Mark hogan is a man in a hurry. As chief of e-GM, he is trying to set up a worldwide network of General Motors BuyPower Web sites to market cars and trucks over the Internet. And he's trying to accomplish it by year end. By the auto industry's standards, that would require breathtaking speed. 'Being first is important and being second is like being last,' Hogan said.
That leads to a dilemma. Automakers have learned the hard way that different regions require different marketing strategies. That is as true for Internet Web sites as it is for brick-and-mortar dealerships. On the other hand, it would be costly and time-consuming to design Web sites for each region.
What to do? Hogan designed a basic GM BuyPower platform, then used it as a model to develop variations for local markets. Outside of the USA, GM is developing two basic versions. In the United Kingdom, Vauxhall has developed an advanced version that will be rolled out throughout Europe and other mature markets. In emerging markets such as China, e-GM intends to install its Taiwan model of direct vehicle selling to consumers via the Internet.
VAUXHALL'S `DOT.COM' MODELS
Whether in the United States or the United Kingdom, dealers fear that automakers will use the Internet to sidestep them and sell vehicles directly to consumers.
To calm those fears in Great Britain, GM's Vauxhall operation created 'dot.com' models, special versions of Opel-made vehicles that are promoted and sold to consumers only through its Web site. The idea came from GM's successful creation of special models, such as the World Cup Corsa that was sold in unique colors, fabric and trim, equipped with special options and sold at a discount.
Vauxhall started with the Corsa dot.com and expanded the dot.com series to include the Vectra and Astra. So far, only 300 dot.com cars have been sold, compared with the nearly 300,000 Vauxhalls that sell annually in the United Kingdom. 'Vauxhall's objective wasn't necessarily to sell a lot of cars,' said Michael Bergmann, e-GM of Europe regional director. 'We wanted to show we were innovative and on the cutting edge of Internet activity. And we wanted to understand how to sell cars through the Internet with our dealer network.'
'Vauxhall has proven to dealers and themselves that it is possible to work together with dealers offering vehicles through the Internet that benefits both of us as well as the customer,' Bergmann said.
Vauxhall is experimenting with other Web functions that GM might transplant to other markets. Vauxhall offers an advisory service that helps visitors identify the best vehicle to fit their needs based on household budget, family circumstances or competing products on their shopping lists. After asking the visitor a series of questions, the site suggests which GM-made vehicles the visitor should consider.
In addition, the customer can pick out a vehicle online, arrange a test drive with a dealer, submit a purchase offer to a dealer and conduct the purchase transaction on the Internet, up to signing the contract and taking delivery of the vehicle.
'We are documenting what we learn at Vauxhall and are trying to identify markets in Europe where it makes sense to roll out the same services,' Bergmann said.
TAIWAN - A FRESH START
Necessity became the mother of invention for GM's Internet strategy in Taiwan. In 1998, GM's largest dealership group, China Automotive Co., suffered a financial crisis brought on by its non-automotive operations. To make things worse, a devastating earthquake caused widespread damage to buildings and roads.
In the wake of these crises, the dealer group, which generated 70 percent of GM's sales volume, could not distribute Opel automobiles adequately in Taiwan. 'We were left with a decimated distribution system, and we had to replace it,' said Terry Johnsson, regional director for e-GM in Asia.
GM could have rebuilt a traditional dealership network, or it could have tried something innovative. It chose a combination of the two. First, GM purchased select dealerships from China Automotive Inc. to provide service outlets. Then GM supplemented its network of dealerships with an Internet site that allows customers to buy vehicles online.
The Web site made considerable sense. As of December, 6 million of Taiwan's 21 million people were registered as Internet users. Moreover, growth in Internet use has doubled in two years. 'The Taiwan model has been successful because we have integrated clicks and bricks,' Johnsson said.
Web site visitors can chat with a consultant online or receive a call from a consultant. They can schedule a test drive, which 40 percent of the site's visitors do. They can make a down payment or transfer money from their bank account to pay cash for the vehicle. They can have the vehicle delivered to their home and complete the purchase there. As of December, owners of GM as well as non-GM vehicles can have their cars picked up at home for service.
'We stumbled into an area customers really like - staying out of Taipei traffic and a dealership,' Johnsson said. 'We moved quickly to doorstep delivery for test drives and new-car transactions because we were scrambling because of the lack of brick-and-mortar stores.'
The first Opel sold online on July 1, 1999. To lure consumers to its Web site, GM initially offered coupons for $200 discounts on a vehicle purchase at a dealership. The response was so overwhelming that GM's Web site crashed. The automaker's sales doubled in two months.
Since then, GM has revamped its Taiwan Web site to harmonize it with GM's BuyPower Internet service worldwide. In December, GM added banking and financing services for Taiwanese customers. GM also has brought its Buick and Cadillac brands under its Internet umbrella and is expanding to include Isuzu, Subaru and Saab.
GM further offers online buyers a 10 percent discount on their vehicle purchase. And for good measure, it offers a frequent flier-style program that gives Web site visitors 'cyber cash' to spend on restaurants and travel.
The site draws up to 100,000 people a month. Nearly all online visitors arrive at GM's site by links from other Web sites. GM sells about 18 percent of its retail sales volume through the Internet, more than double the rate in December.
Would traditional GM dealerships have gotten those sales anyway? Johnsson does not know. But he does say that GM's Web site is building a relationship with 20,000 consumers who have not yet bought a vehicle. Even if one assumes the Web site has not generated much new business, GM's Internet strategy has paid dividends. GM has cut marketing and distribution costs by $1,000 per vehicle.
'The results have definitely given us incentive to further steer our business in that direction,' Johnsson said. Look for GM's Taiwan Web site to be the model for Internet marketing in other Asian markets such as Thailand, China and even Japan.
Once a Web site is established in a market, e-GM forms alliances with Internet service providers, such as America Online, to lure consumers to a site. Then, e-GM forges partnerships with third-party car-shopping services to provide links for consumers to GM BuyPower. In the USA, GM has partnered with two well-known price guides, Edmunds.com and Kelley Blue Book, for such links.
The third step is to align with groups that maintain Internet sites. In the USA, for example, it has built a relationship between a Web site aimed at people with physical disabilities with GM Mobility, which designs vehicles for that audience. Another partnership links GM to college students who are first-time car buyers.
However, e-GM does not automatically export all U.S.-developed Web features to overseas markets. Quite the contrary. For example, the United Kingdom is expert in Internet car-selling through dealers, while Taiwan is at the forefront of direct sales to consumers.
While GM builds its global architecture, it also is conducting local experiments. In Europe, Internet usage varies widely from country to country. In Scandinavia, for instance, Internet usage exceeds that of the USA, said Michael Bergmann, regional director of e-GM in Europe. Among Mediterranean countries from Greece to Portugal, Internet usage is low. Yet, wireless communication in Italy is popular. So e-GM is conducting a test of Internet accessibility via a wireless channel there. In Poland, however, phone service is spotty, so GM must explore other ways to provide Internet access.
Despite these regional differences, GM believes consumers around the globe want three key things: hassle-free car shopping, precise information about available models and price comparisons with rival vehicles.
Hogan believes the World Wide Web fills those needs. 'The Internet is here to stay, and you've got to get on board,' he said. 'Those who don't get on board - whether it's an automaker, a dealer or a supplier - will be in bad condition.'
You can e-mail free-lance writer Michelle Krebs at [email protected]