All the analysts warned GM about emphasizing GM branding before creating and marketing great products. Turns out Obama’s first big GM marketing push with eBay is an epic failure.
The pilot GM eBay program, currently being tested at 225 California dealerships, has not generated substantial sales to the disappointment of GM executives.
GM dealers have posted 16,000 new vehicle listings, but sold only 45 vehicles through the ‘click & drive’ promotion. And while the first four listings are free, eBay charges $20.00 per vehicle for an eBay motors insertion fee–or in GM’s case, $360,000.00–which does not include the successful listing fee changed after a complete transaction.
In any case, it is safe to say GM lost a lot of money with their test run in the auction space.
But it gets worse.
The models generating the most interest was the now-discontinued Pontiac G8. This suggests that people turned to eBay in desperation, to locate a seller of the G8, as most dealerships have depleted inventories of this car.
In addition, Edmunds.com’s analysts also estimated eBay’s “buy it now” prices are on average 2% higher than average market price, about $500 on a $25,000 vehicle.
I guess GM forgot that when you sell via auction, you need to actually sell things people want–and that alone can drive the price high enough to meet your reserve.
It is not to say this business model cannot work. But you need a decent product to drive the auction above reserve or the buy it now price to be successful.
Nevertheless, it is somewhat comical to flashback and watch MSNBC’s August 11th coverage of the eBay program. Listening to them, you’d think this program could not fail. The only one with a sense of business acumen is the BusinessWeek editor. Watch:
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