General Motors Co. plans to expand a new online shopping tool that allows customers to bypass showrooms when buying new cars.
The software, which keeps GM’s 4,300 dealers central to the sale of its vehicles, will provide a high-profile test of whether the auto maker can better cater to online-savvy consumers without running afoul of state franchise laws that give dealers exclusive rights to sell most new cars.
By the end of this year, GM plans to extend a Web-based application, called Shop-Click-Drive, to its entire dealer network. The app would let new-car buyers use their computer screen to lock in the price of a new car, get an estimate of the trade-in value of their old car, apply for financing and even arrange a test drive or delivery of their new vehicle.
GM’s app acts as an electronic door to its independent brick-and-mortar dealers, and so represents a cautious step toward adapting to consumers whose experience with online shopping for appliances and other goods has made them less willing to visit showrooms.
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State franchise laws that protect car dealers mean their pivotal role in auto sales will remain intact. The dealers prefer doing business face to face because it also lets them sell auto buyers more-profitable service work, add-ons or finance and insurance products as well as new cars. New-car sales is one area that has been largely insulated from the online retailing revolution that already has pummeled booksellers and appliance stores.
Tesla Motors Inc. has tried to push the boundaries of franchise laws by selling its luxury electric cars exclusively through its website and a small number of company-owned stores. Tesla argues that franchise laws don’t apply to its operations because it has never had franchised dealers.
GM dealers aren’t required to participate in the project, and GM officials say they have had some dealers turn it down. One potential sticking point is that the auto maker for several years has pressured dealers to undertake costly makeovers of their stores—investments that could be undermined if more shoppers buy online. About 100 other dealers have signed up so far through a pilot launched in January in Michigan, Minnesota, Wisconsin and Arizona.
“My initial reaction was we have investment in brick and mortar, and they’re trying to come up with an idea contrary to that,” said Todd DeNooyer , general manager at DeNooyer Chevrolet in Kalamazoo, Mich., which was among the first batch of dealers to test GM’s shopping app.
Date: Oct. 6, 2013