Negotiating Car Prices On eBay (EBAY)

eBay (EBAY) and GM are setting up a program in California that will allow consumers to negotiate prices for new cars online. Potential customers can also set up financial packages to buy a new car and pick out the make and model.

The program would seem to be a good idea for getting new buyers to come into the car market, but that assumption is almost certainly not true.

According to The Wall Street Journal, “The trial is part of Detroit-based GM’s turnaround plan, making more official a practice some of its dealers had already participated in on their own.” The fact of the matter is that there is absolutely no evidence that a person shopping for a car is more likely to buy just because he can negotiate price online. A consumer without the time or money to buy a vehicle is almost certainly not going to suddenly become a buyer because of the eBay program. By the same token, a consumer who has decided to buy a car will buy it whether it is available only through a dealer or can be purchased online as well. People do not make $25,000 purchase decisions because of clever sales tactics.

The GM program with eBay is a fine example of the seduction of e-commerce. Technology may add to the ease of buying something but it is not likely to make a poor consumer feel rich. The people in California who want a GM car are going to buy it whether the eBay program is in place or not.

Douglas A. McIntyre