Texas has put the brakes on a General Motors plan to sell used vehicles directly to Houston consumers by denying the company a license to do business.
In a June 29 letter to GM, the Motor Vehicle Division Licensing Section of the Texas Department of Transportation said the agency believes 'that GM DriverSite is ineligible to hold a general distinguishing number under current state law.' A general distinguishing number is a license that allows used-car dealerships to transfer vehicle titles.
GM DriverSite is GM's test program to link Internet used-vehicle shoppers with GM DriverSite stores in Houston strip malls. While most of the transaction was to be handled on the Internet, consumers would visit the store to complete the sale.
The letter was addressed to Ross Hendrix, director of retail operations for GM Certified Used Vehicles. It said GM has 20 days to request a hearing to protest the denial.
GM issued a statement saying that the license denial was based on an interpretation of a new Texas law and that the company is reviewing its position.
'We plan to work with the appropriate channels to resolve the issue,' the company statement said. 'We are confident that we can and will arrive at an appropriate solution to the situation soon.'
Last month, Gov. George W. Bush signed an amendment that strengthened a Texas law prohibiting manufacturers from owning or operating a dealership unless the dealership is for sale, is owned in partnership with a minority dealer or is a Motors Holding type of operation.
GM planned to open the first DriverSite store in Houston early this month; a second Houston store was to open in late July or early August.
The company said DriverSite was to be a test to see if Internet customers would buy late-model used vehicles online.
While GM has stressed that DriverSite is to be a partnership with dealers, many Houston dealers are not convinced. They say GM is getting into competition with them by selling directly to consumers.