e-GM expands its online sales model

www.infoworld.com –

GENERAL MOTORS THIS week put the spotlight on its South American region to showcase the next step in e-GMs Internet sales initiative.

GM is promising to deliver within four to seven days a Celta "sub-economy" Chevrolet model, configured at the factory to the specifications of the online buyer, to Brazilian consumers living anywhere in the country. To achieve this, GM has combined both manufacturing and e-commerce innovations.

Brazil is approximately the size of the United States. A similar effort was announced in the States last month but only for one small region of the country: the Minneapolis-St. Paul trading area.

Components of what Mark Hogan, president of e-GM, called an "operational experiment" will be duplicated worldwide including in the United States. There will be a particular focus on GM's Saturn line, said Hogan, as more of the systems developed at the company's Gravatai car plant in Brazil are deployed at other sites around the world.

Car shoppers logging on to the www.celta.com.br Web site will have a total of 20 so-called "build combinations" from which to configure the Celta model they want. The site also allows users to add accessories, select colors, and view each change to the car as it is configured.

Buyers can also arrange for financing, receive approvals, and select payment options online. Once a $500 deposit is made -- the site accepts online credit card payments -- the buyer can take delivery at a dealer of their choice, even tracking the location of their car as it makes its way to the local dealer.

The benefits accrue to everyone in the buying cycle, according to Hogan, who ticked off a series of pluses for GM, dealers, and customers.

"We can now sell cars 24 hours a day and it gives us a more efficient distribution and sales model," Hogan said.

Dealers will need to stock only two models, one for the showroom and one for test drives, Hogan said. Plus, data collected by GM on its customers is returned to the dealers for more focused marketing efforts in the future.

Customers also benefit.

"The customer gets a car at the right time and place, at the best price, and has a flexible shopping experience," Hogan added.

Another unique e-commerce feature that will encourage online rather than in-store shopping is a single, no-haggling price, which obviates the need to shop in person. This technique is also used for Saturn models in the United States.

Hogan also said the direct shopping model will give the buyer a "relationship with the factory."

What Hogan failed to say was that no such relationship between General Motors and the consumer existed prior to online shopping. In the past, the dealer was GM's customer, and it was the dealer -- not GM -- that owned the relationship with the ultimate buyer of the product. Despite strict franchise laws, at least in the United States, e-commerce and direct buying have made the old two-tier distribution and selling model obsolete, according to most industry analysts.

As global competition increases, GM is attempting to demonstrate that it understands the importance of controlling the customer experience online rather than trusting it to the uneven quality of its semi-independent dealer network.

E-commerce, however, is affecting even more than the marketing process. Behind the e-GM online configure-and-locate-to-order sales modell is its experimental Blue McCaw initiative, now going through its first phase at the Gravatai Automotive Complex in Brazil, which was completed last August.

Through that initiative, about 50 tier-1 suppliers have been placed at GMs manufacturing site. The Celta was actually designed by GM in partnership with those suppliers who are now able to deliver pre-assembled modules to the factory in a "just in time" manufacturing model. The Gravatai plant, the first to implement what GM officials call an "industrial condominium," uses about 60 percent fewer suppliers and 50 percent fewer parts due to the collaborative design efforts between GM and suppliers.

According to Hogan, the reduced production time and low inventory levels will allow GM to manufacture the competitively priced Celta for the economy car buyer in Brazil, with similar efforts worldwide. However, perhaps the most unique feature of the Chevrolet Celta is the fact that it is the first car ever created -- from design through final sale to the consumer -- for the New Economy.

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