New GM Site To Offer Rival Auto Brands

In what is essentially a response to rapid consolidation in the online car-buying sector, General Motors (NYSE: GM) told its dealers Sunday that they will have the option of selling other car brands through a new online sales operation, AutoCentric.

While GM has yet to publicly unveil AutoCentric to the public, the company has told the U.S. Securities and Exchange Commission (SEC) that it intends to sell a half stake in the venture to its dealers for US$25 million, while maintaining a half share itself.

Over the weekend, GM executives reportedly pitched the idea to dealers gathered for a convention in Las Vegas, Nevada, as a way of fending off competitors.

AutoCentric is reportedly designed to complement and expand the GM's existing offering, BuyPower.com, which enables shoppers to get prices online but requires them to visit a dealership to make the purchase. AutoCentric would feature other car brands and the ability to complete purchases on the Web.

Best Defense

The move comes as automakers try to defend their turf from third party Internet sales sites.

"We'll do much better if we spend our time developing the innovation we need to deliver this kind of service, rather than wasting our time arguing among ourselves about which Internet model will win out," GM chairman and chief executive officer Richard Wagoner said.

Automakers have been moving to reassure dealers that they will not be cut out of the sales process by the Internet, which in theory could enable direct sales from manufacturers to consumers.

Motivational Speech

Rather, GM is using the threat of competition to fire up dealer interest in AutoCentric.

"Let's not let some third party show us the way to the future," Wagoner told the company's 7,800 dealers, according to published reports.

The venture is apparently going to be based on a pilot program that GM started in September in Minneapolis and St. Paul, Minnesota. The company has not revealed additional details on how it would work.

Consolidation Abounds

GM's efforts come amid a fresh round of consolidation within the online car sales industry. CarsDirect.com announced Wednesday that it would buy Greenlight.com in an all-stock deal . In doing so, CarsDirect gained access to Greenlight's partnership with Amazon, which includes a link from the front page of the e-tailer's site.

Two days later, Microsoft's (Nasdaq: MSFT) MSN Carpoint announced a deal to share car sales leads it generates with AutoNation.

All the activity is aimed at capturing an early share of a market which is, despite a slow start, still expected to become a massive financial opportunity. Jupiter Communications estimates that direct and Web-influenced new vehicle sales will grow to $128 billion annually by 2004.

Additionally, Forrester Research recently said that within three years, the percentage of new car buys made online will grow to 6 percent, from less than 1 percent today.

Active Web Players

Other automakers have made similar attempts to stave off competition. Ford last year said it would gather its 4,200 national dealers together to form FordDirect.com.

General Motors has been an active Internet force in other ways as well. In December, the automaker announced a marketing alliance with eBay Motors.

GM also struck a sweeping deal with America Online that included discount Web access for GM workers.