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Commentary: GM's Brazil success shows Net can drive sales

It may take a while for direct-from-the-maker online car sales to arrive in the rest of the world, but there's no question this will be an important sales channel in the near future.

By Thilo Koslowski, Gartner Analyst

General Motors' success with an Internet-only automobile purchase model for the Brazilian market shows the enormous worldwide potential of that approach to vehicle sales.

See news story:
Will GM's Internet direct-sales model catch on?
It may take a while for direct-from-the-manufacturer online car sales to arrive in the rest of the world--especially in the comparatively conservative U.S. market--but there is no question that this will be an important sales channel in the near future.

The convenience of configuring and ordering vehicles online is certainly very attractive to computer-savvy consumers worldwide. Even more important, Internet-based sales enable auto manufacturers and dealers to reduce their inventory costs dramatically, and pass the savings on to consumers. GM, for example, has estimated that bringing a true built-to-order vehicle to market would enable it to save $20 billion per year--a savings that would result in spectacular improvements in the company's competitiveness and profitability.

Online vehicle sales are already well-established in Europe, with GM, Ford and DaimlerChrysler all offering Internet-based selling in the United Kingdom. For example, when DaimlerChrysler introduced its new ultracompact Smart car last month, it made it available only via the Internet.

It's no accident that manufacturers are bringing unusual new models to market this way. They believe this unique and innovative approach to retailing works best with unique and innovative products. Internet sales offer the automakers a great way to introduce new niche-market models, without the risk of diluting the value of their established brands.

As is usually the case, the U.S. market will likely be slower in adopting Internet vehicle sales than the rest of the world. U.S. consumers are more resistant to this approach than Europeans. Nonetheless, with Gartner research showing that 12 percent of U.S. consumers are likely to purchase vehicles this way, this approach is coming, and coming soon. Moreover, GM, which has embraced e-commerce with great fervor, will probably be the first company to make it happen.

The first vehicles offered this way in the U.S. market are likely to be from GM's standalone Saturn division, which enjoys a strong brand identity distinct from GM's. Look for Saturn to offer new models via the Internet very soon--probably as early as next year.

(For related commentary on automakers' use of the Internet for B2B purposes, see registration required.)

Entire contents, Copyright ? 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.