Although few Brazilians enjoy Internet access, two automakers already have launched a full-scale cyberspace sales war. General Motors and Fiat S.p.A. are selling cars directly to consumers over the Internet, and early results suggest that the automakers will expand their experiments.
Internet car sales in Brazil began September 17 with GM offering the Chevrolet Celta. At first, customers had to visit dealership showrooms, where they could make Internet purchases using the dealership computer. In October, GM allowed customers to use their home computers.
Those who did so were rewarded. Consumers can buy the Celta at the dealership for $7,621, or they can pay $384 less by purchasing via the Internet. The discount is possible because a direct purchase from GM allows buyers to avoid some sales taxes. So far, Internet purchases account for half of the Celta's sales. 'The results are fantastic if you consider it is a new car and a new way to sell cars,' said Luiz Moan, GM's director for corporate affairs. 'We then believe Celta Internet sales will account for seven out of 10 cars sold.'
Even so, the Celta's Internet launch is only a half victory for the automaker. GM had wanted to sell the Celta only over the Internet. Unhappy dealers protested, fearing GM eventually would sell all of its cars that way. So GM negotiated a compromise with Abrac, the local Chevrolet dealer association. The automaker let dealers sell the Celta in their dealerships. And GM agreed to ship cars sold on the Internet to dealers for delivery to the customer. To make this possible, GM set up six holding yards throughout Brazil to store vehicles for Internet customers. Four days after the customer orders the vehicle, GM delivers it from these yards.
Fiat Strikes Back
Just five days after the Celta's Internet debut, Fiat counterattacked. It began to sell two small cars, the Palio Young and Uno Mille Smart, over the Internet. The Palio sells for $7,081, while the Uno is priced at $6,183. Fiat was jubilant. Two years ago, GM had claimed that the Celta would be Brazil's cheapest minicar, with a price under $7,000. A low price is a crucial selling point for minicars, which are powered by one-liter engines. GM's vow was undercut by Brazil's currency devaluation in 1999, when the real's value plunged 50 percent against the dollar.
In its first 10 days of Internet sales, Fiat sold 370 cars and enrolled 950 customers. Fiat had experimented with Internet sales of the Brava. 'The customer could choose the car on the Net, make all financial projections and then clinch the deal at the dealer,' said Gianni Coda, responsible for Fiat Auto's operations in South America. 'The results were encouraging, and we went ahead with the plan.' That plan still involves the dealer at the end of the sales transaction.
Fiat also attacked GM's new Celta with a redesigned lineup of Palio cars. The Italian automaker celebrated the launch by inviting journalists and 2.000 guests to a party inside a blimp hangar in Rio de Janeiro, Brazil. The hangar had once housed the legendary Graf Zeppelin; it is thought to be the last of its kind in the world.
Though it was only 4 years old, the Palio was redesigned by Giorgetto Giugiaro. Eighty percent of its parts are new, including the engine. Even so, Fiat is offering the new Palio at the same $8,421 price as the model it replaces. That positions the stylish Palio as a rival to the Celta - an indication of Fiat's determination to protect its market share.
Volkswagen, the market leader, is watching this cutthroat battle with a cool, imperial attitude. 'I prefer to observe the competition,' declares Herbert Demel, Volkswagen's local president. 'We are awaiting clarification of the government's position on taxes not paid when a deal is made through the Net.'
This cautious position does not mean Volkswagen has given up on the Internet. The German automaker already handles purchasing banking on the Net. Moreover, Volkswagen sells the New Beetle and the Passat via the Net. But these vehicles carry relatively high prices, so sales are small. Still, Volkswagen's Demel says the experiment proved useful. 'They help us to understand customers' attitudes,' he said.
Although electronic car sales remain small, Brazil's 16 automakers have gotten the message: E-commerce has arrived.
You can e-mail Autodata Magazine Editor Fred Carvalho at [email protected]