(Source: Bloomberg; WSJ & Autoblog)

Image Courtesy: Autoblog

General Motors Co. will let customers buy cars and trucks online from some California dealers through EBay Inc., the operator of the most-visited U.S. e-commerce Web site.

A new Web site, gm.ebay.com, will offer Chevrolet, Buick, GMC and Pontiac brands starting tomorrow, GM and San Jose, California-based EBay said today in a statement. More than 225 dealers will participate, the companies said.

Offering GM autos on the Internet gives Chief Executive Officer Fritz Henderson a new venue to boost sales as he shrinks the ranks of U.S. dealers by about 42 percent to 3,600 by the end of 2010. Those reductions are part of a plan to return GM to profit after $88 billion in losses since 2004.

When GM emerged from bankruptcy protection in July, among a slate of changes, it said it would realign sales and marketing functions. Chief Executive Fritz Henderson had said GM was testing a new online auction system with eBay that would enable customers to bid on actual vehicles just like they do in an eBay auction, including the option of choosing a predetermined “buy it now” price.

“Exploring new online distribution alternatives is a good idea as GM downsizes its brick-and-mortar distribution system,” said Laura Martin, a Los Angeles-based analyst at Soleil Securities Group Inc. She rates EBay shares as “hold” and doesn’t own any.

In addition to acquiring vehicle through eBay’s “Buy It Now” and “Best Offer” formats, the site also will allow consumers to compare pricing across models or participating dealerships and get tips and advice while determining trade-in values and whether their current vehicle may also qualify for the government’s “cash-for-clunkers” incentive program.

The companies cited a recent J.D. Power & Associates study that said more than 75% of new-vehicle buyers in 2008 used the Internet during their shopping and research process, compared with 70% in 2007. The study also found that 2008 marked the largest year-over-year increase in online automotive shopping since 2001.

Autoblog’s comments on the news notes that this pact between GM and eBay will add functionality to the process, though, while giving dealers a greater online presence. Suspiciously absent from the program is GM’s Cadillac brand. It is not known exactly why GM chose not to include its luxury arm in the eBay auctions, but it is believed that the decision has something to do with giving customers a more premium, coddled car-buying experience. The trial program is reportedly set to expire on September 8.

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