Claiming that the business model was not viable, General Motors has halted its plans to launch an Internet car retail site in the US. The auto giant is making the right decision. While many people research new cars online, few go ahead and buy them. Even those who do tend to prefer independent retailers. GM’s site just didn’t justify the investment.
General Motors has abandoned its joint Internet venture with its US dealer network.
Despite strong forecasts, the use of the Internet for retailing cars has not grown dramatically. Most consumers who use the Internet as part of the car buying process use it to research cars and related products, not to buy them. Independent online retailers such as Auto-by-Tel have enjoyed some success – but, on the whole, serious growth has not materialized.
It is due to these reasons, combined with a general consumer preference for independent companies rather than manufacturer-backed Internet retailing sites, that GM has decided to pull out of its $50 million ‘Autocentric’ program, launched in February 2001. The objective of the program was to create an ‘all-brands’ Internet retailing operation, funded by GM and its dealers.
Autocentric would have given GM’s dealers information and leads on Internet car shoppers, thereby enabling greater targeting. However, the auto giant has now realized that expected hits to (and subsequent purchases from) the site will be below par. In essence, the program could have taken several years to reach fruition. This is probably too long, given the current economic climate and market conditions.
Internet car retail sales will still develop over time, but it will be the independents that pave the way towards the development of this trend. GM is likely to postpone this program in anticipation of better market conditions and increasing user take-up of Internet shopping, especially for cars.