GM to begin selling Oldsmobiles online in Web-site pilot program

For the first time since launching its Web site 18 months ago as a place where car shoppers could get information about its products, General Motors Corp. next month will give some of its customers the ability to buy new vehicles almost entirely via the Internet.

In a 90-day pilot program that's due to be unveiled two weeks from now in cooperation with seven Oldsmobile dealerships in the Minneapolis area, GM will make it possible to order cars, arrange financing and do everything but the final paperwork online. Customers ordering via the Web will be given a specially set "e-price" that they will be able to take to their preferred local dealer, where the final transaction will take place.

The move by GM follows through on a commitment made last month when the company first said it planned to work jointly with dealers to sell cars via the Web in response to the growing popularity of online vehicle sites such as Inc. in Irvine, Calif. (see story).

The disclosure of GM's online selling plans also comes after rival Ford Motor Co.'s recent announcement of a similar program for selling vehicles through its Web site. Ford's online sales program is also scheduled to begin early next month, in an as-yet-unnamed California city (see story).

"We just look at this as another opportunity to address customer needs," said Scott McDonald, director of e-sales at Detroit-based GM. According to McDonald, the site, which went online in March 1999, already receives about 1 million hits per month despite the fact that it provides just information at this point.

GM officials presented the online sales plan to its 7,700 U.S. dealers earlier this month after working with them to develop the details of how the program will work, McDonald said. If the pilot program is a success, he added, it will likely be expanded to other parts of the country and to other GM brands. Customers participating in the pilot program will be able to do as much or as little of the actual purchase transaction over the Internet as they desire, McDonald said.

Thilo Koslowski, an analyst at Gartner Group Inc. in Stamford, Conn., called GM's move to online sales "the right thing to do" for the automaker. GM and its rivals "are aware that consumers are ready to buy over the Internet," Koslowski said. For example, a recent Gartner survey of 40,000 U.S. households showed that 7% rated themselves as "very likely" to buy their next vehicle online, while another 12% said they are "at least likely, if not very likely" to do so.

But Koslowski said he was amused that GM chose to build the pilot program around its more conservative Oldsmobile brand. "That's not really the target group for an Internet-savvy customer," he noted.

Kevin Prouty, an analyst at AMR Research Inc. in Boston, said it will be "critical" for GM to have the support of its dealers in order to make the online sales program a success. Also important, he said, will be technical issues such as helping customers obtain the cars they want from GM's inventory, wherever the vehicles are located in the country.

That may not always be easy if a desired vehicle is found at a dealership far away from where the customer lives, Prouty said. Another potential stumbling block, he added, could be the pricing of vehicles sold online, since federal laws currently restrict automakers to advertising only their "manufacturer's suggested retail prices."

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