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Wresting power from the dealers. Part 2

Traditionally, when a consumer wanted a vehicle that a smaller dealer failed to have in its own inventory, the dealer would simply track down the vehicle, trade inventory with the dealer who had it, and make the sale. Now, consumers find they can easily find the vehicle on their own, typically at the larger dealers, and they don’t mind driving the 30 miles to get the car they want. “Buyers will pay more for a car if it’s got everything they want, as opposed to a compromise. Smaller dealers will lose out,” says Khaykin.

Responds Zarrella: “Our intention is not to put anyone out of business but to enhance the business.”

A minority of GM BuyPower dealers don’t think GM is moving fast enough into the Information Age. Just as car salespeople don’t want you wandering into the competing lot across the street, some GM dealers are pushing to keep Web shoppers from visiting other sites to capture such information as dealer invoices — what the dealer paid for a vehicle. Bob Giarrusso, director of Internet sales for Serramonte Pontiac, Buick & GMC in Colma, Calif., a 60-car dealership, favors posting invoices on GM BuyPower. “When you get right down to it, it would be a good thing to do. It will keep people on the site,” he says.

For many in the auto industry, which still moves at the pace of a Model T, that’s a scary proposition. But it’s no scarier than what some observers of ecommerce trends are predicting that automobile manufacturers will be forced to do in the changing economy to hold onto their role in selling the automobiles they manufacture. Some predict that the automakers will have to take a lesson from such industries as financial services in order to compete on the Internet, which is rapidly redefining distribution. Charles Schwab’s OneSource sells others’ mutual funds in addition to its own, and Banc One Mortgages’ HomeByNet peddles other companies’ mortgages. Is it too much to expect GM to do the same?

“It’s never going to happen,” snorts Ellis. “It’s too big a leap.” Adds Khaykin: “If you were Ford or Toyota, would you trust GM to show you in the best light?” Khaykin could envision such a strategy only if the automakers joined forces to create an independent company aimed at marketing all their cars online.

That’s not such a massive shift in thinking. The great disintermediation that electronic commerce was always supposed to create — in this case, enabling consumers to configure and buy vehicles directly from the factory via a computer — has yet to happen. Indeed, a new generation of profit-takers has stepped in: Some make markets, some represent buyers, some represent sellers, some enable transactions. Unless GM and the other automakers can find a role in this new world order or use their muscle to bust it up, they’ll find themselves on the losing end, blinded by the dust of the upstarts.

For his part, Payam Zamani, co-founder of Autoweb.com, which in May was responsible for the sale of $660 million worth of vehicles, suggests GM should just back off. “They should think of the Internet as just another advertising medium, like TV or radio,” he says. “They’re not going to go out and start their own TV station.”

When discussing the future of GM BuyPower, executives schooled at GM once again resort to diplomacy. “This is somewhat of a pilot, and there will be continuous improvement,” are the cautious words of Zarrella, who says the company is “aggressively looking at expansion.”

No time line, of course. Meanwhile, the elephant continues to stumble over its feet — but it’s learning nonetheless.

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