DETROIT – On Sunday, the Wall Street Journal reported that General Motors (NYSE:GM) is planning to roll out a new online shopping tool that allows customers to shop for their new car online – completely bypassing the showroom.
The software, which links GM’s 4,300 dealers, will provide a high-profile test of whether the company can better suit the needs of internet-savvy shoppers without conflicting with local laws that allow dealers exclusive rights to sell cars. The application, which will be called Shop-Click-Drive, is expected to be launched in the fourth quarter of this year.
Using the application, car buyers will use their computers to negotiate the price of a new car, obtain an estimate of their trade-in, apply for financing, and even schedule a test drive of their new car. According to Lenny George, General Manager at Berger Chevrolet in Grand Rapids, Michigan, ‘this is just another way to close.’ However, the app acts independently of the company’s dealer network and could face resistance when it is rolled out.
In particular, state franchise laws protect car dealers and in the past several dealers have preferred to conduct business face-to-face – up to this point, new car sales have been largely insulated from the march of automation. One test for GM is Tesla (NASDAQ:TSLA), the company has tried to push the boundaries of franchise laws by selling its luxury electric cars exclusively through its website and a small number of company-owned stores. Tesla argues that franchise laws do not apply to its operations because it has never had franchised dealers.
While GM dealers are not required to participate, roughly 100 other dealers have signed up so far through a pilot launched in January in Michigan, Minnesota, Wisconsin, and Arizona. If successful, the project could transform the function of the dealer in car sales and potentially position GM as a service leader in the industry. However, the test of the project will be how dealers, traditionally known for their independence, and state laws that protect them will bend to the changing environment.