GM Gives Up On eBay

Like most high-profile celebrity relationships, General Motors and eBay's love affair was a short one. The program that began on Aug. 11 will end today. How did it go? The Wall Street Journal reports:

"We thought the program was successful but that this was not the right time," GM sales chief Mark LaNeve said.

Given that a few weeks of the program overlapped with the infamous cash-for-clunkers program, artificially boosting auto demand, this raises the question: when would a better time have been? The little detail we have suggests the program probably wasn't all that successful after all. If it was why end it?

The Associated Press reports:

The eBay site received 1.5 million hits, or visits, producing 15,000 leads for dealers. About 227 California-based dealerships participated in the program. GM and eBay did not say how many cars were sold based on the program.

And from WSJ:

VJ Singh, executive manager of Singh Chevrolet in Riverside, Calif., said the program produced an overload of "browsers." His Chevrolet store typically gets 1,000 leads per month, and eBay created about 20% more -- but led to just one sale.

This implies that the number of vehicles actually sold through the program was very, very low. How low? Let's do an estimation based on that Chevy dealer's experience. If its experience was typical, then every 200 leads the eBay site provided resulted in one sale. If the program overall created 15,000 leads, that approximates to 75 sales. That's not exactly a slam-dunk.

So why were those leads so useless? The WSJ further notes:

Several dealers involved in the program said most attendees at a recent dealer conference in Las Vegas agreed it was ineffective. Richard Slade, general manager at FH Dailey Chevrolet in San Leandro, Calif., said too many people submitted ridiculously low offers, forcing staff to sift through bids that were highly unlikely to result in sales. He said one person submitted a $2,500 offer for a $40,000 vehicle.

Because that's what eBay is for! Nobody goes to eBay expecting anything other than a huge deal at a deep discount. But that's not really the game that GM was trying to play.

Back in August, my colleague Derek noted that this partnership could be good for GM, as it might allow them to utilize an online sales model and rely less on expensive dealerships. As the AP article notes, that didn't really work:

Very few people chose the "Buy Now" price option, said the owner of Dublin GMC Buick in Dublin, Calif., with consumers preferring to come into a dealership to make such a large purchase.

I'm all about online shopping, but I can totally relate. The most expensive thing I've ever bought online was a TV, and I was only comfortable doing that after a great deal of research on and experience with the manufacturer and online retailer. I think there's still a psychological barrier for most of us to spend a lot of money without physically seeing the tangible product in front of us.

I'm not sure if people will ever be comfortable buying something like a car online, but it could happen. After all, diamond website does a pretty good amount of business. Some of its diamonds are as expensive as cars, so online auto sales might not be impossible. With that hope likely in mind, the WSJ reports that GM says it may try the program again next year.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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