GM Scraps Plan To Sell Cars Over Web - InformationWeek

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GM Scraps Plan To Sell Cars Over Web

The Detroit automaker says it's giving its AutoCentric project the red light, "due to a determination that the business model is not viable at this time."

For General Motors Corp., cars move too slowly on the information superhighway. The $184.6 billion auto and truck maker has dropped plans to form a separate company with dealers to sell cars over the Internet.

AutoCentric, unveiled in February, would have cost $50 million to start, with GM putting up half and selling the remainder to its 7,800 dealers. But in a Securities and Exchange Commission filing, the Detroit automaker said it was giving the project the red light, "due to a determination that the business model is not viable at this time."

GM's plan to scrap AutoCentric follows a decision the company made in November to fold its E-business unit, e-GM, back into the corporate organization, including the unit's 100 employees. The 2-year-old venture was responsible for GM's Web sites and included GM's OnStar in-car communications unit, which mostly operated independently.

With the disappearance of e-GM went plans for possibly buying a stake in an independent, third-party auto site that offers consumer information and sells new and used cars over the Internet. Instead, GM will continue its partnership with Autobytel Inc. in testing systems that link customers to dealers.

GM's decision to scale back its Internet plans is similar to rival Ford Motor Co.'s plan to cut back on E-business initiatives and focus on its core business. Carmakers once believed they could use the Internet to quickly grab market share from competitors, but analysts say the manufacturers have learned that the basics of quality, design, and cost remain most important. Says Kevin Prouty, market analyst for AMR Research Inc., "Wall Street no longer gets excited about the latest E-business initiative, but has gone back to looking at margins, inventories, and the excitement of new designs."

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