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GM Looking to eBay to Rev Up Auto Sales

GM and eBay
Can eBay help save General Motors?

That's the question being asked after comments by GM CEO Frederick Henderson suggested that the U.S. auto giant is working with eBay to enable customers to buy new cars online.

After GM emerged from bankruptcy protection Friday, Henderson said teaming up to offer cars on eBay Motors would help make auto purchasing more convenient.

"We're also working on new ways to make car buying more convenient for our customers, including an innovative new partnership with eBay in California to revolutionize how people buy vehicles online," Henderson said in a statement.

But eBay (NASDAQ: EBAY) responded on Friday with a statement saying no deal has been finalized, though today the online marketplace company is sounding less surprised and more positive about the GM statement.

"At this time, discussions are underway but not finalized with General Motors. We hope to support GM's new company and vision going forward," an eBay spokesperson today told InternetNews.com. "We are excited about a potential new adventure that supports GM's dealers by expanding on how they already reach consumers through new approaches."

GM did not return calls asking for comment.

Despite the uncertainty over the deal, GM appears to be betting big on some sort of arrangement that could be a radical change for the auto sales model.

The idea, according to at least one industry-watcher, is that GM is trying to find a workaround to state laws restricting the sale of new cars online, while simultaneously attempting to create a streamlined system for dealers to use eBay.

Currently, state franchising laws prohibit the sale of new cars direct from the manufacturer through online sites such as eBay -- or anywhere else for that matter, Jack Nerad, executive editor and executive marketplace analyst at Kelley Blue Book, told InternetNews.com.

"The only people who can sell new cars are new car dealers," Nerad said.

And many have been doing so already using eBay, as it turns out.

"Currently, more than 30,000 U.S. franchise and independent dealers in the U.S. utilize eBay Motors as a complementary sales channel for their businesses," Rob Chesney, vice president of eBay Motors, said in a blog post on the eBay blog. "In addition, several automakers, including General Motors, display certified pre-owned inventory on the eBay Motors marketplace."

GM goes direct?

Tom Pyden, vice president for communications at GM, later said that the company's dealers, not the company itself, would list new cars on eBay, according to the New York Times.

Still, Henderson's comments last week suggest that GM itself is taking an active role in targeting consumers.

"Customers will be able to bid on actual vehicles just like they do in an eBay auction, including the option of choosing a predetermined 'Buy It Now' price," he said. "We'll be testing this and other ideas with our dealers over the next few weeks, and hope to expand and build upon them in the coming months," he said.

"In all cases, our goal is to make the shopping and buying process as easy as possible for GM customers -- on their time and their terms."

[cob:Special_Report]Because of the complex nature of the traditional auto sales model, Nerad said GM and eBay could be trying to figure out how to distribute online sales of new cars for individual dealers.

"Henderson did say it was an experiment, and no one knows how far along in that experiment they are," Nerad said.

Regardless of how the deal develops, Nerad thinks the move will be embraced by auto shoppers.

"I think it would be successful, absolutely," he said. "Many consumers want to avoid the in-dealership experience. A few like it, maybe enjoy the dickering, but most would be happy to do it online at their convenience and skip the dealership visit."

Nerad isn't the only industry expert who thinks GM and eBay Motors could benefit from a new-car sales partnership.

"What we're looking for is a real change in thinking from GM and this type of deal with eBay indicates there might be an critically-needed, updated approach to selling cars from GM. It's not the kind of thing you would have heard them boasting about two years ago," Philip Reed, senior consumer advice editor at Edmunds.com, an automotive consumer site, told InternetNews.com.

He said that while details remain sketchy on the proposed partnership -- neither eBay nor GM has released any other information to date -- it does signal an interest in boosting new online car sales company wide.

"There were instances of dealers selling new cars before, but this shows that GM wants to create a more cohesive, united, standardized sales effort," Reed said.

He also thinks consumers will benefit. "By using eBay, pricing becomes more transparent, it takes out a lot of the uncertainty over pricing, especially if they use the 'buy it now' feature. Savvy shoppers can do a lot of comparisons to other dealers.

"Most important though is it takes a lot of the abuse out of the process," he added. "During the finance processing, consumers are subjected to a lot of pressure to buy other services and features they don't need, or they get the wrong type of financing. If an eBay deal cleans that up, or even provides an alternative to the abuse you're physically subjected to when in the dealership environment, that's a big step in the right direction."

Henderson's description of his company's work with eBay Motors comes on the heels of GM's unusually quick exit from bankruptcy protection on Friday, with bold plans for remaking the once most powerful automaker into a leaner, more modern and profitable company.

For its part, eBay is undergoing a makeover of its own, in which the online marketplace is retooling itself as an Internet destination for liquidation inventory rather than for unique auction items.