Savvy Shopper: Online Tire Kickers Crowd GM's Virtual Car Lot on eBay
Should you buy your next car online? And by "online," what do we really mean? Can you really click a button and have a car show up in your driveway?
GM has launched a month-long experiment to sell cars through eBayMotors in California. Some early figures are in. And the results are, well, intriguing...
In the first week, 632,000 people visited the GM site on eBay. Of those, some 2,400 offers were emailed to dealers but only 45 actual sales were actually completed. Bottom-line, there are a lot of internet tire kickers. Disappointing? Yes. A failure? No.
Clearly, the model for car buying is broken. People HATE buying cars through the current dealership system. It is slow, stressful and filled with the danger of overpayment. So when a new road map is offered consumers are quick to investigate it. So why aren't more people actually buying through GM's eBay program? Well, there's a little thing called "price" which is stronger than the fear that car shoppers typically feel.
More specifically, while GM is offering its cars online the prices are still too high. Edmunds.com analysts looked at the "Buy it Now" price on GM eBay and found them to be 2 percent higher than our True Market Value pricing. On a $25,000 car that is about $500.
That doesn't sound like much but it is at least $1,000 more than most people would be willing to pay. Keep in mind that TMV is the average price paid. That means it's not difficult to beat the average and get a much lower price.
So, clearly, you need to click on the "Make an Offer" button rather than "Buy it Now." Consider offering just less than invoice price (minus any incentives) knowing that the dealer will certainly counter offer.
You could easily do this kind of negotiating through the fleet or internet department quite apart from eBay. But this new GM eBay site takes online car buying to the masses. If successful -- and we believe they will modify it until it works -- other manufacturers will follow suit. Salesmen will become order takers and car deliverers rather than smooth talking pitchmen.
And no one will miss them.
- Posted by
- Philip Reed August 21, 2009, 1:29 PM
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- Categories:
- Car Buying, Car Negotiating, The Savvy Shopper
- Technorati Tags:
- Car buying, car salesman, dealers, eBay, GM, negotiating, online car buying, upselling
While I do believe that price is a big factor in the purchase of a vehicle. I think we are forgetting a few major points in this article.
1. Its hard to pay $16000 plus for a new vehicle withought actually touching or driving it
2. There is the problem of financing the vehicle. While some customers can go to their credit unions and just write a check for it not everyone has this luxury
3. By cutting out the middle man we do enjoy cheaper prices. However if this method is completely accepted as a whole you are taking a lot of salesman and lot technicians out of the economic market and funneling whatevre profits are left directly to the people at the top.
4. I know we all want to get as close to invoice as possible but I dont think there is anything wrong with paying my salesman a little bit of profit the last mustang I bought I paid MSRP i didnt argue or dicker about it I just said this is what I am paying can you do it they said yes
the salesman probably made a little bit of a paycheck and I got a decent deal
The current system works part of the time. There are good salesmen who are well informed and truly add value to the transaction. But all too often there is unnecessary game playing to maximize profit. And then there is the test drive which Windsor points out is essential.
I would say that most internet/fleet encounters are positive and accomplish the four points that Windsor calls out. That's because internet/fleet managers don't do a lot of "selling." Instead, they help informed buyers get what they have already selected. Also, they are paid on selling volume not max profit. When a salesman's commission is based on profit the game playing begins. It is firmly engrained in too many salesmen that the only way to make money is to manipulate and decieve.