GM’s Online Car Buying Program Is Gaining Traction
In the dealer-centric world of U.S. auto transactions, General Motors (NYSE:GM) is showing it’s open to the idea of buying cars online. GM announced that over one-third of the automaker’s 4,300 U.S. dealerships already offer or have signed up for the “Shop-Click-Drive” program that gives consumers the ability to handle most of an auto purchase online. Though the program may stoke fears that dealers could be left out of the picture, GM is emphasizing the embrace of the voluntary program by its U.S. retail sales force.
There is perhaps nothing more natural than shopping for a car online. The extensive research tools at an auto consumer’s disposal allow for price, performance, and reliability comparisons without the intervention and influence of a dealer on the showroom floor. A recent study by the Interactive Advertising Bureau showed that auto consumers were influenced by online ads 71 percent more than the rest of the population. If there’s an auto deal, at least some part is taking place online.
The GM program is voluntary for dealers, the automaker said in a statement, and about 1,500 of the 4,300 dealerships in different U.S. states were already on board. Since the program began in November 2013, GM says 1,800 automobiles sold through Shop-Click-Drive.
However, the number of actual “blind” car buys is still very low. Customers overwhelmingly wait until test-driving a vehicle before finalizing the deal. In the pilot program that began in early 2013, about 1 percent of the 1,000 transactions didn’t involve a trip to the dealership, the Detroit Free Press reported in October. Industry research suggests that figure will soon change.
According to the Financial Times, Frost & Sullivan research indicates one-quarter of U.S. auto sales will take place online by 2025. That makes it imperative for automakers such as GM to begin adjusting to a new way of doing business. In fact, It may be another area in which GM can take a few pointers from Tesla (NASDAQ:TSLA).
The electric vehicle maker has salespeople and test drives available at showroom locations, but they aren’t dealerships. The system has kept Tesla from selling its cars in several American states as pressure from dealerships on state legislatures has allowed dealers to maintain the age-old U.S. system.
Yet refusing to adapt to change was an approach that got the Detroit automakers in trouble several times in recent decades. Now that the industry has been affected by the Internet-centric times, automakers will have to plan accordingly while being mindful of dealer’s concerns.
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