Are Dealers Afraid of General Motors’ New Online Initiative?


General Motors (NYSE:GM) is looking to give customers the option to purchase a new car online, which can eliminate the need for new car buyers to go to a dealership at all. GM’s online app called “Shop, Click, Drive” will be extended to its entire dealer network by the end of the year, according to a report from the Wall Street Journal.

The “Shop, Click, Drive” app can allow customers to lock in the price of a new car, estimate the value of a trade-in, apply for financing, and even schedule either a test-drive at a dealership or arrange to have the car delivered to a home or place of employment. The move has GM balancing the fine line between giving customers who may be used to making the majority of purchases online the ease that the Web provides and adhering to laws that give dealerships the right to sell new automobiles.

GM believes that an offering an online shopping experience is crucial in a world where buyers are becoming accustomed to making big purchases online. But, dealers have been hesitant to make such a move, as the in-store experience gives them more room to convince buyers to purchase add-ons like insurance products or financing in addition to the new cars.

State laws protecting dealers will ensure that they’re not left out of the loop as the online purchases via “Shop, Click, Drive” will still be made through GM’s dealerships. According to the Wall Street Journal, GM dealers aren’t required to participate in the project and some have already chosen not to.

Some dealers have questioned the model, comparing it to Tesla Motors’ (NASDAQ:TSLA) decision to skip over the dealer network entirely and sell its cars directly to the public. That model has been called into question and even brought about lawsuits as dealers will miss out on selling the luxury electric vehicles. Dealers in Texas have opposed the model, while a judge in New York didn’t heed dealer complaints and allowed Tesla to move forward with its model.

GM dealers don’t seem too worried about the app, as the company will continue to sell its vehicles through its dealerships. While some have complained about the move, especially since GM recently asked dealers to invest in updating their brick and mortar stores, others are encouraging the move as a way to appeal to younger, tech-savvy customers. “To me, this is just another way to close the customer [deal],” Lenny George, a manager at Berger Chevrolet in Grand Rapids, Michigan, which was selected to test the program, told the Journal. “It’s a selling tool.”

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