GM to Sell Used Cars on eBay

News that went mostly unnoticed

By Brendan Moore

02.10.2008

General Motors announced two days ago that they had reached agreement with eBay for all GM dealers to sell their certified used cars on the huge internet site. The ads will be classified ads as opposed to the auction ads typical of the site.

The news hardly caused a ripple in the business dailies and went pretty much unnoticed by the public. Yet, the move by GM could dramatically change the used car business.

I can hear you asking yourself. “howzsat?”.

Let me point out several of the ways.

First, GM’s 3900 dealers currently have their certified cars listed on around 300 online sites. eBay Motors (the vehicle sales section of eBay) gets around 11 million unique users and visits to eBay Motors account for approximately 34% of auto-related minutes spent online. The GM dealers may logically decide that they’re going to put their cars on the site that has the most people on it, and, also, decide to cut back on advertising their inventory on those other sites. By the way, did I mention that the ads on eBay are FREE to GM’s dealers? Yes, that’s what I said, free. Since the cost on eBay will be nothing and the exposure great, it is a given that GM’s dealers will be deserting any online site that charges to place an ad. This will force those other sites to go to a revenue model based off visitor ad income, or, stop taking used vehicle ads.

Second, if the deal with GM is successful, then other manufacturers will follow, and in a hurry. The possibility of eBay becoming “the” place to look for a car online is now very high.

Third, eBay Motors should get some massive increases in visitors as a result of the first two items, which, of course, is then self-fulfilling in terms of their attractiveness to dealers.

Fourth, if consumers and dealers are able to look at certified used cars within, say, a 300-mile radius, they will then be able to ascertain whether the certified used car they want is at another dealer nearby. Sure, they could get in their car and drive 300 miles in order to buy it. But, the other thing that could happen is that they could go to the local GM dealer they like, and that dealer could just simply do a dealer trade for it, just like they currently do with new cars. You might say, “Well, how many customers are going to do that with a used car that they can’t even test-drive first?”, and that’s a valid question, and my response is that quite a few of them might be willing to do that on a certified used car. Since every certified used car has to undergo the same process for certification and comes with a factory warranty and available factory financing, that takes an incredible amount of variability and uncertainty out for the used car equation. The dealers could swap certified used cars, just like they swap new cars now when a customer wants something that’s not on the lot and another dealer nearby has it. Think about it.

Fifth, for those cars that are possessed of extreme rarity, this makes the job of the customer searching for one of those cars or trucks a lot easier. They can now look at a national used car lot, and if they’re willing to travel to get the super-special car or truck, they will now at least know where it is.

Lastly, as all of the above happen, dealerships and consumers will get much more used to (and comfortable with) doing online (or by fax) all the other things related to buying or leasing a car; things like completing a credit application, insurance verification, etc. Electronic transactions are faster and more convenient for consumers, and faster and cost much less to dealers. Dealers will have to develop more online forms for consumers and increase their personnel now allocated to the internet, but the costs will decrease in other areas as a result. Dealers that do not evolve to meet this changing transaction landscape will be penalized in the marketplace.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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3 Comments

  1. So what? If sites like Autotrader and Cars.com go out of business, who really cares? How would that change the used car business? As far as buying a used car online, that will never happen. No one, and I mean no one, is going to buy a used car without driving it and looking it over first. Tehy would have to be crazy to do that.

  2. If all the dealers had their used cars on a single site, that would be a very big change in the car business. And if you could do the purchase over the internet, that would a very big change, too.

    The other sites going out of business is just fallout damage, whixh is what happens when a business model changes.

  3. I would buy a certified used car unseen provided I had the right of refusal upon first inspection. If my Chevrolet dealer, who I like and have bought several cars from, could trade for the car a hundred miles way, I would much, much rather buy the car from him. As long as it has the same factory warranty, etc., I’m game for that. I’m sure my dealer is not going to trade for the car if they get to the other dealer and it’s screwed up. I think you are underestimating the number of people like me that would do that.

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