Online Car Sales Increased for GM, Other Vehicles

General Motors is all set to ramp up its use of an innovative web application program called "Shop-Click-Drive" that is designed to let consumers buy new cars online more easily. The online car sales application has been in pilot tests since January in Michigan, and will soon be available nationwide. It will let consumers look for new cars online, obtain a final price quote and get an estimated trade-in value for their old car. The application will let consumers apply for and obtain financing for a new vehicle, close the purchase, and arrange for the car to be delivered, all without ever having to step into a dealership.

Major Evolution

Shop-Click-Drive is aimed largely at tech-savvy millennial customers and consumers who have traditionally been reluctant to deal with sales people and other middlemen. For GM, the online vehicle sales application marks a major evolution in its car distribution strategy. GM, currently, has one of the largest car dealer networks in the country and almost all its cars are sold through this network. The internet car sale application will allow the company to bypass dealers and sell directly to the consumer.

Challenges Ahead

How successful the company will be in its efforts remains to be seen, however. So far, GM’s car sales online have been modest at best. Since launching the Shop-Click-Drive pilot program in January, GM has sold just 900 new cars online via the application. All but five of those cars were eventually picked up from local dealer locations by the customers. GM itself has so far shipped just five cars directly to consumers under the program. Going forward, the company’s task is not going to get any easier. Many states have strict laws in place that prohibit car manufacturers from selling directly to consumers. Electric carmaker Tesla, for instance, has been hit with multiple lawsuits in Texas over its attempts to sell direct. GM is trying to get around such issues by getting dealers involved in the Shop-Click-Drive initiative. Dealers presently are not required to sign up for the program. General Motors, though, has been trying to convince them to join the effort all the same because dealers generate money for the company not just through car sales for vehicles like the new 2014 Chevy Corvette Stingray, but also through sales of add-ons and extended warranties.

The Brick and Mortar Challenge

General Motors's efforts to push more of its new cars for sale online comes even as its dealers around the country have been pouring money into renovating their showrooms to attract more buyers in the wake of the recent recession. Not surprisingly, many see Shop-Click-Drive as a threat to their brick-and-mortar businesses, and have been reluctant to partner with GM on the program. At the same time, many other dealers see it as an opportunity for putting their inventory in front of a larger audience. To them, the internet car sales program is just another distribution process that is likely to appeal to a segment of customers but not everyone.