What do eBay (Nasdaq: EBAY), Saturn, and 1,300 GM dealerships have in common? General Motors is kicking them all to the curb.
You probably already know about the disappearing showrooms and car lines. However, GM's also nixing a head-turning deal it launched this summer, when it began to sell new cars through eBay.
"I don't see the brand-polishing appeal of being associated with moving shiny new cars through the same platform that sells Alf ashtrays and Pokemon trading cards," I wrote in early August, when I tapped the pairing as one of the week's five dumbest moves.
eBay Motors is a popular component of the country's leading auction site, but mostly as a place to buy and sell used cars. GM simply leaned on eBay to drum up leads for a handful of dealers in California, only to complain when virtual tire-kickers presented insulting bids.
The priceline.com (Nasdaq: PCLN) model works in the travel industry, because there's a surplus of inventory of air carrier seats and hotel nights that expire worthless if not consumed. One can expect a significant discount on a trip if the service providers are desperate enough. But a new car costs too much to assemble to put up with uneducated bidders.
This deal may not have been doomed form the start, but GM's decision to kill the deal during the second month of the partnership speaks volumes.
"We thought the program was successful, but this was not the right time," GM sales chief Mark LaNeve told The Wall Street Journal. I guess the bar of "successful" is pretty low at GM these days.
If timing is the culprit, is GM too early or too late? "If [the eBay deal] works, expect Ford (NYSE: F), Toyota (NYSE: TM) and others to follow suit," I wrote at the time. But I no longer expect anyone to follow GM in what has clearly become a dead end.
The deal's failure doesn't mean that the Internet isn't an effective outlet to promote cars. Autobytel (Nasdaq: ABTL), Cars.com, and Internet Brands' (Nasdaq: INET) CarsDirect wouldn't be in business if there weren't a market for connecting Web users to dealerships.
GM may have been too quick to kill this program. Still, it's clear that both eBay and GM need to rethink what they originally wanted to accomplish with this bizarre bazaar.
Like this article? Get our best articles delivered direct to your inbox at no cost. Sign up for Foolwatch Weekly by entering your email below.
Terms & Conditions
RSS Headlines
Fool UK