LOS ANGELES - California has given Daewoo Motor America a conditional go-ahead to sell its vehicles directly over the Internet.
The approval, by the California Department of Motor Vehicles, technically does not endorse factory-direct selling because Daewoo has only factory-owned stores in this state.
The company, therefore, would not be violating state franchise laws by bypassing franchised dealers. Even so, the action appears to be a first step down the slippery slope of automakers retailing to consumers without direct dealer involvement.
Christoph Nagel, Daewoo's manager of Internet marketing, said other automakers and electronic-commerce firms sell vehicles over the Internet. But at some point, the purchase is handed over to an independent franchised dealer for closing and delivery, he said.
In contrast, 'We can conduct the entire financial process of buying and paying for a Daewoo online, and consummating the deal off-site,' he said.
'Everyone else is doing faux e-commerce, all rhetoric. With us, the customer never needs to see some F&I guy in a cubicle or in his dining room.'
Since Daewoo is a one-price outfit, no price haggling is necessary and the sale can be performed without a salesperson. In short, dealership employees might be involved only in the logistics of delivering the vehicle and the finished sales agreement paperwork to the customer.
Daewoo still is constructing the architecture of its Web site to allow customers to select a vehicle, make a test-drive appointment, apply for financing, get a referral for an insurance quote, place a deposit and down payment via credit card, trade in their old vehicle and set up a delivery time.
Nagel wants to have the site running by the end of the year, with a pilot program in select California markets. Should the pilot prove successful, Daewoo will expand access into the other states where it does business.
Tom Novi, chief of occupational licensing for the California Department of Motor Vehicles, said the only caveat to the process is that a dealer is involved in some way in consummating the deal.
'What's different is that the distributor is basically running the Internet sale, and because they own all their dealerships, they basically arrange the distribution,' he said.
'Daewoo will be able to conduct the entire transaction over the Internet, including actual delivery of the vehicle,' Novi said.
The other legal constraint is that an off-site transaction must be completed with the signature of both a Daewoo representative and the customer at the time of vehicle delivery.
'We're trying to make sense of this new era of car sales, within the context of the vehicle code and regulations and their intent,' Novi said.
He noted that the California Department of Motor Vehicles has given the go-ahead only for the preliminary business plan and said it can later change its mind should Daewoo's Web presence overstep its legal bounds.
'In terms of consumer protection, however, there's probably greater protection if the customer conducts the sale over the phone or the Internet than if they go into a dealership,' Novi said, 'because it's easier to say no and disconnect, as opposed to being in a dealership with a salesman.'