Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Could GM Revolutionize the Way It Sells Vehicles?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

General Motors (NYSE: GM  ) plans to expand its Shop-Click-Drive program, which has been testing at select dealers since last year, to all dealers. The program is aimed toward consumers who are savvier with purchasing products online and enables them to do so with GM vehicles. E-commerce continues to grow in today's economy and similar online retail strategies have allowed companies like Amazon to completely crush brick-and-mortar competition. However, don't expect this development to have a revolutionary impact on GM's ability to sell vehicles online or improve margins. I believe GM will have minimal success and here's why.

Buying blind?
In February Automotive News reported that the Shop-Click-Drive program allowed you to purchase in five simple steps.

  • Choose a vehicle by reviewing inventory.
  • Get a value on a trade-in.
  • Fill out a credit application.
  • Select extended warranties and accessories.
  • Schedule delivery either in-store or at the buyer's destination of choice.

Lenny George, general manager of Berger Chevrolet in Grand Rapids, Mich., offered Automotive News his opinion. "People who are shopping online for towels or Apple gear expect to be able to buy online. Why should auto dealers be any different?"

George has a point, but with all due respect, comparing towels to vehicles might be a stretch. If consumers take a leap of faith to purchase towels online, the risk of being unsatisfied likely comes at a cost of $5 to $10. When it comes to purchasing a $25,000 vehicle, I doubt consumers will be buying blind.

In a phone interview with John Giamalvo, director of dealer initiatives at, he explained to me the necessity of integrating online programs with dealerships. "Having an online presence in the auto industry is becoming a necessity. There's no question consumers are wanting to get as much visibility into the actual vehicle transaction before they step in the dealership for a test drive." He continued, "What's important for GM and other automakers is how the online selling programs are integrated at the local level to maintain customer satisfaction. Automotive manufacturers still want face to face contact, they want you to test drive, they want a local presence for repairs, maintenance and customer loyalty." 

Consumers need to feel the materials, get a sense of the headroom, and take notice of a thousand other factors. Even if GM were successful in convincing consumers to buy online, it wouldn't cut out the middle man and boost to margins as most would think. State franchise laws exist that protect the important role that dealerships play in vehicle sales. Tesla (NASDAQ: TSLA  ) is currently testing the boundaries of these laws, and has had some success because it has never had franchised dealerships in place. That's why GM's success will be minimal, and its Shop-Click-Drive program will essentially be a front door to the dealership, not replacing their presence. GM's move to expand its online sales program is more evolutionary than revolutionary -- but that's not a bad thing.

"When this was first introduced, there was a lot of talk: 'Well, GM is eliminating the dealerships. They want to be Tesla,'" said George, according to The Wall Street Journal. "To me, this is just another way to close the customer [deal]. It's a selling tool."

I agree wholeheartedly with George on this point: GM really has nothing to lose by expanding its program, which could generate incremental sales leads over competitors without a similar online presence.

While the approach may not revolutionize the buying process, as Amazon has done in its industry, it could appeal to the millennial generation, which prefers to do much of their research online, including steps typically done at dealerships. GM won't boost its margins by cutting out dealerships -- it doesn't want to. If GM's online program can reduce the hassle and time spent at dealerships, it should help GM's battered brand image by improving its customer service and satisfaction. That would be a huge development because crosstown rival Ford continues to lead the industry in consumer loyalty, and is gaining market share because of it. 

Need excellent investing ideas?
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 09, 2013, at 10:08 AM, AdvanderMeer wrote:

    Could they change? Yes.

    Will they change? Eventually.

    Will it take another bankruptcy? Likely.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2674560, ~/Articles/ArticleHandler.aspx, 8/27/2016 6:25:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 21 hours ago Sponsored by:
DOW 18,395.40 -53.01 -0.29%
S&P 500 2,169.04 -3.43 -0.16%
NASD 5,218.92 6.71 0.13%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/26/2016 4:00 PM
GM $31.53 Down -0.01 -0.03%
General Motors CAPS Rating: ***
TSLA $219.99 Down -0.97 -0.44%
Tesla Motors CAPS Rating: **