial arrangements with GM.

Rob Chesney, vice president of EBay Motors, said the auctioneer was studying new ways to make money off online listings of new cars other than sales commissions and listing fees, including charging automakers for leads.

"I admit it's not what EBay normally does," he said, saying the auctioneer would explore other options as well. "It's still very early days."

According to GM, about 95% of its California dealers participated in the program, which required little of them other than that they upload inventory information and guarantee availability of the vehicles listed for auction.

Although the auctions will cease after today, GM said it was not closing the door on the online auction format for good. Its dealers will continue to sell certified pre-owned cars on EBay, as do dealers for Ford, Audi, Lexus, Toyota and Mercedes.

In addition, GM's McDonald said the automaker would consider posting new cars for sale online again in the future, perhaps as early as next year.

George Peterson, president of marketing consulting firm AutoPacific, believes that Internet sales will play a larger part in the new-car distribution chain, but that GM may have jumped the gun.

"GM is to be complimented for trying something new, but frankly I don't think anything is selling right now," he said.

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ken.bensinger@latimes.com

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